Chp 5 Quiz

Question 0

Where are the selling and administrative expenses found on the multi step income statement?
A. Before gross profit
B. After sales and before gross profit
C. After net income before expenses
D. After gross profit

Answer 0

D. After gross profit

Question 1

Which account is NOT classified as a selling expense?
A. Sales salaries
B. Freight out
C. Sales discounts
D. Advertising expense

Answer 1

C. Sales discounts

Question 2

When the three sections of a balance sheet are presented on a page in a downward sequence, it is called the
A. Account form
B. Comparative form
C. Horizontal form
D. Report form

Answer 2

D. Report form

Question 3

A chart of accounts for a merchandising business
A. Usually is the same as a service business
B. Requires more accounts than a service business
C. Standardized by the FASB for all merch busi.
D. Always use the three digit numbering system

Answer 3

B

Question 4

Which of the following accounts has a normal debit balance?
A. Accounts payable 
B. Sales returns and allowances
C. Sales
D. Interest revenue

Answer 4

B

Question 5

Merchandise subject to terms 1/10, n/30, FOB shipping point, is sold on account to a customer for $25,000. The freight costs $2,000 and issued a credit memo for $10,000 prior to payment. What is the amount of cash debited to the AP?

Answer 5

B. $150

Question 6

When comparing a retail business to a service business, the financial statement that changes the most is the

Answer 6

B. Income statement

Question 7

When merchandise is returned under the perpetual inventory system, the buyer would credit

Answer 7

Merchandise inventory

Question 8

When goods are shipped FOB destination and the seller pays the freight charges, the buyer

Answer 8

D. Makes no journal entry for freight

Question 9

Generally, the revenue account for a merchandising business is entitled

Answer 9

A. Sales

Question 10

Office salaries, depreciation of office equipment, and office supplies are examples of what type of expense?

Answer 10

C. Administrative expense

Question 11

If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a

Answer 11

C. Credit memo

Question 12

Isaac co sells merchandise on account to sonar co in the amount of $9600. The invoice is dated on april 15 with terms ** net 45. What is the amount of the discount and up to what date must the invoice be paid in order for the buyer to receive the discount?

Answer 12

C. $96 april 30

Question 13

What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?

Answer 13

A. Gross profit

Question 14

If the buyer is to pay the freight costs of delivering merchandise, delivery terms are stated as

Answer 14

A. FOB shipping point

Question 15

If title to merchandise purchases passes to the buyer when goods are shipped from the seller, the terms are

Answer 15

FOB shipping point

Question 16

Multi step income statements show

Answer 16

C. Both gross profit and income from operations

Question 17

Merchandise inventory is classified as a

Answer 17

B. Current asset

Question 18

In credit terms of 3/15, n/45, the 3 represents the

Answer 18

D. Percent of the cash discount

Question 19

Using a perpetual inventory system, the entry to record the return from a customer of merchandise sold on account includes

Answer 19

Debit to merchandise inventory

Question 20

Which is closed to income summary at the end of the fiscal year

Answer 20

D. Cost of merchandise sold

Question 21

Difference between perpetual and periodic inventory system is that

Answer 21

A. Periodic determines the inventory on hand only at the end of the accounting period

Question 22

The form of income statement that derives its name from the fact that the total of all expenses is deducted from the total of the revenues is called a

Answer 22

D. Single step statement

Question 23

What is the same between a retail business and service business?

Answer 23

C. Accounting equation

Question 24

Sales to customers who use bank credit cards such as MasterCard and visa are usually recorded by a

Answer 24

B. Debit to CASH and credit to SALES