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DeVry NY ACCT 504 Week 4, Midterm Exam 4

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Question;1. Merchandising businesses that sell to retailers are known as:a. brokersb. companiesc. wholesalersd. service firms.2. Which of the following companies would be most likely to use a perpetual inventory system?a. grain companyb. supermarketc. clothing stored. jewellery dealer 3. A merchandiser that sells directly to consumers is a: a. retailer b. wholesaler c. broker d. service enterprise.4. Two categories of expenses in all merchandising companies are: a. cost of goods sold and financing expenses b. operating expenses and sales c. cost of goods sold and operating expenses d. sales and cost of goods sold.5. The primary source of revenue for a wholesaler is:a. investment incomeb. service revenuec. the sale of merchandised. the sale of plant assets the company owns.6. The operating cycle of a merchandising company is:a. always one year in lengthb. ordinarily longer than that of a service companyc. about the same as that of a service companyd. ordinarily shorter than that of a service company.7. Sales revenue less cost of goods sold is called:a. gross profitb. net profit (loss)c. operating expensed. net sales.8. After gross profit is calculated, operating expenses are deducted to determine:a. gross marginb. net profit (loss)c. gross profit on salesd. sales margin.9. A perpetual inventory system would most likely be used by a:a. motor vehicle dealershipb. hardware storec. juice bard. supermarket.10. The primary difference between a periodic and perpetual inventory system is that a periodic system:a. keeps a record showing the inventory on hand at all times b. provides better control over inventories c. records the cost of the sale on the date the sale is made d. determines the inventory on hand only at the end of the accounting period.11. Under a perpetual inventory system, which of the following accounts would be used to record purchases? a. Sales b. Invoices c. Cost of Goods Sold d. Inventory12. Under a perpetual inventory system, acquisition of merchandise for resale is debited to:a. the Inventory accountb. the Sales accountc. the Supplies accountd. the Cost of Goods Sold account.13. A company using a perpetual inventory system that returns goods previously purchased on credit would:a. debit Accounts Payable and credit Inventoryb. debit Sales and credit Accounts Payablec. debit Cash and credit Accounts Payabled. debit Inventory and credit Accounts Payable.14. Freight costs incurred by a seller on merchandise sold to customers will cause an increase:a. in the selling expenses of the buyerb. in operating expenses for the sellerc. to the cost of goods sold of the sellerd. to a discount received account of the seller.15. Hunter Company purchased inventory with an invoice price of $4,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Hunter Company pays within the discount period?a. $4,000b. $3,920c. $3,600d. $3,68016. Sales revenues are usually considered earned when: a. cash is received from credit salesb. an order is receivedc. goods are transferred from the seller to the buyerd. goods are invoiced to the customer.17. Sales revenue:a. may be recorded before cash is collectedb. will always equal cash collections in a monthc. only results from credit salesd. is only recorded after cash is collected.18. The journal entry to record a credit sale is:a. Cash Salesb. Cash Service Revenuec. Accounts Receivable Cost of goods soldd. Accounts Receivable Sales19. When sales of merchandise are made for cash, the transaction should be recorded by the following entry:a. debit Sales, credit Cashb. debit Cash, credit Salesc. debit Sales, credit Cash Discountsd. debit Sales, credit Sales Returns and Allowances.20. A sales invoice is prepared when goods:a. are sold for cashb. are sold on creditc. sold on credit are returnedd. are faulty and written-down.21. The Sales Returns and Allowances account is classified as a(n):a. asset accountb. contra asset accountc. expense accountd. contra revenue account.22. As an incentive for customers to pay their accounts promptly, a business may offer its customers:a. a cash discountb. a trade discountc. a sales allowanced. a sales return.23. The credit terms offered to a customer by a business firm are 2/10, n/30, which means:a. the customer must pay the bill within 10 daysb. the customer can deduct a 2% discount if the bill is paid between the 10th and 30th day from the invoice datec. the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice dated. two sales returns can be made within 10 days of the invoice date and no returns thereafter.24. Gross profit equals the difference between sales and: a. operating expenses b. cost of goods sold c. net profit d. cost of goods sold plus operating expenses.25. Expenses that are associated with sales are classified as: a. financial expenses b. other expenses c. selling expenses d. administrative expenses.26. Interest expense would be classified on an income statement under the heading: a. Other expenses b. Financial expenses c. Selling expenses d. Cost of goods sold.Section "Income Statement Presentation" ? Financial expenses are those associated with the financing of the firm?s operations and debt collection.Use the following information to answer questions 27 through 28 Financial information is presented below:Operating expenses $ 45,000Sales returns and allowances 13,000Cash discount 6,000Sales 150,000Costs of goods sold 77,00027. The amount of net sales on the statement of financial performance would be:a. $131,000b. $137,000c. $144,000d. $150,000.28. Gross profit would be:a. $60,000b. $54,000c. $76,000d. $73,000.29. The gross profit ratio is computed by dividing gross profit by:a. financial expensesb. cost of goods soldc. net salesd. operating expenses.30. The operating expenses to sales ratio is computed by dividing:a. operating expenses by gross profitb. operating expenses by selling expensesc. operating expenses by net salesd. sales by operating expenses.31. Z sold goods to X on credit at a price of $4,400 including GST. What is the correct accounting entry to record this transaction in Z?s books? a. Debit Accounts Receivable $4,400, credit Sales $4,400 b. Debit Accounts Receivable $4,000, credit Sales $4,000 c. Debit Accounts Receivable $4,000, debit GST Collections $400, credit Sales $4,400 d. Debit Accounts Receivable $4,400, credit Sales $4,000, credit GST Collections $40032. Under the perpetual inventory system what is the correct entry for the credit purchase of 10 electric guitars at $250 per guitar plus GST of $25 each. a. Debit Inventory $2,750, credit accounts payable $2,500, credit GST $250 b. Debit Inventory $2,500, debit GST $250, credit Accounts Payable $2,750 c. Debit Inventory $2,750, credit Accounts Payable $2,750 d. Debit Accounts Payable $2,750, credit Inventory $2,500, credit GST $25033. Consumers are not required to pay goods and services tax on the following item.a. luxury motor vehiclesb. imported textilesc. commercial rentsd. basic foods

 

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