Reference no: EM132478690

Question 1: What accounts are used to recognize a retailer's purchase from a manufacturer on credit?

1. accounts receivable, merchandise inventory
2. accounts payable, merchandise inventory
3. accounts payable, cash
4. sales, accounts receivable

Question 2: If a customer purchases merchandise on credit and returns the defective merchandise before payment, what accounts would recognize this transaction?

1. sales discount, cash
2. sales returns and allowances, cash
3. accounts receivable, sales discount
4. accounts receivable, sales returns and allowances

Question 3: Which of the following is an advantage of the periodic inventory system?

1. frequent physical inventory counts
2. cost prohibitive
3. time consuming
4. real-time information for managers

Question 4: Which of the following is not included when computing Net Purchases?

1. purchase discounts
2. beginning inventory
3. purchase returns
4. purchase allowances

Question 5: A 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?

1. $19.50
2. $630.50
3. $650
4. $195

Question 6: A 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?

1. Accounts Payable debit of $600 and Merchandise Inventory credit of $600.
2. Cash credit of $600 and Merchandise Inventory credit of $600.
3. Accounts Payable debit of $600 and credits to Merchandise Inventory of $10 and Cash of $590.

Question 7: A 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. $1,250
2. $1,200
3. $50
4. $500

Question 8: A 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?

1. Debit to Sales Returns and Allowance of $220 and credit to Cash of $220.
2. Debit to Sales Returns and Allowances of $220 and credit to Accounts Receivable of $220.
3. Debits to Cash and Sales Returns and Allowances of $200 and $20, respectively, and credit to Accounts Receivable of $220.

Question 9: Which two accounts are used to recognize shipping charges for a buyer, assuming the buyer purchases with cash and the terms are FOB Shipping Point?

1. delivery expense, cash
2. merchandise inventory, cash
3. merchandise inventory, accounts payable
4. The buyer does not record anything for shipping since it is FOB Shipping Point.