ch05_tb_so1 - CHAPTER 5 Test Bank Study Objective 1...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 5 Test Bank: Study Objective 1 TRUE-FALSE STATEMENTS AND SOLUTIONS 1. Retailers and wholesalers are both considered merchandising enterprises. 2. The operating cycle of a merchandising company ordinarily is shorter than that of a service company. 3. Sales minus operating expenses equals gross profit. 4. Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs. 5. A periodic inventory system does not require a detailed record of inventory items. 6. The operating cycle involves the purchase and sale of merchandise inventory as well as the subsequent collection of cash from credit sales. 7. A business can shorten its operating cycle by increasing its percentage of cash sales and reducing its percentage of credit sales. 8. Under the periodic inventory system, cost of goods sold is treated as an account. 9. An advantage of using the periodic inventory system is that it requires less record keeping than the perpetual inventory system. 10. The periodic inventory system provides an up to date amount of inventory on hand. 11. A very small business most likely would have to use the perpetual inventory system. 12. The computer has increased greatly the use of the periodic inventory system. 13. Cost of Goods Sold is considered an expense of a merchandising firm. Answers to True-False Statements 1. T 9. T 17. T 25. F 33. F 41. T 49. F 2. F 10 F 18. T 26. T 34. T 42. T 50. T 3. F 11. F 19. F 27. F 35. T 43. F 51. F 4. T 12. F 20. F 28. T 36. T 44. F 52. F 5. F 13. T 21. T 29. F 37. F 45. T 6. T 14. T 22. T 30. T 38. F 46. T 7. T 15. T 23. F 31. T 39. F 47. T 8. F 16. T 24. F 32. T 40. F 48. T
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
MULTIPLE CHOICE QUESTIONS AND SOLUTIONS 53. Merchandising companies that sell to retailers are known as a. brokers. b. corporations. c. wholesalers. d. service firms. 54. Which of the following would not be considered a merchandising operation? a. Retailer b. Wholesaler c. Service firm d. Merchandising company 55. 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 56. Which of the following companies would be most likely to use a perpetual inventory system? a. Grain company b. Auto parts store c. Clothing store d. Fur dealer 57. Gross profit equals the difference between a. net income and operating expenses. b.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 12/05/2009 for the course ACCT 2102 taught by Professor Constable,d during the Fall '08 term at Georgia Perimeter.

Page1 / 7

ch05_tb_so1 - CHAPTER 5 Test Bank Study Objective 1...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online