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Exam 6: Accounting for Merchandising Businesses

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Question 91

True/False

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On the income statement in the single-step form,the total of all expenses is deducted from the total of all revenues.

A) True
B) False

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Question 92

Multiple Choice

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Jacob Co.sells merchandise on credit to Isaiah Co.for $9,700.The invoice is dated on May 1 with terms of 1/15,net 45.What is the amount of the discount and up to what date must the invoice be paid in order for the buyer to take advantage of the discount?

A) $194, May 15
B) $194, May 16
C) $97, May 15
D) $97, May 16

E) A) and B)
F) None of the above

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Question 93

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Under a perpetual inventory system,the cost of merchandise on hand at the end of the year can only be determined by reviewing the ledger.

During the current year,merchandise is sold for $86,000 cash and for $93,950 on account.The cost of the merchandise sold is $76,240.What is the amount of the gross profit?

In retail businesses,inventory is reported as a current asset.

Cost of merchandise sold is often the largest expense on a merchandising company income statement.

Match each of the following terms (a-h) with the correct definition below. -Payment arrangements determined by the seller as to when invoices are due and whether early payment discount is offered.

The following data for the current year ended June 30 are from the accounting records of Zanadu Co.:​ Prepare a multiple-step income statement for the year ended June 30.​

Under the periodic inventory system,the journal entry to record the cost of merchandise sold at the point of sale will include which of the following?

Sales to customers who use bank credit cards,such as MasterCard and VISA,are generally treated as credit sales.

A chart of accounts for a merchandising business

Match each of the following terms (a-h) with the correct definition below. -Shipping terms where the ownership of merchandise passes to the buyer when the buyer receives the merchandise.

When a merchandising business is compared to a service business,the financial statement that is not affected by that change is the statement of owner's equity.

The journal entry to record the receipt of inventory purchased for cash in a perpetual inventory system would be

When comparing a retail business to a service business,the financial statement that changes the most is the

Calculate the gross profit for Jonas Company based on the following data:

Service businesses provide services for income,while a merchandising business sells merchandise.

Gross profit minus selling expenses equals net income.

The account form of the balance sheet is presented in a downward sequence in three sections.

The seller records the sales tax as part of the sales amount.