1. Merchandise with an invoice price of $5,000 is purchased on September 2 subje

Question

1. Merchandise with an invoice price of $5,000 is purchased on September 2 subject to terms of 2/10, n/30, and FOB destination. Freight costs paid by the seller totaled $200. What is the cost of the merchandise if paid on September 12, assuming the discount is taken? (Points: 2)
$5,200
$5,096
$4,704
$4,900


2. If the buyer is to pay the freight costs of delivering merchandise, delivery terms are stated as (Points: 2)
FOB shipping point
FOB destination
FOB n/30
FOB buyer


3. When merchandise is returned under the perpetual inventory system, the buyer would credit (Points: 2)
Merchandise Inventory
Purchases Returns and Allowances
Accounts Payable
depending on the inventory system used.


4. Using a perpetual inventory system, the entry to record the return from a customer of merchandise sold on account includes a (Points: 2)
credit to Sales Returns and Allowances
debit to Merchandise Inventory
credit to Merchandise Inventory
debit to Cost of Merchandise Sold


5. Where are selling and administrative expenses found on the multi-step income statement? (Points: 2)
before gross profit
after sales and before gross profit
after net income before expenses
after gross profit


6. Using the following information, what is the amount of cost of merchandise sold?
(Points: 2)
26,900
20,530
30,210
28,130


7. Which account is not classified as a selling expense? (Points: 2)
Sales Salaries
Freight-Out
Sales Discounts
Advertising Expense


8. Multiple-step income statements show (Points: 2)
gross profit but not income from operations
neither gross profit nor income from operations
both gross profit and income from operations
income from operations but not gross profit


9. Generally, the revenue account for a merchandising business is entitled (Points: 2)
Sales
Net Sales
Gross Sales
Gross Profit


10. Net income plus operating expenses is equal to (Points: 2)
cost of merchandise sold
cost of merchandise available for sale
net sales
gross profit

Explanation / Answer

!% of $5,000 is $50 x 2 = $100 savings

FOB destination means the seller pays the freight; destination is where the change in ownership takes place. If it has said FOB shipping point and the seller paid the $200, the $200 would be added to the discounted amount of $4,900 for a total of $5,100.
3) Could be A or C

4) B

5) B

6) your question is incomplete but it should be C... because this was on my exam as well
7) C - Sales Discounts
8) A but not sure 9) A - Sales
10) D - Gross profit

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