ch05_tb_so2 - CHAPTER 5 Test Bank: Study Objective 2...

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CHAPTER 5 Test Bank: Study Objective 2 TRUE-FALSE STATEMENTS AND SOLUTIONS 14. Operating expenses are subtracted from Revenue for a service enterprise and from Gross Profit for a merchandising enterprise. 15. Net sales minus cost of goods sold is called gross profit. 16. Under the perpetual inventory system, purchases of merchandise for sale are recorded in the Merchandise Inventory account. 17. Freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller. 18. The terms 2/10, net/30 mean that a 2 percent discount is allowed on payments made within the 10 days discount period. 19. A buyer who acquires merchandise under credit terms of 1/10, n/30 has 20 days after the invoice date to take advantage of the cash discount. 20. Discounts taken by the buyer for early payment of an invoice are called sales discounts by the buyer. 21. If merchandise costing $5,000, with terms 2/10, n/30, is paid within 10 days, the amount of the purchase discount is $100. 22. When an invoice is paid within the discount period, the amount of the discount decreases Merchandise Inventory. 23. Sales revenues are only earned during the period cash is collected from the buyer. 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
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MULTIPLE CHOICE QUESTIONS AND SOLUTIONS 83. Under a perpetual inventory system, acquisition of merchandise for resale is debited to a. the Merchandise Inventory account. b. the Purchases account. c. the Supplies account. d. the Cost of Goods Sold account. 84. The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit a. Accounts Payable. b. Purchase Returns and Allowances. c. Sales. d. Merchandise Inventory 85. Which of the following items does not result in an adjustment in the merchandise inventory account under a perpetual system? a. A purchase of merchandise. b. A return of merchandise inventory to the supplier c. Payment of freight costs for goods shipped to a customer d. Payment of freight costs for goods received from a supplier 86. A company using a perpetual inventory system that returns goods previously purchased on credit would a. debit Accounts Payable and credit Merchandise Inventory. b. debit Sales and credit Accounts Payable. c. debit Cash and credit Accounts Payable. d. debit Accounts Payable and credit Purchases. 87. If a purchaser using a perpetual inventory system pays the transportation costs, then the a. Merchandise Inventory account is increased. b. Merchandise Inventory account is not affected.
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ch05_tb_so2 - CHAPTER 5 Test Bank: Study Objective 2...

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