Question Details

Business A 654 CHAPTER 5 PART 10

CHAPTER 5 ACCOUNTING FOR MERCHANDISING OPERATIONS

a161.	Which of the following accounts has a normal credit balance?
a.	Purchases
b.	Sales Returns and Allowances
c.	Freight-In
d.	Purchase Discounts


	a162.	The respective normal account balances of Purchases, Purchase Discounts, and Freight-in are
a.	credit, credit, debit.
b.	debit, credit, credit.
c.	debit, credit, debit.
d.	debit, debit, debit.


a163.	Cobb Company's accounting records show the following at the year ending on December 31, 2014:

Purchase Discounts	$    11,200
Freight - In	15,600
Purchases	402,000
Beginning Inventory	47,000
Ending Inventory	57,600
Purchase Returns	12,800

Using the periodic system, the cost of goods purchased is
a.	$378,000.
b.	$383,000.
c.	$393,600.
d.	$404,200.


a164.	Cobb Company's accounting records show the following at the year ending on December 31, 2014:

Purchase Discounts	$    11,200
Freight - In	15,600
Purchases	402,000
Beginning Inventory	47,000
Ending Inventory	57,600
Purchase Returns	12,800

Using the periodic system, the cost of goods sold is
a.	$378,000.
b.	$383,000.
c.	$393,600.
d.	$404,200.


	165.	Ezra Company has sales revenue of $60,000, cost of goods sold of $36,000 and operating expenses of $14,000 for the year ended December 31. Ezra's gross profit is
a.	$0.
b.	$10,000.
c.	$24,000.
d.	$46,000.


	166.	Rae Company uses a perpetual inventory system made a purchase of merchandise on credit from Tyree Corporation on August 3, for $9,000, terms 2/10, n/45. On August 10, Rae makes the appropriate payment to Tyree. The entry on August 10 for Rae Company is
a.	Accounts Payable		9,000
		Cash			9,000
b.	Accounts Payable		8,820
		Cash			8,820
c.	Accounts Payable		9,000
		Purchase Returns and Allowances			180
		Cash			8,820
d.	Accounts Payable		9,000
		Inventory			180
		Cash			8,820

	167.	Kate Company uses a perpetual inventory system purchased inventory from Phoebe Company. The shipping costs were $500 and the terms of the shipment were FOB shipping point. Kate would have the following entry regarding the shipping charges:
a.	There is no entry on Kate's books for this transaction.
b.	Freight Expense		500
		Cash			500
c.	Freight-Out		500
		Cash			500
d.	Inventory		500
		Cash			500


168.	In a perpetual inventory system, a return of defective merchandise by a purchaser is recorded by crediting
a.	Purchases.
b.	Purchase Returns.
c.	Purchase Allowance.
d.	Inventory.


	169.	On October 4, 2014, JT Corporation had credit sales transactions of $4,000 from merchandise having cost $2,400. The entries to record the day's credit transactions include a
a.	debit of $4,000 to Inventory.
b.	credit of $4,000 to Sales Revenue.
c.	debit of $2,400 to Inventory.
d.	credit of $2,400 to Cost of Goods Sold.


170.	Which of the following accounts is not closed to Income Summary?
a.	Cost of Goods Sold
b.	Inventory
c.	Sales Revenue
d.	Sales Discounts

	171.	In the Augie Company, sales were $750,000, sales returns and allowances were $30,000, and cost of goods sold was $450,000. The gross profit rate was
a.	36%.
b.	37.5%.
c.	40%.
d.	41.7%.


172.	Net sales is sales revenue less
a.	sales discounts.
b.	sales returns.
c.	sales returns and allowances.
d.	sales discounts and sales returns and allowances.


	173.	In the balance sheet, ending inventory is reported
a.	in current assets immediately following accounts receivable.
b.	in current assets immediately following prepaid expenses.
c.	in current assets immediately following cash.
d.	under property, plant, and equipment.


a174.	Cost of goods available for sale is computed by adding
a.	freight-in to net purchases.
b.	beginning inventory to net purchases.
c.	beginning inventory to purchases and freight-in.
d.	beginning inventory to cost of goods purchased.


	175.	The Income statement is
a.	required under GAAP but not under IFRS.
b.	required under IFRS in the same format as under GAAP.
c.	required under IFRS but not under GAAP.
d.	required under IFRS with some differences as compared to GAAP.


	176.	The basic accounting entries for merchandising are
a.	the same under GAAP and under IFRS.
b.	required under GAAP but not under IFRS.
c.	required under IFRS but not under GAAP.
d.	required under IFRS with some differences as compared to GAAP.


	177.	Under GAAP, companies can choose which inventory system?
	Perpetual	Periodic
a.		Yes	No
b.		Yes	Yes
c.		No	Yes
d.		Yes	No


	178.	Under IFRS, companies can choose which inventory system?
	Perpetual	Periodic
a.		Yes	No
b.		Yes	Yes
c.		No	Yes
d.		Yes	No


 
	179.	Companies cannot use the
a.	periodic inventory system under GAAP.
b.	periodic inventory system under IFRS.
c.	perpetual system under IFRS.
d.	both periodic and perpetual can be used under GAAP and IFRS.


	180.	Inventories are defined by IFRS as
a.	held-for-sale in the ordinary course of business.
b.	in the process of production for sale in the ordinary course of business.
c.	in the form of materials or supplies to be consumed in the production process or in the providing of services.
d.	All of these answer choices are correct.



181.	Under GAAP, companies generally classify income statement items by
a.	function.
b.	nature.
c.	nature or function
d.	date incurred.


	182.	Under IFRS, companies must classify income statement items by
a.	function.
b.	nature.
c.	nature or function
d.	date incurred.


	183.	Under GAPP, income statement items are generally described as
a.	administration, distribution, manufacturing, etc.
b.	salaries, depreciation, utilities, etc.
c.	administration, depreciation, manufacturing, etc.
d.	salaries, distribution, utilities, etc.


	184.	Under IFRS, income statement items are generally described as
a.	administration, distribution, manufacturing, etc.
b.	salaries, depreciation, utilities, etc.
c.	administration, depreciation, manufacturing, etc.
d.	salaries, distribution, utilities, etc.


 
	185.	For the income statement, IFRS requires
a.	single-step approach.
b.	multiple-step approach.
c.	single-step approach or multiple-step approach.
d.	no specific income statement approach.


	186.	Under IFRS, companies can apply revaluation to
a.	land, buildings, and intangible assets.
b.	land, buildings, but not intangible assets.
c.	intangible assets, but not land or beer.
d.	no assets.


	187.	The use of IFRS results in more transactions affecting
a.	net income but not other comprehensive income.
b.	other comprehensive income, but not net income.
c.	but net income and other comprehensive income.
d.	neither net income nor other comprehensive income.


	188.	Comprehensive income under IFRS
a.	includes unrealized gains and losses included in net income, in contrast to GAAP.
b.	includes unrealized gains and losses included in net income, similar to GAAP.
c.	excludes unrealized gains and losses included in net income, in contrast to GAAP.
d.	excludes unrealized gains and losses included in net income, similar to GAAP.


	189.	The number of years of income statement information to be presented is
a.	2 years under both GAAP and IFRS.
b.	3 years under both GAAP and IFRS.
c.	2 years under GAAP and 3 years under IFRS.
d.	3 years under GAAP and 2 years under IFRS.