Exam (elaborations)
Chapter 06 Accounting for Merchandising Businesses
- Course
- Institution
Chapter 06 Accounting for Merchandising Businesses ACCOUNTING 26TH EDITION BY WARREN -TEST BANK
[Show more]
Seller
Follow
ExamsExpert
Reviews received
Content preview
CHAPTER 6: ACCOUNTING FOR MERCHANDISING BUSINESSES1. The most important differences between a service business and a retail business are reflected in their operating
cycles and financial statements.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.06-01 - 06-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.03 - Business Forms
ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.BB.01 - Industry
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
2. In a merchandise business, sales minus operating expenses equal net income.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.06-01 - 06-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements
ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
3. Cost of merchandise sold is the amount that the merchandising company pays for the merchandise it intends to sell.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.06-01 - 06-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.06 - Recording Transactions
ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 6: Accounting for Merchandising Businesses
4. Service businesses provide services for income, while a merchandising business sells merchandise.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.06-01 - 06-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.03 - Business Forms
ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
5. In retail businesses, inventory is reported as a current asset.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.06-01 - 06-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
6. Under a periodic inventory system, the cost of merchandise on hand at the end of the year is determined by a
physical count of the inventory.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.06-02 - 06-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 6: Accounting for Merchandising Businesses
7. In a perpetual inventory system, the Merchandise Inventory account is only used to reflect the beginning inventory.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.06-02 - 06-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
8. Freight in is the amount paid by the company to deliver merchandise sold to a customer.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.06-02 - 06-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
9. Freight in is considered a cost of purchasing inventory.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.06-02 - 06-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
10. The cost of merchandise inventory is limited to the purchase price less any purchase discounts.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.06-02 - 06-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Chapter 6: Accounting for Merchandising Businesses
11. Under the perpetual inventory system, when a sale is made, both the sale and cost of merchandise sold are
recorded.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.06-02 - 06-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
12. If payment is due by the end of the month in which the sale is made, the invoice terms are expressed as n/30.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.06-02 - 06-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements
ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
13. When merchandise that was sold is returned, a credit to sales returns and allowances is made.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.06-02 - 06-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.09 - Financial Statements
ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller ExamsExpert. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $4.03. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
78637 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now