ScienceEconomicsChapter 6 Quiz example #60971
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Chapter 6 Quiz example #60971

Cruz Lee avatar Cruz Lee
27 November 2023
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20 test answers

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question
To encourage a buyer to pay before the end of the credit period, the seller may offer a
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purchases discount
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Which of the following accounts will only be found in the chart of accounts of a merchandising company?
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Merchandise Inventory
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A retailer purchases merchandise with a catalog list price of $30,000. The retailer receives a 15% trade discount and has credit terms of 2/10, n/30. How much cash will be needed to pay this invoice within the discount period?
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$24,990 Price after Trade Discount = Catalog Price - Trade Discount = $30,000 - (15% × $30,000) = $30,000 - $4,500 = $25,500; Cash Required to Pay Invoice = Price after Trade Discount - Purchase Discount = $25,500 - (2% × $25,500) = $25,500 - $510 = $24,990
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Who is responsible for the freight costs when the terms are FOB shipping point?
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the buyer
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Which account will be included in closing entries of both service and merchandising companies?
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Sales
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Which of the following accounts has a normal credit balance?
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Sales
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What is the term applied to the excess of revenue from sales over the cost of merchandise sold?
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Gross Profit
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The statement of owner's equity shows
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beginning and ending capital, all the changes in the owner's capital as a result of net income (loss), and withdrawal
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Which of the following accounts has a normal debit balance?
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Merchandise Inventory
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Which of the following accounts should be closed at the end of the fiscal year?
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Cost of Merchandise Sold
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When the three sections of a balance sheet are presented on a page in a downward sequence, it is called the
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report form
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A chart of accounts for a merchandising business
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usually requires more accounts than does the chart of accounts for a service business
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Which account is not classified as a selling expense?
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Cost of Goods Sold
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Who is responsible for the freight cost when the terms are FOB destination?
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the seller
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What type of company would normally offer trade discounts to its customers?
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wholesaler
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When goods are shipped FOB destination and the seller pays the freight charges, the buyer
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makes no journal entry for the freight
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Under a perpetual inventory system,
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accounting records continuously disclose the amount of inventory
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What is the major difference between a periodic and a perpetual inventory system?
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a. Under the periodic inventory system, the purchase of inventory will be debited to the purchases account. b. Under the periodic inventory system, no journal entry is recorded at the time of the sale of inventory for the cost of the inventory. c. Under the periodic inventory system, all adjustments such as purchases returns and allowances and discounts are reconciled at the end of the month. Correctd. All of these choices are correct.
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Where are selling and administrative expenses found on the multiple-step income statement?
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after gross profit
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When a buyer returns merchandise purchased for cash, the buyer will record the transaction as a
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. debit to Cash and a credit to Merchandise Inventory