Chapter 6 Practice Materials.docVIP

Chapter 6—Accounting for Merchandising Businesses MULTIPLE CHOICE 1. Which one of the following is not a difference between a retail business and a service business? a. in what is sold b. the inclusion of gross profit in the income statement c. accounting equation d. merchandise inventory included in the balance sheet ANS: C DIF: Moderate OBJ: 06-01 NAT: AACSB Analytic | AICPA BB-Industry 2. Net income plus operating expenses is equal to a. cost of goods sold b. cost of goods available for sale c. net sales d. gross profit ANS: D DIF: Easy OBJ: 06-01 NAT: AACSB Analytic | AICPA FN-Measurement 3. Generally, the revenue account for a merchandising business is entitled a. Sales b. Net Sales c. Gross Sales d. Gross Profit ANS: A DIF: Easy OBJ: 06-01 NAT: AACSB Analytic | AICPA FN-Measurement 4. What is the term applied to the excess of net revenue from sales over the cost of merchandise sold? a. gross profit b. income from operations c. net income d. gross sales ANS: A DIF: Easy OBJ: 06-01 NAT: AACSB Analytic | AICPA FN-Measurement 5. The term inventory indicates a. merchandise held for sale in the normal course of?business b. materials in the process of production or held for?production c. supplies d. both (a) and (b) ANS: D DIF: Easy OBJ: 06-01 NAT: AACSB Analytic | AICPA FN-Measurement 6. A company using the periodic inventory system has the following account balances: Merchandise Inventory at the beginning of the year, $4,000; Transportation-In, $450; Purchases, $12,000; Purchases Returns and Allowances, $2,300; Purchases Discounts, $220. The cost of merchandise purchased is equal to a. $13,930 b. $9,930 c. $9,489 d. $14520 ANS: B DIF: Difficult OBJ: 06-02 NAT: AACSB Analytic | AICPA FN-Measurement 7. A company, using the periodic inventory system, has merchandise inventory costing $140 on hand at the beginning of the period. During the period, merchandise costing $400 is purchased. At year-end, merchandis