1. J.C.Penny had net sales of $28,496 million, its cost of goods sold was $19,09
ID: 2434079 • Letter: 1
Question
1. J.C.Penny had net sales of $28,496 million, its cost of goods sold was $19,092million, and its net income was $997 million. Its gross margin ratioequals:
A. 3.5%.
B. 5.2%.
C. 33%.
D. 67%.
E. 149.3%.
2. Salesreturns and allowances:
A. Can provide useful information about dissatisfied customers and thepossibility of lost future sales.
B. Are recorded in a separate contra-revenue account.
C. Are rarely disclosed in published financial statements.
D. Are closed to the Income Summary account.
E. All of these.
3. Amerchandising company:
A. Earns net income by buying and selling merchandise.
B. Can buy products from manufacturers and sell to retailers.
C. Can buy products from manufacturers and sell them to consumers.
D. Can be a wholesaler or a retailer.
E. All of these.
4. Adebit memorandum is:
A. Required whenever a journal entry is recorded.
B. The source document for the purchase of merchandise inventory.
C. Required when a purchase discount is granted.
D. The document a buyer issues to inform the seller of a debit made to theseller's account in the buyer's records.
E. Not necessary in a perpetual inventory system.
5. Salesreturns:
A. Refer to merchandise that customers return to the seller after thesale.
B. Refer to reductions in the selling price of merchandise sold tocustomers.
C. Represent cash discounts.
D. Represent trade discounts.
E. Are not recorded under the perpetual inventory system until the end ofeach accounting period.
6. Theoperating cycle of a merchandising company:
A. Begins with the purchase of merchandise.
B. Ends with the collection of cash from the sale of merchandise.
C. Can vary in length among different merchandising companies.
D. Sometimes involves accounts receivable.
E. All of these.
7. Salesless sales discounts less sales returns and allowances equals:
A. Net purchases.
B. Cost of goods sold.
C. Net sales.
D. Gross profit.
E. Net income.
9. Merchandisingcompanies must account for:
A. Sales.
B. Sales discounts.
C. Sales returns and allowances.
D. Cost of merchandise sold.
E. All of these.
10. Amerchandising company:
A. Earns net income by buying and selling merchandise.
B. Receives fees only in exchange for services.
C. Earns profit from commissions only.
D. Earns profit from fares only.
E. Buys products from consumers.
BreannaBoutique reported the following year-end information:
11. Basedon the ratios and analysis of the account balances for Breanna Boutique, thecompany is:
A. likely to face near-term liquidity problems.
B. unlikely to face near-term liquidity problems.
C. likely raising liquidity concerns unless cash can be generated frominventory sales.
D. unlikely raising liquidity concerns.
E. Both A and C.
12. Thequick assets are defined as:
A. Cash, short-term investments, and inventory.
B. Cash, short-term investments, and current receivables.
C. Cash, inventory, and current receivables.
D. Cash, noncurrent receivables, and prepaid expenses.
E. Accounts receivable, inventory, and prepaid expenses.
13. Beginninginventory plus net purchases is:
A. Cost of goods sold.
B. Merchandise available for sale.
C. Ending inventory.
D. Sales.
E. Shown on the balance sheet.
14. Adebit to Sales Returns and Allowances and a credit to AccountsReceivable:
A. Reflects an increase in amount due from a customer.
B. Recognizes that a customer returned merchandise and/or received anallowance.
C. Requires a debit memorandum to recognize the customer's return.
D. Is recorded when a customer takes a discount.
E. All of these.
15. HeraldCompany had sales of $135,000, sales discounts of $2,000, and sales returns of$3,200. Herald Company's net sales equals:
A. $5,200.
B. $129,800.
C. $133,000.
D. $135,000.
E. $140,200.
16. Thecurrent period's ending inventory is:
A. The next period's beginning inventory.
B. The current period's cost of goods sold.
C. The prior period's beginning inventory.
D. The current period's net purchases.
E. The current period's beginning inventory.
17. Acompany's current assets were $17,980, its quick assets were $11,420 and itscurrent liabilities were $12,190. Its quick ratio equals:
A. 0.94.
B.&nbs
Explanation / Answer
1 B 2 E 3 E 4 B 5 A 6 E 7 C 8Cash 5,684 SalesDiscount 116 AccountReceivable 5,800 9 E 10 A
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.