Chapter 5

1.
	When the perpetual inventory system is used, the inventory sold is debited to Student Response Value Correct Answer Feedback 1. merchandise inventory 2. cost of merchandise sold 100% 3. sales 4. supplies expense Score: 1/1
2.
	The entry to record the return of merchandise from a customer would include a Student Response Value Correct Answer Feedback 1. credit to Sales returns and Allowances 2. debit to Sales 0% 3. credit to Sales 4. debit to Sales Returns and Allowances Score: 0/1
3.
	Using the following information, what is the amount of gross profit? Purchases $32,000 Purchases discounts $960 Merchandise inventory September 1 5,700 Merchandise inventory September 30 6,370 Sales returns and allowances 910 Sales 63,000 Purchases returns and allowances 1,200 Freight In 1,040 Student Response Value Correct Answer Feedback 1. 62,090 2. 27,460 3. 34,870 4. 31,880 100% Score: 1/1
4.
	The effect of a sales return and allowance is a reduction in sales revenue and a decrease in cash or accounts receivable. Student Response Value Correct Answer Feedback 1. True 100% 2. False Score: 1/1
5.
	When merchandise is returned under the perpetual inventory system, the buyer would credit Student Response Value Correct Answer Feedback 1. Purchases Returns and Allowances 2. Merchandise Inventory 100% 3. Accounts Payable 4. depending on the inventory system used. Score: 1/1
6.
	The retained earnings statement shows Student Response Value Correct Answer Feedback 1. only total assets, beginning and ending retained earnings 2. only net income, beginning retained earnings, and dividends 3. all the changes in the retained earnings as a result of net income, net loss, and dividends 100% 4. only net income, beginning and ending retained earnings Score: 1/1
7.
	Which account is not classified as a selling expense? Student Response Value Correct Answer Feedback 1. Freight-Out 2. Sales Discounts 100% 3. Advertising Expense 4. Sales Salaries Score: 1/1
8.
	The ending merchandise inventory for 2009 is the same as the beginning merchandise inventory for 2010. Student Response Value Correct Answer Feedback 1. False 2. True 100% Score: 1/1
9.
	If the buyer is to pay the freight costs of delivering merchandise, delivery terms are stated as Student Response Value Correct Answer Feedback 1. FOB n/30 2. FOB destination 3. FOB shipping point 100% 4. FOB buyer Score: 1/1
10.
	Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as Student Response Value Correct Answer Feedback 1. other expenses 2. selling expenses 100% 3. general expenses 4. administrative expenses Score: 1/1
11.
	Under the periodic inventory system, freight charges paid when purchasing merchandise FOB shipping point are debited to Transportation In, Freight In, or a similarly titled account. Student Response Value Correct Answer Feedback 1. False 2. True 100% Score: 1/1
12.
	One of the most important differences between a service business and a retail business is in what is sold. Student Response Value Correct Answer Feedback 1. False 2. True 100% Score: 1/1
13.
	Merchandise with an invoice price of $5,000 is purchased on September 2 subject to terms of 2/10, n/30, FOB destination. Freight costs paid by the seller totaled $200. What is the cost of the merchandise if paid on September 12, assuming the discount is taken? Student Response Value Correct Answer Feedback 1. $4,704 2. $5,200 3. $4,900 100% 4. $5,096 Score: 1/1
14.
	The proper journal entry to record the receipt of inventory purchased on account in a periodic inventory system would be: Student Response Value Correct Answer Feedback 1. Jan 1 Purchases 450.00 Accounts Receivable 450.00 2. Jan 1 Purchases 450.00 Accounts Payable 450.00 3. Jan 1 Inventory 450.00 Accounts Payable 450.00 0% 4. Jan 1 Office Supplies 450.00 Accounts Payable 450.00 Score: 0/1
15.
	If payment is due by the end of the month in which the sale is made, the invoice terms are expressed as n/30. Student Response Value Correct Answer Feedback 1. True 2. False 100% Score: 1/1
16.
	Under the periodic inventory system, the journal entry to record the purchase of merchandise inventory will include a debit to Student Response Value Correct Answer Feedback 1. Purchases 100% 2. Merchandise Inventory 3. Accounts Payable 4. Cost of Merchandise Purchased Score: 1/1
17.
	Merchandise is ordered on June 13; the merchandise is shipped by the seller and the invoice is prepared, dated, and mailed by the seller on June 16; the merchandise is received by the buyer on June 18; the entry is made in the buyer's accounts on June 19. The credit period begins with what date? Student Response Value Correct Answer Feedback 1. June 16 100% 2. June 18 3. June 13 4. June 19 Score: 1/1
18.
	In many retail businesses, inventory is the largest current asset. Student Response Value Correct Answer Feedback 1. False 2. True 100% Score: 1/1
19.
	A retailer purchases merchandise with a catalog list price of $15,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should the retailer debit to the Merchandise Inventory account? Student Response Value Correct Answer Feedback 1. $14,700 2. $10,290 3. $4,500 0% 4. $10,500 Score: 0/1
20.
	Merchandise with a sales price of $800 is sold on account with term 2/10, n/30. The journal entry to record the sale would include a Student Response Value Correct Answer Feedback 1. Debit to Sales Discounts for $16 2. Debit to Accounts Receivable for $784 3. debit to Cash for $800 4. Credit to Sales for $800 100% Score: 1/1