BUA 201 Exam 2 Study Guide.doc - Exam II Review Chapter 5...

Exam II Review
Chapter 5 :
1. Which of the following activities is not a component of the operating cycle?
a. Sale of merchandise
b. Payment of employees’ salaries
c. Collection of cash from merchandise sales
d. Purchase of merchandise
2. Gross profit equals the difference between
3. Two categories of expenses in merchandising companies are
4. Which of the following expressions is incorrect ?
5. 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 time.
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.
6. A company using a perpetual inventory system that returns goods previously purchased
on credit would
7. If a purchaser using a perpetual inventory system pays the transportation costs, then:
8. Freight costs incurred by a seller on merchandise sold to customers will cause an increase
1

9. In the credit terms of 1/10, n/30, the “1” represents the
a. number of days in the discount period.
b. full amount of the invoice.
c. number of days when the entire amount is due.
d. percent of the cash discount.