Chapter 4 Flashcards
The difference between sales and cost of merchandise sold for a merchandising business is:
a. gross sales.
b. sales. c. gross profit. d. net sales.
c. gross profit.
West, Inc. had beginning inventory of $30,000, purchases of $65,000, and ending inventory of $10,000. What is West’s cost of merchandise sold?
a. $85,000
b. $65,000 c. $10,000 d. $30,000
a. $85,000
Galaxy, Inc. had the following merchandise transactions in October:
Purchases $80,000
Purchase returns 8,000
Purchase discounts 7,200
Transportation in 3,000
What is the total cost of merchandise purchased for Galaxy, Inc.?
a. $67,800
b. $77,000 c. $80,000 d. $83,000
a. $67,800
ABC Company had $100,000 in net sales, $45,000 in cost of merchandise sold, $60,000 in operating expenses, and $10,000 in other income. What is ABC Company’s gross profit?
a. $40,000
b. $90,000 c. $55,000 d. $145,000
c. $55,000
Office salaries, depreciation of office equipment, and office supplies are examples of what type of expense?
a. Selling expense
b. Miscellaneous expense c. Other expense d. Administrative expense
d. Administrative expense
Merchandise not sold at the end of the period is reported as:
a. old stock.
b. net purchases. c. cost of goods sold. d. merchandise inventory.
d. merchandise inventory.
Which of the following accounts will not be found in the Cost of Merchandise Sold section on the income statement?
a. Sales Returns and Allowances
b. Purchases c. Merchandise Inventory d. Transportation In
a. Sales Returns and Allowances
Silver Co. sold merchandise to Copper Co. on account, $75,000, terms 2/10, net 30. The cost of the merchandise sold is $55,000. Silver Co. issued a credit memorandum for $10,000 for merchandise returned that originally cost $9,000. Copper Co. paid the invoice within the discount period. What is amount of net sales from the transactions?
a. $63,500
b. $64,680 c. $65,000 d. $63,700
d. $63,700
If Johnson, Inc. sold $800,000 worth of merchandise, had $100,000 returned, and then the balance paid during the 1% discount period, how much was Johnson’s net sales?
a. $692,000
b. $693,000 c. $800,000 d. $700,000
b. $693,000
When merchandise that was sold on account is returned, which accounts are affected?
a. Sales returns, accounts receivable, merchandise inventory, and cost of goods sold
b. Sales returns, accounts receivable, purchases, and cost of goods sold
c. Sales returns, accounts receivable, purchases, and merchandise inventory
d. Cash, accounts receivable, cost of goods sold, and sales returns
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a. Sales returns, accounts receivable, merchandise inventory, and cost of goods sold
erchandise subject to terms 2/10, n/30, FOB shipping point, is sold on account to a customer for $35,000. The seller issued a credit memorandum for $8,000 prior to payment. What is the amount of the cash discount allowable?
a. $700
b. $350 c. $860 d. $540
d. $540
In credit terms of 1/10, n/30, the “10” represents the:
a. number of days in the discount period.
b. number of days when the entire amount is due. c. percent of the cash discount. d. full amount of the invoice.
a. number of days in the discount period.
When purchases of merchandise are made for cash, under the perpetual inventory system, the transaction:
a. increases Cash; decreases Merchandise Inventory.
b. increases Merchandise Inventory; decreases Cash.
c. increases Merchandise Inventory; decreases Cash Discounts.
d. increases Merchandise Inventory; decreases Purchases.
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b. increases Merchandise Inventory; decreases Cash.
If title to merchandise purchases passes to the buyer when the goods are shipped from the seller, the terms are:
a. consigned.
b. n/30. c. FOB destination. d. FOB shipping point
d.FOB shipping point.
Inventory shortage is recorded when:
a. merchandise is returned to a seller.
b. merchandise is returned by a buyer. c. merchandise purchased from a seller is incomplete or short. d. there is a difference between a physical count of inventory and inventory records.
d. there is a difference between a physical count of inventory and inventory records.
