Question 1

Identify whether a company should debit (Dr)or credit (Cr)its Cash account to record each of the following transactions:
_____ The company writes a $197.06 check.
_____ The company deposits a $5,000 check into its account.
_____ In a bank reconciliation,the company discovers that it recorded a $127.35 payment to a supplier as $27.35.
_____ The bank pays $16.00 interest on the company's account.
_____ The company electronically transfers $867 to a supplier.
_____ A customer check in the amount of $31 is returned by the bank as NSF.
_____ The bank charges $12 in fees to the company's bank account.
_____ When preparing the bank reconciliation,the company's accountant discovers a check in the amount of $1,000 that had been written but had not been recorded.
_____ A customer electronically transfers $189.43 to the company's bank account.

Accepted Answer

Cr,Dr,Cr,D...

Question 2

A company sells three different products.The first costs $8 and sells for $16,the second costs $18 and sells for $45,while the third costs $36 and sells for $120.Which of the following is not true?

Accepted Answer

A)  The gross profit percentages on the individual products are 50%,60%,and 70%,respectively.
B)  The third product has the highest gross profit.
C)  If the company can persuade some customers to switch to the third product,overall gross profit percentage will increase.
D)  The product with the highest dollar amount of gross profit will always be the product with the highest gross profit percentage.E) A) and C)
F) A) and D)

Question 3

A company starts the period with 100 computers in inventory,purchases 30 more,returns 4 of them to suppliers,and has 83 in inventory at the end of the period.If there is no shrinkage,how many computers were sold?

Accepted Answer

A)  47 computers.
B)  43 computers.
C)  17 computers.
D)  83 computers.E) A) and D)
F) C) and D)

Question 4

LA Company has a gross profit percentage of 61%,while NY Company has a gross profit percentage of 37%.Which of the following is always true?

Accepted Answer

A)  LA Company will report a higher net income than NY Company.
B)  NY Company must have a greater sales volume than LA Company.
C)  LA Company is more efficient at controlling selling,general,and administrative expenses than NY Company.
D)  LA Company and NY Company both earn enough on each sale to make a contribution to their operating costs.E) A) and B)
F) A) and C)

Question 5

Use the information above to answer the following question.What journal entry should be recorded by Flynn Company for the EFT?

Accepted Answer

A)  Option A
B)  Option B
C)  Option C
D)  Option DE) None of the above
F) C) and D)

Question 6

Which of the following is a true statement?

Accepted Answer

A)  Sales discounts is a contra-asset account.
B)  Sales returns & allowances is a contra-revenue account.
C)  Sales returns & allowances is a credit balance account.
D)  Sales discounts is a contra-account to inventory.E) B) and C)
F) All of the above

Question 7

Notification by the bank that a customer's deposited check was returned NSF requires that the company make the following adjusting journal entry:

Accepted Answer

A)   
B)   
C)   
D)  No adjusting entry is necessary.E) A) and B)
F) A) and D)

Question 8

Use the information above to answer the following question.Net Sales for 2014 would be

Accepted Answer

A)  $30,000.
B)  $124,000.
C)  $130,000.
D)  $160,000.E) All of the above
F) B) and C)

Question 9

Merchandise costing $3,000 is sold for $4,000 on terms 2/10,n/30.If the buyer pays within the discount period,what amount will be reported on the income statement as net sales?

Accepted Answer

A)  $3,920
B)  $4,000
C)  $1,000
D)  $3,200E) A) and C)
F) B) and D)

Question 10

FOB shipping point means that ownership of goods passes to the buyer when the goods reach the buyer.

Accepted Answer

A) True 
 B)False

Question 11

The receipt of cash is one of the operating activities of:

Accepted Answer

A)  companies that sell goods but not companies that sell services.
B)  companies that sell to consumers but do not sell to other companies.
C)  merchandising,manufacturing,and service companies.
D)  companies that sell goods they bought from others but not of companies that make the goods they sell.E) A) and C)
F) A) and B)

Question 12

Which of the following statements regarding the recording of merchandising journal entries in a perpetual inventory system is true?

Accepted Answer

A)  When a customer pays within the discount period,accounts receivable is credited for the full amount.
B)  If a customer pays within the discount period,sales discounts is credited.
C)  A sales return is recorded with entries that include a credit to sales returns and allowances.
D)  Sales of merchandise are recorded by entries that include a credit to cost of goods sold.E) A) and B)
F) C) and D)

Question 13

A retail chain sells 100 designer sheet sets for $199.99 a set;these sheet sets cost the company $69.95 a set to buy.The company also sells 1,000 basic sheet sets for $49.99 a set;these sheet sets cost the company $24.99 to buy.Other operating expenses total $10,000.Which of the following statements is true?

Accepted Answer

A)  The company's net income is $38,004.
B)  Rounded to the nearest whole number,the gross profit percentage is 65% on the designer sheets and 50% on the basic sheets.
C)  The company's total gross profit is $28,004.
D)  The total sales for the period are $48,004.E) A) and B)
F) B) and C)

Question 14

Which of the following items appearing on a bank reconciliation would require journal entries to bring the cash account up to date?

Accepted Answer

A)  Deposits in transit.
B)  Checks from customers returned as NSF.
C)  Outstanding checks.
D)  An error made by the bank in recording a deposit.E) A) and B)
F) A) and C)

Question 15

All of the following bank reconciliation items would result in an adjusting journal entry on the company's books except:

Accepted Answer

A)  interest earned.
B)  deposits in transit.
C)  service charge.
D)  a customer's check returned NSF.E) A) and B)
F) A) and C)

Question 16

A company sells goods at a selling price of $20,000.The cost of the goods is $15,000.Under a perpetual inventory system the journal entries to record the sale will include:

Accepted Answer

A)  $15,000 will be debited to Inventory and $15,000 will be credited to Sales.
B)  $15,000 will be debited to Cost of goods sold and $15,000 will be credited to Inventory.
C)  $15,000 will be credited to Inventory and $15,000 will be credited to Sales.
D)  $15,000 will be debited to Cost of goods sold and $15,000 will be credited to Sales.E) B) and C)
F) A) and B) B

Question 17

If a merchandiser offers a sales discount of 2/10,net/30 on a sale of $1,000,the amount due in 30 days is the net amount of $980.

Accepted Answer

A) True 
 B)False

Question 18

A retailer is a company that buys products from manufacturers and sells them to wholesalers.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is an activity common to the operations of merchandising,manufacturing,and service companies?

Accepted Answer

A)  Producing the product.
B)  Incurring operating expenses.
C)  Buying goods or raw materials.
D)  Selling a physical product.E) A) and B)
F) All of the above B

Question 20

If a company returns an item to a supplier,the supplier will record the return as:

Accepted Answer

A)  sales returns and allowances.
B)  shrinkage.
C)  sales discounts.
D)  purchase returns and allowances.E) A) and D)
F) All of the above A

Exam 6: Internal Control, Cash, and Merchandise Sales

Correct Answer
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Cr,Dr,Cr,D...
View Answer

A company sells three different products.The first costs $8 and sells for $16,the second costs $18 and sells for $45,while the third costs $36 and sells for $120.Which of the following is not true?

Correct Answer
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A company starts the period with 100 computers in inventory,purchases 30 more,returns 4 of them to suppliers,and has 83 in inventory at the end of the period.If there is no shrinkage,how many computers were sold?

Correct Answer
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LA Company has a gross profit percentage of 61%,while NY Company has a gross profit percentage of 37%.Which of the following is always true?

Correct Answer
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Use the information above to answer the following question.What journal entry should be recorded by Flynn Company for the EFT?

Correct Answer
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Which of the following is a true statement?

Correct Answer
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Notification by the bank that a customer's deposited check was returned NSF requires that the company make the following adjusting journal entry:

Correct Answer
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Use the information above to answer the following question.Net Sales for 2014 would be

Correct Answer
verified

Merchandise costing $3,000 is sold for $4,000 on terms 2/10,n/30.If the buyer pays within the discount period,what amount will be reported on the income statement as net sales?

Correct Answer
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FOB shipping point means that ownership of goods passes to the buyer when the goods reach the buyer.

Correct Answer
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The receipt of cash is one of the operating activities of:

Correct Answer
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Which of the following statements regarding the recording of merchandising journal entries in a perpetual inventory system is true?

Correct Answer
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Correct Answer
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Which of the following items appearing on a bank reconciliation would require journal entries to bring the cash account up to date?

Correct Answer
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All of the following bank reconciliation items would result in an adjusting journal entry on the company's books except:

Correct Answer
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A company sells goods at a selling price of $20,000.The cost of the goods is $15,000.Under a perpetual inventory system the journal entries to record the sale will include:

Correct Answer
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B

If a merchandiser offers a sales discount of 2/10,net/30 on a sale of $1,000,the amount due in 30 days is the net amount of $980.

Correct Answer
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A retailer is a company that buys products from manufacturers and sells them to wholesalers.

Correct Answer
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Which of the following is an activity common to the operations of merchandising,manufacturing,and service companies?

Correct Answer
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B

If a company returns an item to a supplier,the supplier will record the return as:

Correct Answer
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A

Exam 6: Internal Control, Cash, and Merchandise Sales

Correct AnswerverifiedCr,Dr,Cr,D...View AnswerShow Answer

A company sells three different products.The first costs $8 and sells for $16,the second costs $18 and sells for $45,while the third costs $36 and sells for $120.Which of the following is not true?

Correct AnswerverifiedShow Answer

A company starts the period with 100 computers in inventory,purchases 30 more,returns 4 of them to suppliers,and has 83 in inventory at the end of the period.If there is no shrinkage,how many computers were sold?

Correct AnswerverifiedShow Answer

LA Company has a gross profit percentage of 61%,while NY Company has a gross profit percentage of 37%.Which of the following is always true?

Correct AnswerverifiedShow Answer

Use the information above to answer the following question.What journal entry should be recorded by Flynn Company for the EFT?

Correct AnswerverifiedShow Answer

Which of the following is a true statement?

Correct AnswerverifiedShow Answer

Notification by the bank that a customer's deposited check was returned NSF requires that the company make the following adjusting journal entry:

Correct AnswerverifiedShow Answer

Use the information above to answer the following question.Net Sales for 2014 would be

Correct AnswerverifiedShow Answer

Merchandise costing $3,000 is sold for $4,000 on terms 2/10,n/30.If the buyer pays within the discount period,what amount will be reported on the income statement as net sales?

Correct AnswerverifiedShow Answer

FOB shipping point means that ownership of goods passes to the buyer when the goods reach the buyer.

Correct AnswerverifiedShow Answer

The receipt of cash is one of the operating activities of:

Correct AnswerverifiedShow Answer

Which of the following statements regarding the recording of merchandising journal entries in a perpetual inventory system is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following items appearing on a bank reconciliation would require journal entries to bring the cash account up to date?

Correct AnswerverifiedShow Answer

All of the following bank reconciliation items would result in an adjusting journal entry on the company's books except:

Correct AnswerverifiedShow Answer

A company sells goods at a selling price of $20,000.The cost of the goods is $15,000.Under a perpetual inventory system the journal entries to record the sale will include:

Correct AnswerverifiedB

If a merchandiser offers a sales discount of 2/10,net/30 on a sale of $1,000,the amount due in 30 days is the net amount of $980.

Correct AnswerverifiedShow Answer

A retailer is a company that buys products from manufacturers and sells them to wholesalers.

Correct AnswerverifiedShow Answer

Which of the following is an activity common to the operations of merchandising,manufacturing,and service companies?

Correct AnswerverifiedB

If a company returns an item to a supplier,the supplier will record the return as:

Correct AnswerverifiedA

Correct Answer
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Cr,Dr,Cr,D...
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B

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B

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A