quiz
The operating cycle of a merchandising company is ordinarily shorter than that of a service company.
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True |
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False |
The operating cycle of a merchandising company is ordinarily ___________________ that of a service firm.
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longer than |
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shorter than |
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has fewer steps than |
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the same as |
Which statement is true when recording the sale of goods for cash in a perpetual inventory system?
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Only one journal entry is necessary. It will record the receipt of cash and sales revenue. |
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Two journal entries are necessary: one to record the receipt of cash and sales revenue, and one to record the cost of goods sold and to reduce inventory. |
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Two journal entries are necessary: one to record the receipt of cash and reduction of inventory, and one to record the the cost of goods sold and sales revenue. |
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Only one journal entry is necessary. It will record cost of goods sold and reduce of inventory. |
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Which one of the following will result in gross profit?
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Operating expenses less net income |
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Operating expenses less cost of goods sold |
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Sales revenue less cost of goods sold |
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Sales revenue less operating expenses |
Under what system is cost of goods sold determined at the end of an accounting period?
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Double entry inventory system |
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Perpetual inventory system |
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Single entry inventory system |
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Periodic inventory system |
Net income is $15,000, operating expenses are $20,000, net sales total $75,000, and sales revenues total $95,000. How much is the profit margin?
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16% |
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79% |
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75% |
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20% |
In a periodic inventory system, when is the cost of the merchandise sold determined?
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At the end of the period |
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Periodically during the period |
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Either at time of sale, end of period or periodically during the period |
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At the time of the sale |
Waymon Co. has net sales of $100,000, cost of goods sold of $70,000, and operating expenses of $18,000. What is its gross profit?
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Gross profit |
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$
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Masie Ascot believes revenues from credit sales may be recorded before they are collected in cash. Do you agree? Explain.
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Gross profit equals the difference between
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sales revenue and cost of goods sold. |
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sales revenue and cost of goods sold plus operating expenses. |
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sales revenue and operating expenses. |
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net income and operating expenses |
Net income will result if gross profit exceeds
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purchases. |
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cost of goods sold. |
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cost of goods sold plus operating expenses. |
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operating expenses. |
Two categories of expenses in merchandising companies are
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cost of goods sold and financing expenses. |
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other expenses and cost of goods sold. |
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cost of goods sold and operating expenses. |
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operating expenses and financing expenses |
Under a perpetual inventory system
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increases in inventory resulting from purchases are debited to purchases. |
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there is no need for a year-end physical count. |
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the account purchase returns and allowances is credited when goods are returned to vendors. |
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accounting records continuously disclose the amount of inventory. |
In a perpetual inventory system, cost of goods sold is recorded
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on a monthly basis. |
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on an annual basis. |
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each time a sale occurs. |
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on a daily basis. |
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If a purchaser using a perpetual inventory system pays the transportation costs, then the
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Inventory account is not affected. |
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Freight-out account is increased. |
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Inventory account is increased. |
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Delivery Expense account is increased |
In the credit terms of 1/10, n/30, the “1” represents the
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number of days in the discount period. |
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full amount of the invoice. |
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percent of the cash discount. |
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number of days when the entire amount is due. |
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Sales revenues are usually considered earned when
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adjusting entries are made. |
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cash is received from credit sales. |
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an order is received. |
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goods have been transferred from the seller to the buyer. |