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ACC 557 (Strayer) WK 5 Chapter 5, 6 Quiz

TRUE-FALSE STATEMENTS

1. Retailers and also wholesalers are both considered merchandisers.

2. The steps in the accounting cycle are different for a merchandising agency than for a organization company.

3. Sales minus operating prices equals gross profit.

4. Under a perpetual inventory device, the cost of products offered is figured out each time a sale occurs.

5. A periodic inventory mechanism needs a in-depth inventory record of inventory items.

6. Freight terms of FOB Desticountry indicates that the seller pays the freight prices.

7. Freight expenses incurred by the seller on outgoing merchandise are an operating expense to the seller.


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8. Sales earnings are earned during the period cash is gathered from the buyer.

9. The Sales Retransforms and also Allowances account and the Sales Discount account are both classified as cost accounts.

10. The revenue recognition principle applies to merchandisers by recognizing sales revenues once they are earned.

11. Sales Allowances and also Sales Discounts are both designed to encourage customers to pay their accounts promptly.

12. To provide a customer a sales return, the seller credits Sales Returns and Allowances.

13. A company"s unadjusted balance in Inventory will normally not agree through the actual amount of inventory on hand also at year-finish.


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14. For a merchandising company, all accounts that affect the determination of revenue are closed to the Income Summary account.

15. A merchandising firm has actually different types of adjusting entries than a business company.

16. Non-operating activities exclude profits and also costs that result from second or auxiliary operations.

17. Operating expenses are different for merchandising and also organization enterprises.

18. Net sales shows up on both the multiple-action and single-step develops of an earnings statement.

19. A multiple-action income statement offers individuals with more indevelopment about a company’s revenue performance.

20. The multiple-action develop of income statement is less complicated to read than the single-step develop.

21. Inventory is classified as a present ascollection in a classified balance sheet.

22. Gain on sale of tools and interemainder expense are reported under various other profits and also gains in a multiple-step revenue statement.

23. The gross profit area for a merchandising firm appears on both the multiple-action and single-step forms of an income statement.

24. In a multiple-action income statement, income from operations excludes other earnings and also gains and various other costs and also losses.

25. A single-step income statement reports all revenues, both operating and other revenues and gains, at the top of the statement.

26. If net sales are $800,000 and expense of items offered is $600,000, the gross profit price is 25%.

27. Gross profit represents the merchandising profit of a firm.

28. Gross profit is a meacertain of the as a whole profitability of a firm.

29. Gross profit price is computed by dividing cost of items marketed by net sales.

30. Purchase Retransforms and Allowances and also Purchase Discounts are subtracted from Purchases to recognize net purchases.

31. Freight-in is an account that is subtracted from the Purchases account to arrive at expense of goods purchased.

32. Under a periodic inventory device, the acquisition of inventory is charged to the Purchases account.

33. Under a regular inventory system, freight-in on merchandise purchases need to be charged to the Inventory account.

34. In a worksheet, expense of items sold will be displayed in the trial balance (Dr.), readjusted trial balance (Dr.) and earnings statement (Dr.) columns.

a35. The procedures in preparing a worksheet for a merchandising firm are various than for a business agency.

a36. A merchandising agency generally has the same forms of adjustments as a service agency.

a37. The major distinction in between the balance sheet of a organization agency and a merchandiser is inventory.

38. Inventory is reported as a long-term asset on the balance sheet.

39. Under a perpetual inventory mechanism, inventory shrinkage and also shed or stolen goods are even more readily established.

40. The terms 2/10, n/30 state that a 2% discount is available if the invoice is phelp within the first 10 days of the following month.

41. Sales revenue have to be tape-recorded in accordance through the corresponding principle.

42. Sales retransforms and allowances and also sales discounts are subtracted from sales in reporting net sales in the revenue statement.

43. A merchandising agency using a perpetual inventory system will generally must make an adjusting enattempt to encertain that the tape-recorded inventory agrees through physical inventory count.

44. If a merchandising agency sells land also at more than its expense, the obtain have to be reported in the sales revenue area of the income statement.

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45. The single-step earnings statement is so named because only one action, subtracting complete expenses from complete earnings, is forced in determining net revenue or net loss.