LO 6.1What accounts are used to recognize a retailer’s purchase from a manufacturer on credit?
- accounts receivable, merchandise inventory
- accounts payable, merchandise inventory
- accounts payable, cash
- sales, accounts receivable
LO 6.1If a customer purchases merchandise on credit and returns the defective merchandise before payment, what accounts would recognize this transaction?
- sales discount, cash
- sales returns and allowances, cash
- accounts receivable, sales discount
- accounts receivable, sales returns and allowances
LO 6.2Which of the following is an advantage of the periodic inventory system?
- frequent physical inventory counts
- cost prohibitive
- time consuming
- real-time information for managers
LO 6.2Which of the following is not included when computing Net Purchases?
- purchase discounts
- beginning inventory
- purchase returns
- purchase allowances
LO 6.3A retailer pays on credit for $650 worth of inventory, terms 3/10, n/40. If the merchandiser pays within the discount window, how much will the retailer remit in cash to the manufacturer?
- $19.50
- $630.50
- $650
- $195
LO 6.3A retailer returns $400 worth of inventory to a manufacturer and receives a full refund. What accounts recognize this return before the retailer remits payment to the manufacturer?
- accounts payable, merchandise inventory
- accounts payable, cash
- cash, merchandise inventory
- merchandise inventory, cost of goods sold
LO 6.3A retailer obtains a purchase allowance from the manufacturer in the amount of $600 for faulty inventory parts. Which of the following represents the journal entry for this transaction if the retailer has already remitted payment?
LO 6.4A customer pays on credit for $1,250 worth of merchandise, terms 4/15, n/30. If the customer pays within the discount window, how much will they remit in cash to the retailer?
- $1,250
- $1,200
- $50
- $500
LO 6.4A customer returns $870 worth of merchandise and receives a full refund. What accounts recognize this sales return (disregarding the merchandise condition entry) if the return occurs before the customer remits payment to the retailer?
- accounts receivable, sales returns and allowances
- accounts receivable, cash
- sales returns and allowances, merchandise inventory
- accounts receivable, cost of goods sold
LO 6.4A customer obtains a purchase allowance from the retailer in the amount of $220 for damaged merchandise. Which of the following represents the journal entry for this transaction if the customer has not yet remitted payment?
LO 6.5Which of the following is not a characteristic of FOB Destination?
- The seller pays for shipping.
- The seller owns goods in transit.
- The point of transfer is when the goods leave the seller’s place of business.
- The point of transfer is when the goods arrive at the buyer’s place of business.
LO 6.5Which two accounts are used to recognize shipping charges for a buyer, assuming the buyer purchases with cash and the terms are FOB Shipping Point?
- delivery expense, cash
- merchandise inventory, cash
- merchandise inventory, accounts payable
- The buyer does not record anything for shipping since it is FOB Shipping Point.
LO 6.5Which of the following is not a characteristic of FOB Shipping Point?
- The buyer pays for shipping.
- The buyer owns goods in transit.
- The point of transfer is when the goods leave the seller’s place of business.
- The point of transfer is when the goods arrive at the buyer’s place of business.
LO 6.6A multi-step income statement ________.
- separates cost of goods sold from operating expenses
- considers interest revenue an operating activity
- is another name for a simple income statement
- combines cost of goods sold and operating expenses
LO 6.6A simple income statement ________.
- combines all revenues into one category
- does not combine all expenses into one category
- separates cost of goods sold from operating expenses
- separates revenues into several categories
LO 6.7Which of the following accounts are used when recording a purchase using a periodic inventory system?
- cash, purchases
- accounts payable, sales
- accounts payable, accounts receivable
- cash, merchandise inventory
LO 6.7A customer returns $690 worth of merchandise and receives a full refund. What accounts recognize this sales return, assuming the customer has not yet remitted payment to the retailer?
- accounts receivable, sales returns and allowances
- accounts receivable, cash
- sales returns and allowances, purchases
- sales discounts, cost of goods sold