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Exam 5: Accounting for Merchandising Operations

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Question 71

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Explain the difference between the single-step and multiple-step income statements.

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A single-step income statement format in...

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Question 72

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Sellers always offer a discount to buyers for prompt payment toward purchases made on credit.

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Question 73

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A ______________________ income statement includes cost of goods sold as another expense and shows only one subtotal for total expenses.

Sales less sales discounts less sales returns and allowances equals:

Prepare journal entries to record the following merchandising transactions of Dean Company,which applies the perpetual inventory system.Dean Company offers all of its credit customers credit terms of 2/10,n/30.

FOB _________________ means the buyer accepts ownership when the goods depart the seller's place of business.The buyer is responsible for paying shipping costs and bears the risk of damage or loss when goods are in transit.

A merchandising company:

A merchandising company's ___________ begins with the purchase of merchandise and ends with the collection of cash from merchandise sales.

Sales of $350,000 and net sales of $323,000 could reflect sales discounts of $27,000.

The __________________ inventory system continually updates accounting records for merchandise transactions for the amounts of inventory available for sale and inventory sold.

Purchase returns refer to merchandise a buyer acquires but then returns to the seller.

A single-step income statement includes cost of goods sold as another expense,and shows only one subtotal for total expenses.

A _____________________ income statement format shows detailed computations of net sales and other costs and expenses,and reports subtotals for various classes of items.

The following information refers to Annie's Attic and its competitors in the antiques business. Current Ratio Quick ratio Annie's Attic………………... 2.0 0.95 Bart's Basement……... 1.5 1.00 Chisolm's Collectibles…... 1.8 1.20 Martin's Marbles…………. 1.9 0.80 Industry Average………… 2.0 1.00 Required: Comment on the relative liquidity positions of these companies.

An income statement that includes cost of goods sold as another expense and shows only one subtotal for total expenses is a:

Under both the periodic and perpetual inventory systems,the temporary account Purchases Returns and Allowances is used to accumulate the cost of all returns and allowances for a period.

A company had a gross profit of $300,000 based on sales of $400,000.Its cost of goods sold equals $700,000.

Inventory shrinkage can be computed by comparing the ___________ of inventory with recorded quantities and amounts.

Sales returns:

_____________ are non-operating activities that include interest expense,losses from asset disposals,and casualty losses.