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20 Cards in this Set

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A buyer purchaed merchandise for $10,000, terms 1/10, n/30, FOB destination. The seller pays transportation costs of $500. If the buyer pays the invoice within the discount period, the amound paid by the buyer is _______.
ch6
$9,900
Merchandise with a list price of $12,000 is sold with a trade discount of 45%, terms 2/10, n/30. The amount to be recorded in the sales account is _______.
ch6
$6,600
A buyer receives an invoice for $60.00 dated June 10. If the terms are 2/10, n/30, and the buyer pays the invoice within the discount period, what amount will the seller receive?
ch6
$58.80
The seller will receive $58.80, computed as $60 less the sales discount of $1.20 ($60.00x2%)
After all adjusting entries are posted, teh balances of all asset, liability, revenue, and expense accounts correspond exactly to the amounts in the:

a) work sheet trial balance
b) general ledger
c) post-closing trial balance
d) financial statements
ch6
d) After all adjusting entries are posted, teh balances of all asset, liability, revenue, and expense accounts correspond exactly to the amounts in the financial statements.
Income from operations is computed by subtracting from gross profit the:

a) selling expenses
b) general expenses
c) total administrative expenses
d) total operating expenses
ch6
d) Income from operatons is computed by subtracting operating expenses from gross profit. Operating expenses include both selling and administrative expenses.
The excess of net revenue from sales over the cost of merchandise sold is called:

a) gross profit
b) operating profit
c) net profit from operations
d) merchandising income
ch6
a) The excess of net revenue from sales over the cost of merchandise sold is gross profit.
If the seller collects sales tax at the time of sale, the seller credits the tax to:

a) Sales
b) Accounts Receivable
c) Sales Tax Payable
d) Sales Tax Receivable
ch6
c. If the seller collects sales tax at the time of sale, the seller credits the tax to Sales Tax Payable
The account that appears in the chart of accounts for a merchandising business but not for a service business is:

a) Accounts Receivable
b) Advertising Expense
c) Sales Returns and Allowances
d) Accumulated Depreciation
ch6
Sales Returns and Allowances appears in the chart of accounts for a merchandising business but not for a service business.
When the seller prepays the transportation costs and the terms of sale are FOB shipping point, the seller records the payment of the transportation costs by debiting:

a) Accounts Receivable
b) Sales
c) Transportation In
d) Accounts Payable
ch6
a) When the seller prepays the transportation costs and the terms of sale are FOB shipping point, the seller records the payment of the transportation costs by debiting Accounts Receivable. This is because transportation costs are the responsibility of the buyer when the terms are FOB shipping point.
In a multiple-step income statement of a merchandising business, which of the following would appear as "other income"?

a) sales
b) interest revenue
c) sales discounts
d) sales returns and allowances
ch6
b. In a multiple-step income statement of a merchandising business, interest revenue would appear as "other Income"
When a seller of merchandise allows a customer a reduction from the original price for defective goods, the seller usually issues to the customer a(n):

a)debit memorandum
b) credit memorandum
c) sales invoice
d) inventory slip
ch6
b. A credit memorandum is issued by the seller when a customer is allowed a reduction from the original price for defective goods.
If the seller pays the transportation costs from the shipping point to the final destination, the freight terms are referred to as ________ ________
ch6
FOB destination
Discounts from the list prices in published catalogs or special discounts offered to certain classes of buyers are called _______ ________.
ch6
trade discounts
Sales minus cost of merchandise sold is called ________ _________.
ch6
gross profit
A sales invoice for $5,000, terms 1/10, n/30, FOB shipping point, is paid within the discount period. Transportation costs of $75 are paid and added to the invoice. The amount of the discount is ________.
ch6
$50
A return of $300 has been recorded against a purchase invoice of #3,300, terms 2/10, n/30. The invoice is paid within the discount period. The amount of the discount is ________.
ch6
$60
Merchandise with a list price of $1,000 is sold with a trade discount of 30%, terms 2/10, n/30. The amount to be recorded in the sales account is ________.
ch6
$700
The ______-_____ form of income statement contains several sections, subsections, and subtotals.
ch6
multiple-step
The excess of operating expenses over gross profit is _____ ______ ________.
ch6
loss from operations
Balances of selected accounts at the end of the year, before adjustments, are as follows: Sales $900,000; Sales Returns and Allowances, $50,000; Sales Discounts, $10,000; Cost of Merchandise Sold, $600,000; Selling Expenses, $80,000; Administrative Expenses, $25,500; Interest Revenue, $5,000; Interest Expense, $2,000. The gross profit is ___________.
ch6
$240,000