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Choose the appropriate letter to match the term and the definition.There are more definitions than terms. Term 1.____ Inventory 2.____ Purchase Discount 3.____ Purchase Returns and Allowances 4.____ Sales Discount 5.____ Sales Returns & Allowances 6.____ Shrinkage Definition A.The sum of beginning inventory and purchases for the period. B.The cost of inventory lost to theft,fraud,and error. C.A reduction in the cost of inventory purchases associated with unsatisfactory goods. D.A cash discount received for prompt payment of a purchase on account. E.Refunds and price reductions given to customers after goods have been sold and found unsatisfactory. F.Assets acquired for resale to customers. G.A sales price reduction given to customers for prompt payment of their account balance. H.Presents important subtotals,such as gross profit,to help distinguish core operating results from other,less significant items that affect net income. I.Net sales minus cost of goods sold.It is a subtotal,not an account. J.A ratio indicating the percentage of profit earned on each dollar of sales,after considering the cost of products sold.

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1.F
2.D
3....

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Thompson Company had beginning inventory of $6,000,cost of goods sold of $14,000,and ending inventory of $8,000.Purchases were:


A) $12,000.
B) $10,000.
C) $9,000.
D) $16,000.

E) C) and D)
F) A) and B)

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Which of the following is a merchandising company?


A) General Motors
B) H&R Block
C) The Gap
D) Proctor & Gamble

E) C) and D)
F) A) and D)

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C

Using a perpetual inventory system,what is the correct journal entry when a customer returns a product that was purchased on account?


A) A debit to Sales Returns & Allowances and a credit to Accounts Receivable; and a debit to Inventory and a credit to Cost of Goods Sold
B) A debit to Cash and a credit to Sales Returns & Allowances; and a debit to Inventory and a credit to Cost of Goods Sold
C) A debit to Accounts receivable and a credit to Sales Returns & Allowances; and a debit to Cost of Goods Gold and a credit to Inventory
D) A debit to Sales Returns & Allowances and a credit to Accounts Receivable

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

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In a periodic inventory system,the cost of goods sold is recorded as each sale occurs.

A) True
B) False

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The journal entry to record the payment within the discount period for goods previously purchased on account causes:


A) equity to decrease
B) total stockholders' equity to increase
C) total assets to decrease
D) total assets to increase

E) A) and D)
F) All of the above

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Etcetera Clothing sold merchandise inventory on account at a price of $16,000 with payment terms of 2/10,n/30.The merchandise cost Etcetera Clothing $11,000.If the customer paid for the merchandise 5 days after receiving the invoice,how much cash was collected by Etcetera Clothing?


A) $11,000
B) $15,680
C) $10,780
D) $16,000

E) A) and B)
F) B) and C)

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B

When a periodic inventory system is in use,the Inventory account is updated only at the end of the period.

A) True
B) False

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True

FAD Company uses a periodic inventory system and its inventory records for the period contain the following information: FAD Company uses a periodic inventory system and its inventory records for the period contain the following information: -Use the information above to answer the following question.What is the amount of cost of goods available for sale? A) $11,250 B) $17,500 C) $5,000 D) $13,750 -Use the information above to answer the following question.What is the amount of cost of goods available for sale?


A) $11,250
B) $17,500
C) $5,000
D) $13,750

E) C) and D)
F) All of the above

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A company that purchases inventory for $10,000 with terms 2/10,n/30.It then returns $2,000 of the inventory purchased to the supplier and also receives an allowance for defective inventory of $100.The company pays the amount due within the discount period.What is the amount of the discount that will be taken?


A) $200
B) $158
C) $160
D) $198

E) A) and B)
F) B) and C)

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In a perpetual inventory system,paying transportation charges on goods purchased FOB shipping point would have which of the following effects?


A) Decrease Operating Expenses
B) Increase Selling, General, and Administrative Expenses
C) Decrease Cost of Goods Sold
D) Increase Inventory

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

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Merchandisers record revenue when they:


A) fulfill their performance obligations by transferring control of the goods to customers
B) deliver the goods and collect the cash from their customers
C) receive cash in advance from their customers
D) receive the order to deliver goods to customers

E) B) and D)
F) All of the above

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On October 1,Robertson Company sold inventory in the amount of $5,800 to Alberta,Inc.with credit terms of 2/10,n/30.The cost of the items sold is $4,000.Robertson uses a periodic inventory system.The journal entry (or entries) prepared by Robertson on October 1 is (are) :


A) Debit Sales Revenue and credit Accounts Receivable for $5,800.
B) Debit Sales Revenue and credit Accounts Receivable for $5,800; debit Cost of Goods Sold and credit Inventory for $4,000.
C) Debit Accounts Receivable and credit Sales Revenue for $5,800.
D) Debit Accounts Receivable and credit Sales Revenue for $5,800; Debit Cost of Goods Sold and credit Inventory for $4,000.

E) A) and D)
F) A) and C)

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The following is a listing of some of the balance sheet accounts and all of the income statement accounts for Aldine Inc.as they appear on the company's adjusted trial balance. The following is a listing of some of the balance sheet accounts and all of the income statement accounts for Aldine Inc.as they appear on the company's adjusted trial balance. -Use the information above to answer the following question.Net income would be: A) $8,000. B) $9,000. C) $10,000. D) $14,000. -Use the information above to answer the following question.Net income would be:


A) $8,000.
B) $9,000.
C) $10,000.
D) $14,000.

E) B) and C)
F) A) and B)

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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 prepared to record the sale will include one with a debit to:


A) Inventory and a credit to Sales Revenue for $15,000.
B) Cost of Goods Sold and a credit to Inventory for $15,000.
C) Inventory and credit to Sales Revenue for $20,000.
D) Cost of Goods Sold and a credit to Sales Revenue for $15,000.

E) B) and D)
F) A) and B)

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The following is a listing of some of the balance sheet accounts and all of the income statement accounts for Aldine Inc.as they appear on the company's adjusted trial balance. The following is a listing of some of the balance sheet accounts and all of the income statement accounts for Aldine Inc.as they appear on the company's adjusted trial balance. -Use the information above to answer the following question.The gross profit percentage would be closest to: A) 25.6%. B) 31.5%. C) 55.6%. D) 68.5%. -Use the information above to answer the following question.The gross profit percentage would be closest to:


A) 25.6%.
B) 31.5%.
C) 55.6%.
D) 68.5%.

E) A) and B)
F) A) and C)

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Beyer Company bought inventory from Sellar Company,FOB destination.On December 31,the last day of the accounting year,the goods were on a truck owned by Common Carrier,Inc.,and not expected to arrive until January 2.Which company should include these goods in its December 31 inventory?


A) Sellar
B) Beyer
C) Common Carrier
D) None of them should include these goods in inventory.

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

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Which of the following is an activity in the operations of a manufacturer,but not in the operations of a merchandising or service company?


A) Selling the good to consumers
B) Receiving cash
C) Selling the good to other firms
D) Buying raw materials

E) C) and D)
F) B) and D)

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Multiple-step income statements:?


A) separate core results from peripheral results.
B) includes one subtotal for revenues and one for expenses.
C) exclude certain significant items from net income.
D) only report core results.

E) A) and D)
F) A) and C)

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Multistep income statements:


A) are required for merchandise companies.
B) contain more detail than just listing revenues and expenses.
C) are required when the perpetual inventory method is used.
D) classify Cost of Goods Sold as a selling expense.

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

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