会计英语Chapter05.doc

Chapter 005 Accounting for Merchandising OperationsSummary of Questions by Difficulty Level (DL) and Learning Objective (LO)True/FalseItemDLLOItemDLLOItemDLLO1.EasyC126.EasyA251.MedP22.EasyC127.MedA252.MedP23.EasyC128.HardA253.MedP24.EasyC129.HardA254.MedP25.MedC130.EasyP155.HardP26.MedC131.EasyP356.EasyP37.MedC132.EasyP157.EasyP38.MedC133.EasyP158.MedP39.MedC134.EasyP159.MedP310.MedC135.EasyP160.MedP311.EasyC136.MedP161.HardP312.MedC237.MedP162.EasyP413.MedC138.MedP163.EasyP414.HardC239.MedP164.EasyP415.EasyC340.MedP165.MedP416.EasyC341.MedP166.MedP417.EasyC442.MedP167.MedP418.EasyA143.MedP168.MedP419.EasyA144.MedP169.EasyP520.MedA145.MedP170.EasyP521.MedA146.HardP171.EasyP522.MedA147.HardP172.MedP523.MedA148.EasyP273.MedP524.HardA149.EasyP274.HardP525.EasyA250.EasyP2Multiple ChoiceItemDLLOItemDLLOItemDLLO75.EasyC194.HardA1113.MedP276.EasyC195.EasyA2114.MedP277.MedC196.EasyA2115.MedP278.MedC197.HardA2116.MedP279.MedC198.HardA2117.HardP280.HardC199.HardA2118.MedP381.EasyC2100.EasyP1119.MedP382.EasyC2101.EasyP1120. EasyP483.MedC2102.MedP1121.EasyP484.HardC2103.MedP1122.MedP485.MedC4104.MedP1123.MedP486.MedC4105.MedP1124.MedP487.EasyA1106.HardP1125.HardP488.EasyA1107.HardP1126.EasyP589.MedA1108.EasyP2127.MedP590.MedA1109.EasyP2128.MedP591.HardA1110.MedP2129.MedP592.HardA1111.MedP2130.MedP593.HardA1112.MedP2131.HardP5MatchingItemDLLOItemDLLOItemDLLO132.MedC2,P1,P3133.MedC1,C3,P1,P4,A1P2,P4Short EssayItemDLLOItemDLLOItemDLLO134.EasyC1140.MedA1146.MedP3135.MedC1141.MedA2147.MedP4136.MedC2142.MedP1148.MedP4137.MedC2143.HardP1149.HardP5138.MedC3144.HardP2150.Med139.MedC4145.EasyP3ProblemsItemDLLOItemDLLOItemDLLO151.EasyC1158.MedA2165.MedP3152.EasyC1159.HardA2166.HardP3153.HardC1160.EasyP1167.MedP4154.MedA1161.MedP1168.MedP4155.MedA1162.HardP1,P2169.MedP5156.MedA1163.MedP2170.MedP5157.EasyA2164.MedP2171.MedP5Completion ProblemsItemDLLOItemDLLOItemDLLO172.EasyC1181.EasyA2190.MedP2173.MedC1182.MedP1191.EasyP3174.EasyC2183.MedP1192.EasyP4175.EasyC2184.MedP1193.MedP4176.EasyC3185.MedP1194.MedP4177.EasyC3186.MedP1195.MedP4178.EasyC4187.EasyP2196.MedP4179.EasyC4188.EasyP2197.MedP4180.EasyA1189.EasyP2198.MedP5ProblemsItemDLLOItemDLLOItemDLLO199.EasyC1201.MedP3203.HardP4200.EasyC1202.HardP1,P2 True / False Questions1.Merchandise inventory consists of products that a company acquires to resell to customers.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: EasyLearning Objective: C12.A service company earns net income by buying and selling merchandise.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: EasyLearning Objective: C13.Gross profit is also called gross margin.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: EasyLearning Objective: C14.Cost of goods sold is also called cost of sales.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: EasyLearning Objective: C15.A wholesaler is an intermediary that buys products from manufacturers or other wholesalers and sells them to consumers.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: MediumLearning Objective: C16.A retailer is an intermediary that buys products from manufacturers and sells them to wholesalers.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: MediumLearning Objective: C17.Cost of goods sold represents the cost of buying and preparing merchandise for sale.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: MediumLearning Objective: C18.A company had sales and cost of goods sold of $350,000 and $200,000, respectively. Its gross profit equals $150,000.TRUEAACSB: AnalyticAICPA BB: IndustryAICPA FN: MeasurementDifficulty: MediumLearning Objective: C19.A company had net sales and cost of goods of $545,000 and $345,000, respectively. Its gross margin equals $890,000.FALSEAACSB: AnalyticAICPA BB: IndustryAICPA FN: MeasurementDifficulty: MediumLearning Objective: C110.A company had a gross profit of $300,000 based on sales of $400,000. Its cost of goods sold equals $700,000.FALSEAACSB: AnalyticAICPA BB: IndustryAICPA FN: MeasurementDifficulty: MediumLearning Objective: C111.A merchandising companys operating cycle begins with the sale of merchandise and ends with the collection of cash from the sale.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: EasyLearning Objective: C112.Merchandise inventory is reported in the long-term assets section of the balance sheet.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: MediumLearning Objective: C213.Cash sales shorten the operating cycle for a merchandiser; credit purchases lengthen operating cycles.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: MediumLearning Objective: C114.Assets tied up in inventory are not productive assets.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: HardLearning Objective: C215.A perpetual inventory system requires updating of the inventory account only at the beginning of an accounting period.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: EasyLearning Objective: C316.A perpetual inventory system continually updates accounting records for inventory transactions.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: EasyLearning Objective: C317.Beginning merchandise inventory plus the net cost of purchases is the merchandise available for sale.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: EasyLearning Objective: C418.The acid-test ratio is also called the quick ratio.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Risk AnalysisDifficulty: EasyLearning Objective: A119.Quick assets include cash, inventory, and current receivables.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Risk AnalysisDifficulty: EasyLearning Objective: A120.The acid-test ratio is defined as current assets divided by current liabilities.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Risk AnalysisDifficulty: MediumLearning Objective: A121.A common rule of thumb is that a companys acid-test ratio should be at least 2 or a company may face near-term liquidity problems.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Risk AnalysisDifficulty: MediumLearning Objective: A122.Successful use of a just-in-time inventory system can narrow the gap between the acid-test and the current ratio.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Risk AnalysisDifficulty: MediumLearning Objective: A123.A companys quick assets are $147,000 and its current liabilities are $143,000. This companys acid-test ratio is 1.03.TRUE$147,000/$143,000 = 1.03AACSB: AnalyticAICPA BB: IndustryAICPA FN: Risk AnalysisDifficulty: MediumLearning Objective: A124.A companys current ratio is 1.2 and its quick ratio is 0.25. This company is probably an excellent credit risk because the ratios reveal no indication of liquidity problems.FALSEAACSB: AnalyticAICPA BB: IndustryAICPA FN: Risk AnalysisDifficulty: HardLearning Objective: A125.The gross margin ratio is defined as gross margin divided by net sales.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Risk AnalysisDifficulty: EasyLearning Objective: A226.The profit margin ratio is gross margin divided by total assets.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Risk AnalysisDifficulty: EasyLearning Objective: A227.The gross margin ratio reflects the relation between sales and cost of goods sold.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Risk AnalysisDifficulty: MediumLearning Objective: A228.A company had net sales of $340,500, its cost of goods sold was $257,000, and its net income was $13,750. The companys gross margin ratio equals 24.5%.TRUE($340,500 - $257,000)/$340,500 = 24.5%AACSB: AnalyticAICPA BB: IndustryAICPA FN: Risk AnalysisDifficulty: HardLearning Objective: A229.J.C. Penney had net sales of $24,750 million, cost of goods sold of $16,150 million, and net income of $837 million. Its gross margin ratio equals 3.4%.FALSE($24,750 - $16,150)/$24,750 = 34.7%AACSB: AnalyticAICPA BB: IndustryAICPA FN: Risk AnalysisDifficulty: HardLearning Objective: A230.The Merchandise Inventory account balance at the end of the current period is equal to the amount of beginning merchandise inventory for the next period.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: EasyLearning Objective: P131.Cost of goods sold is reported on both the income statement and the balance sheet.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: ReportingDifficulty: EasyLearning Objective: P332.Trade discounts are recorded in a Trade Discounts account in the accounting system.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: EasyLearning Objective: P133.Credit terms for a purchase include the amounts and timing of payments from a buyer to a seller.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: EasyLearning Objective: P134.Purchase returns refer to merchandise a buyer acquires but then returns to the seller.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: EasyLearning Objective: P135.Purchase allowances refer to merchandise a buyer acquires but then returns to the seller.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: EasyLearning Objective: P136.Under the perpetual inventory system, the cost of merchandise purchased is recorded in the Purchases account.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: MediumLearning Objective: P137.Under the perpetual inventory system, the cost of merchandise purchased is recorded in the Merchandise Inventory account.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: MediumLearning Objective: P138.Credit terms of 2/10, n/30 imply that the seller offers the purchaser a 2% cash discount if the amount is paid within 10 days of the invoice date. Otherwise, the full amount is due in 30 days.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: MediumLearning Objective: P139.Sellers always offer a discount to buyers for prompt payment toward purchases made on credit.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: MediumLearning Objective: P140.In a perpetual inventory system, the Merchandise Inventory account reflects the cost of goods available for sale.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: MediumLearning Objective: P141.Purchase discounts are the same as trade discounts.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: MediumLearning Objective: P142.If a company sells merchandise with credit terms 2/10 n/60, the credit period is 10 days and the discount period is 60 days.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: MediumLearning Objective: P143.The seller is responsible for paying shipping charges and bears the risk of damage or loss in transit if goods are shipped FOB destination.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: MediumLearning Objective: P144.If goods are shipped FOB shipping point, the seller does not record revenue from the sale until the goods arrive at their destination because the transaction is not complete until that point.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: MediumLearning Objective: P145.A buyer records the costs of shipping goods in a Delivery Expense, or transportation-out account when the buyer is responsible for these costs.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: MediumLearning Objective: P146.A buyer did not take advantage of a suppliers credit terms of 2/10, n/30, and instead paid the invoice in full at the end of 30 days. By not taking the discount the buyer lost the equivalent of 18% annual interest on the amount of the purchase.FALSEAACSB: AnalyticAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: HardLearning Objective: P147.FOB shipping point (or FOB factory) implies that ownership of goods transfers to the buyer at the buyers place of business.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: HardLearning Objective: P148.Each sales transaction for a seller that uses a perpetual inventory system involves recognizing both revenue and cost of merchandise sold.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: EasyLearning Objective: P249.Sales discounts on credit sales can benefit a seller by decreasing the delay in receiving cash and reducing future collections efforts.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: EasyLearning Objective: P250.Sales discounts is a contra revenue account, meaning that the Sales Discounts account is added to the Sales account when computing a companys net sales.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: EasyLearning Objective: P251.A credit memorandum from a seller informs a buyer of the sellers credit to its Accounts Payable account arising from a sales return or allowance.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: MediumLearning Objective: P252.When a credit customer returns merchandise to the seller, under a perpetual inventory system, the seller would debit Sales Returns and Allowances and credit Accounts Receivable and also debit Merchandise Inventory and credit Cost of Goods Sold.TRUEAACSB: AnalyticAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: MediumLearning Objective: P253.Because sellers assume that their customers will pay within the discount period, the seller usually records the discount at the time of the sale.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: MediumLearning Objective: P254.A journal entry with a debit to cash of $980, a debit to Sales Discounts of $20, and a credit to Accounts Receivable of $1,000 means that a customer has taken a 10% cash discount for early payment.FALSE$20/$1,000 = 2% discountAACSB: AnalyticAICPA BB: IndustryAICPA FN: MeasurementDifficulty: MediumLearning Objective: P255.Sales of $350,000 and net sales of $323,000 could reflect sales discounts of $27,000.TRUE$350,000 - $323,000 = $27,000AACSB: AnalyticAICPA BB: IndustryAICPA FN: MeasurementDifficulty: HardLearning Objective: P256.A perpetual inventory system is able to directly measure and monitor inventory shrinkage and there is no need for a physical count of inventory.FALSEAACSB: CommunicationsAICPA BB: IndustryAICPA FN: Decision MakingDifficulty: EasyLearning Objective: P357.Sales Discounts are closed to the Income Summary account.TRUEAACSB: CommunicationsAICPA BB: IndustryAICPA FN