Chapter 05 – Accounting for Retail Businesses
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Page 41
LEARNING OBJECTIVES:
FNMN.WAJO.19.05–02 – LO: 05–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:19 PM
DATE MODIFIED:
10/16/2017 4:50 PM
104. If the buyer is to pay the freight costs of delivering merchandise, delivery terms are stated as
a.
FOB shipping point
b.
FOB destination
c.
FOB n/30
d.
FOB buyer
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.05–02 – LO: 05–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:19 PM
DATE MODIFIED:
10/16/2017 4:50 PM
105. If the seller is to pay the freight costs of delivering merchandise, the delivery terms are stated as
a.
FOB shipping point
b.
FOB destination
c.
FOB n/30
d.
FOB seller
ANSWER:
b
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.05–02 – LO: 05–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:19 PM
DATE MODIFIED:
10/16/2017 4:50 PM
106. If title to merchandise purchases passes to the buyer when the goods are shipped from the seller, the terms are
a.
n/30
Chapter 05 – Accounting for Retail Businesses
Copyright Cengage Learning. Powered by Cognero.
Page 42
b.
FOB shipping point
c.
FOB destination
d.
consigned
ANSWER:
b
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.05–02 – LO: 05–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:19 PM
DATE MODIFIED:
10/16/2017 4:50 PM
107. When goods are shipped FOB destination and the seller pays the freight charges, the buyer
a.
journalizes a reduction for the cost of the merchandise
b.
journalizes a reimbursement to the seller
c.
does not take a discount
d.
makes no journal entry for the freight
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.05–02 – LO: 05–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:19 PM
DATE MODIFIED:
10/16/2017 4:50 PM
108. Pierce Company sold to Stanton Company merchandise on account FOB shipping point, 2/10, net 30, for $20,000.
Pierce prepaid the $500 shipping charge. Which of the following entries does Pierce make to record this sale?
a.
Accounts Receivable—Stanton, debit $20,000; Sales, credit $20,000
b.
Accounts Receivable—Stanton, debit $19,600; Sales, credit $19,600, and
Accounts Receivable—Stanton, debit $500; Cash, credit $500
c.
Accounts Receivable—Stanton, debit $20,100; Sales, credit $20,100
d.
Accounts Receivable—Stanton, debit $20,000; Sales, credit $20,000, and
Delivery Expense, debit $500; Cash, credit $500
ANSWER:
b
RATIONALE:
Amount of sales = Invoice amount – Sales discount = $20,000 – (2% × $20,000) =
$20,000 – $400 = $19,600. Journal entry: Accounts Receivable—Stanton, debit
Chapter 05 – Accounting for Retail Businesses
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Page 47
c.
the ultimate customer
d.
either the buyer or the seller
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.05–02 – LO: 05–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:19 PM
DATE MODIFIED:
10/16/2017 4:50 PM
118. A retailer purchases merchandise with a catalog list price of $30,000. The retailer receives a 15% trade discount and
has credit terms of 2/10, n/30. How much cash will be needed to pay this invoice within the discount period?
a.
$30,000
b.
$24,900
c.
$29,400
d.
$24,990
ANSWER:
d
RATIONALE:
Price after trade discount = Catalog price – Trade discount = $30,000 – (15% ×
$30,000) = $30,000 – $4,500 = $25,500
Cash required to pay the invoice = Price after trade discount – Purchase discount =
$25,500 – (2% × $25,500) = $25,500 – $510 = $24,990
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Applying
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.05–02 – LO: 05–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:19 PM
DATE MODIFIED:
10/16/2017 4:50 PM
119. What type of company would normally offer trade discounts to its customers?
a.
service companies
b.
retailers
c.
wholesalers
d.
online retailers
ANSWER:
c
POINTS:
1
Chapter 05 – Accounting for Retail Businesses
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Page 50
d.
$2,100
ANSWER:
a
RATIONALE:
Amount charged to sales = Sale price – Sales discount = $3,500 – (3% × $3,500) =
$3,500 – $105 = $3,395
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Applying
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.05–02 – LO: 05–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:19 PM
DATE MODIFIED:
10/16/2017 4:50 PM
125. Under the perpetual inventory system, all purchases of merchandise are debited to the account
a.
Inventory
b.
Cost of Goods Sold
c.
Inventory Available for Sale
d.
Purchases
ANSWER:
a
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.05–02 – LO: 05–02
FNMN.WAJO.19.05–05 – LO: 05–05
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:19 PM
DATE MODIFIED:
10/16/2017 4:50 PM
126. When the perpetual inventory system is used, the inventory sold is debited to
a.
Supplies Expense
b.
Cost of Goods Sold
c.
Inventory
d.
Sales
ANSWER:
b
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Remembering
QUESTION TYPE:
Multiple Choice