Question

6. In which a merchandising company would recognize sales revenue?

Select one:

a. Merchandise is shipped to the customer.

b. Merchandise is ordered by the customer.

c. Merchandise is paid the customer.

d. Purchases are made to replace the merchandise sold.

7.Washington Warehouse is a small retail business that specializes in the sale of top-of-the-line televisions. This year, the store has begun to carry the Flat TV manufactured by Bass Co. Thus far, Washington has recorded the following transactions involving the Flat TV:

Jan.	5		Purchased 9 Flat TVs at a unit cost of $1,300
Jan.	18		Purchased 7 additional Flat TVs at $1,300 each
Feb.	12		Sold 10 Flat TVs to the Duke Hotel for $18,600

If Washington uses a perpetual inventory system, the gross profit on the Flat TVs as of February 12th is:

Select one:

A. 2,200

B. 2,700

C. 5,600

D. 13,000

8. The use of a perpetual inventory system is suggested by one of the factors listed below.

Select one:

A. The size of the company is small.

B. The company desires to minimize record-keeping requirements.

C. The company sells inventory with a high per-unit cost.

D.The company is required to produce annual reporting.

9. Which of the following companies would be most likely to use a perpetual inventory system?

Select one:

A. IBM.

B. First Bank of New York.

C. Sears.

D. A newspaper stand.

10.When a merchandiser sells goods to the customer, the delivery cost is:

Select one:

A. An operating expense.

B. Part of cost of goods sold.

C. Used in the calculation of net sales.

D. A reduction of gross profit.

Answer 1

6. Answer is option a. Marchendise is shipped to the customer.

Brief Explanation: when the marchendise is shipped to the customer the actual transfer of ownership of the marchendise happens, so the revenue is recognized in this stage only.

7. Gross profit = 18600 - 1300×10 = $5,600

Option C.is the right answer, Gross Profit $5,600

8. Option C is the right answer. The company sells inventory with a high per unit cost.

9. Option A. IBM is the right answer.

10. Option A. Is the right answer, the delivery cost is an operating Expenses to the marchendiser.

* Please feel free to ask me if any more explanation is needed at any point of this solution.

Thank You ..!!