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Financial information is presented below operating expenses 28000

09/01/2021 Client: saad24vbs Deadline: 3 days

5 - 12


Test Bank for Accounting Principles, Eleventh Edition


5 - 13


Accounting for Merchandising Operations


CHAPTER 5

ACCOUNTING FOR MERCHANDISING OPERATIONS

Summary of Questions by LEARNING Objectives and Bloom’s Taxonomy

Item

LO

BT

Item

LO

BT

Item

LO

BT

Item

LO

BT

Item

LO

BT

True-False Statements

1.


1


C


10.


3


C


19.


5


K


28.


5


K


sg37.


2


K


2.


1


C


11.


3


C


20.


5


K


29.


5


K


sg38.


3


K


3.


1


K


12.


3


K


21.


5


C


a30.


6


K


sg39.


3


K


4.


1


K


13.


4


C


22.


5


C


a31.


7


K


sg40.


4


C


5.


1


K


14.


4


K


23.


5


C


a32.


7


K


sg41.


5


K


6.


2


K


15.


4


K


24.


5


K


a33.


7


K


sg42.


5


K


7.


2


K


16.


5


K


25.


5


K


a34.


7


K


8.


3


C


17.


5


K


26.


5


AP


sg35.


1


K


9.


3


C


18.


5


K


27.


5


K


sg36.


1


K


Multiple Choice Questions

43.


1


K


73.


2


AP


103.


3


K


133.


5


AP


a163.


7


AP


44.


1


K


74.


3


AP


104.


3


C


134.


5


AP


a164.


7


AP


45.


1


C


75.


3


AP


105.


3


C


135.


5


AP


sg165.


1


AP


46.


1


K


76.


3


AP


106.


3


K


136.


5


AP


sg166.


2


K


47.


1


K


77.


3


C


107.


3


K


137.


5


AP


sg167.


2


K


48.


1


C


78.


3


C


108.


4


C


138.


5


AP


st168.


2


K


49.


1


K


79.


3


AP


109.


4


C


139.


5


AP


sg169.


3


K


50.


1


K


80.


3


AP


110.


4


K


140.


5


AP


st170.


4


K


51.


1


C


81.


3


C


111.


1


C


141.


5


AP


sg171.


6


AP


52.


1


K


82.


3


C


112.


4


C


142.


5


AP


st172.


5


K


53.


1


C


83.


3


C


113.


5


AP


143.


5


AP


sg173.


6


K


54.


1


C


84.


3


K


114.


5


K


144.


5


AP


a,st174.


7


K


55.


1


C


85.


3


K


115.


5


C


145.


5


AP


175.


8


K


56.


1


K


86.


3


C


116.


5


C


a146.


6


K


176.


8


K


57.


1


C


87.


3


C


117.


5


C


a147.


6


K


177.


8


K


58.


2


K


88.


3


K


118.


5


AP


a148.


7


AP


178.


8


K


59.


2


K


89.


3


K


119.


5


K


149.


7


AP


179.


8


K


60.


2


C


90.


3


C


120.


5


C


150.


7


AP


180.


8


K


61.


2


K


91.


3


K


121.


5


K


151.


7


C


181


8


K


62.


2


C


92.


3


AP


122.


5


K


a152.


7


K


182


8


K


63.


2


C


93.


3


C


123.


5


K


a153.


7


K


183.


8


K


64.


2


C


94.


3


C


124.


5


AP


a154.


7


K


184.


8


K


65.


2


AP


95.


3


C


125.


5


AP


a155.


7


AP


185.


8


K


66.


2


AP


96.


3


C


126.


5


K


a156.


7


AP


186.


8


K


67.


2


C


97.


3


C


127.


5


C


a157.


7


K


187.


8


K


68.


2


K


98.


3


C


128.


5


K


a158.


7


C


188.


8


K


69.


2


AP


99.


3


AP


129.


5


K


a159.


7


C


189.


8


K


70.


2


AP


100.


3


AP


130.


5


AP


a160.


7


K


71.


2


K


101.


3


AP


131.


5


AP


a161.


7


K


72.


2


AP


102.


3


K


132.


5


AP


a162.


7


C


sg This question also appears in the Study Guide.


st This question also appears in a self-test at the student companion website.


a This question covers a topic in an appendix to the chapter.


Summary of Questions by LEARNING Objectives and Bloom’s Taxonomy

Brief Exercises

190.


1


AP


193.


3


AP


196.


5


AP


199.


7


AP


191.


2


AP


194.


3


AP


197.


5


AP


200.


7


AP


192.


2,3


AP


195.


4


AP


198.


7


AP


a201.


7


AP


Exercises

202.


1


C


207.


2,3


AN


212.


4


AP


217.


5


AP


a222.


7


AP


203.


2,3


AP


208.


2


AP


213.


4


AP


218.


5


C


a223.


7


AP


204.


2,3


AP


209.


3


AP


214.


5


AN


219.


5


AP


a224.


7


AP


205.


2


E


210.


3


AP


215.


5


AP


220.


5


AP


a221.


7


AP


206.


2,3


AP


211.


4


AP


216.


5


AP


a221.


6


AP


a226.


7


AP


Completion Statements

227.


1


K


229.


1


K


231.


2


K


233.


3


K


235.


5


K


228.


1


K


230.


2


K


232.


3


K


234.


3


K


236.


5


K


Matching Statements


237.


1


K


Short-Answer Essay


238.


3


K


240.


3


K


242.


1


K


244.


1


K


239.


1


K


241.


5


K


243.


5


K


245.


1


K


SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE

Item

Type

Item

Type

Item

Type

Item

Type

Item

Type

Item

Type

Item

Type

Learning Objective 1

1.


TF


35.


TF


46.


MC


51.


MC


56.


MC


202.


Ex


239.


SA


2.


TF


36.


TF


47.


MC


52.


MC


57.


MC


227.


C


242.


SA


3.


TF


43.


MC


48.


MC


53.


MC


111.


MC


228.


C


244.


SA


4.


TF


44.


MC


49.


MC


54.


MC


165.


MC


229.


C


245.


SA


5.


F


45.


MC


50.


MC


55.


MC


190.


BE


237.


MA


Learning Objective 2

6.


TF


60.


MC


65.


MC


70.


MC


157.


MC


204.


Ex


230.


C


7.


TF


61.


MC


66.


MC


71.


MC


158.


MC


205.


Ex


231.


C


37.


TF


62.


MC


67.


MC


72.


MC


203.


Ex


206.


Ex


58.


MC


63.


MC


68.


MC


73.


MC


166.


BE


207.


Ex


59.


MC


64.


MC


69.


MC


156.


MC


167.


BE


208.


Ex


Learning Objective 3

8.


TF


75.


MC


83.


MC


91.


MC


99.


MC


107.


MC


209.


Ex


9.


TF


76.


MC


84.


MC


92.


MC


100.


MC


169.


MC


210.


Ex


10.


TF


77.


MC


85.


MC


93.


MC


101.


MC


192.


BE


232.


C


11.


TF


78.


MC


86.


MC


94.


MC


102.


MC


193.


BE


233.


C


12.


TF


79.


MC


87.


MC


95.


MC


103.


MC


194.


BE


234.


C


38.


TF


80.


MC


88.


MC


96.


MC


104.


MC


203.


Ex


240.


SA


39.


TF


81.


MC


89.


MC


97.


MC


105.


MC


204.


Ex


74.


MC


82.


MC


90.


MC


98.


MC


106.


MC


206.


Ex


SUMMARY OF Learning OBJECTIVES BY QUESTION TYPE

Learning Objective 4

13.


TF


15.


TF


108.


MC


110.


MC


170.


MC


211.


Ex


213.


Ex


14.


TF


40.


TF


109.


MC


112.


MC


195.


BE


212.


Ex


Learning Objective 5

16.


TF


26.


TF


117.


MC


127.


MC


137.


MC


172.


MC


235.


C


17.


TF


27.


TF


118.


MC


128.


MC


138.


MC


173.


MC


236.


C


18.


TF


28.


TF


119.


MC


129.


MC


139.


MC


196.


BE


241.


SA


19.


TF


29.


TF


120.


MC


130.


MC


140.


MC


197.


BE


243.


SA


20.


TF


41.


TF


121.


MC


131.


MC


141.


MC


215.


Ex


21.


TF


42.


TF


122.


MC


132.


MC


142.


MC


216.


Ex


22.


TF


113.


MC


123.


MC


133.


MC


143.


MC


217.


Ex


23.


TF


114.


MC


124.


MC


134.


MC


144.


MC


218.


Ex


24.


TF


115.


MC


125.


MC


135.


MC


145.


MC


219.


Ex


25.


TF


116.


MC


126.


MC


136.


MC


171.


MC


220.


Ex


Learning Objective a6

a34.


TF


175.


MC


178.


MC


181.


MC


184.


MC


187.


MC


a225.


Ex


a146.


MC


176.


MC


179.


MC


182.


MC


185.


MC


188.


MC


a147.


MC


177.


MC


180.


MC


183.


MC


186.


MC


189.


MC


Learning Objective a7

a30.


TF


a149.


MC


a154.


MC


a159.


MC


a164.


MC


a201.


BE


a225.


Ex


a31.


TF


a150.


MC


a155.


MC


a160.


MC


a174.


MC


a221.


Ex


a226.


Ex


a32.


TF


a151.


MC


a156.


MC


a161.


MC


a198.


BE


a222.


Ex


a33.


TF


a152.


MC


a157.


MC


a162.


MC


a199.


BE


a223.


Ex


a148.


MC


a153.


MC


a158.


MC


a163.


MC


a200.


BE


a224.


Ex


Learning Objective 8


175.


MC


177.


MC


179.


MC


181.


MC


183.


MC


185.


MC


176.


MC


178.


MC


180.


MC


182.


MC


184.


MC


Note: TF = True-False BE = Brief Exercise C = Completion


MC = Multiple Choice Ex = Exercise SA = Short-Answer


MA = Matching


CHAPTER LEARNING OBJECTIVES

1. Identify the differences between service and merchandising companies. Because of inventory, a merchandising company has sales revenue, cost of goods sold, and gross profit. To account for inventory, a merchandising company must choose between a perpetual and a periodic inventory system.


2. Explain the recording of purchases under a perpetual inventory system. The company debits the Inventory account for all purchases of merchandise, and freight-in, and credits it for purchase discounts and purchase returns and allowances.


3. Explain the recording of sales revenues under a perpetual inventory system. When a merchandising company sells inventory, it debits Accounts Receivable (or Cash) and credits Sales Revenue for the selling price of the merchandise. At the same time, it debits Cost of Goods Sold and credits Inventory for the cost of the inventory items sold. Sales returns and allowances and sales discounts are debited and are contra revenue accounts.


4. Explain the steps in the accounting cycle for a merchandising company. Each of the required steps in the accounting cycle for a service company applies to a merchandising company. A worksheet is again an optional step. Under a perpetual inventory system, the company must adjust the Inventory account to agree with the physical count.


5. Distinguish between a multiple-step and a single-step income statement. A multiple-step income statement shows numerous steps in determining net income, including nonoperating activities sections. A single-step income statement classifies all data under two categories, revenues or expenses, and determines net income in one step.


a6. Prepare a worksheet for a merchandising company. The steps in preparing a worksheet for a merchandising company are the same as for a service company. The unique accounts for a merchandiser are Inventory, Sales Revenue, Sales Returns and Allowances, Sales Discounts, and Cost of Goods Sold.


a7. Explain the recording of purchases and sales of inventory under a periodic inventory system. In recording purchases under a periodic system, companies must make entries for (a) cash and credit purchases, (b) purchase returns and allowances, (c) purchase discounts, and (d) freight costs. In recording sales, companies must make entries for (a) cash and credit sales, (b) sales returns and allowances, and (c) sales discounts.


TRUE-FALSE STATEMENTS

1. Retailers and wholesalers are both considered merchandisers.


Ans: T, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Business Economics


2. The steps in the accounting cycle are different for a merchandising company than for a service company.


Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting


3. Sales minus operating expenses equals gross profit.


Ans: F, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting


4. Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.


Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: None, IMA: FSA


5. A periodic inventory system requires a detailed inventory record of inventory items.


Ans: F, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: None, IMA: FSA


6. Freight terms of FOB Destination means that the seller pays the freight costs.


Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics


7. Freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller.


Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics


8. Sales revenues are earned during the period cash is collected from the buyer.


Ans: F, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting


9. The Sales Returns and Allowances account and the Sales Discount account are both classified as expense accounts.


Ans: F, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting


10. The revenue recognition principle applies to merchandisers by recognizing sales revenues when the performance obligation is satisfied.


Ans: T, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting


11. Sales Returns and Allowances and Sales Discounts are both designed to encourage customers to pay their accounts promptly.


Ans: F, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Business Economics


12. To grant a customer a sales return, the seller credits Sales Returns and Allowances.


Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Measurement, AICPA PC: None, IMA: FSA


13. A company's unadjusted balance in Inventory will usually not agree with the actual amount of inventory on hand at year-end.


Ans: T, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics


14. For a merchandising company, all accounts that affect the determination of income are closed to the Income Summary account.


Ans: T, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting


15. A merchandising company has different types of adjusting entries than a service company.


Ans: F, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA


16. Nonoperating activities exclude revenues and expenses that result from secondary or auxiliary operations.


Ans: F, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting


17. Operating expenses are different for merchandising and service enterprises.


Ans: F, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: FSA


18. Net sales appears on both the multiple-step and single-step forms of an income statement.


Ans: T, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting


19. A multiple-step income statement provides users with more information about a company’s income performance.


Ans: T, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

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