1. Gore Inc. sold $7,200 of merchandise on account, terms 2/10,n/30. If the
customer paid the amount owed within the discount period, the entry to record the receipt of cash would include a:
2. Cost of goods sold:
A) Is another term for sales.
B) Is the term used for the cost of buying and preparing merchandise.
C) Are operating expenses.
D) Is also called gross margin.
E) Both B and C.
3. Z-Mart had sales of $358,500. Its cost of goods sold was $143,400. Its gross margin was:
A) $215,100.
B) $501,900.
C) $214,600.
D) $354,700.
E) 40%.
4. Z-Mart had sales of $569,300. Its gross profit was $239,106. Its cost of goods sold was:
A) $808,406.
B) 42%.
C) $330,194.
D) $276,194.
E) $357,194.
5. Merchandise inventory:
A) Is a long-term asset.
B) Is a current asset.
C) Can include supplies.
D) Is an invested asset.
E) Both B and C.
6. A perpetual system:
A) Gives a continual record of the amount of inventory on hand.
B) Uses a purchases account for the cost of new purchases.
C) Was historically used by companies that sold large quantities of low-balance items.
D) Both A and B.
E) All of the above.
7. Z-Mart recorded the following journal entry:
Accounts Payable 2,500
Merchandise Inventory 50
Cash 2,450
The transaction was:
A) A purchase.
B) A return.
C) A return and payment of the account payable.
D) A payment of the account payable and recognition of a cash discount taken.
E) A purchase and recognition of a cash discount taken.
8. Sales returns and allowances:
A) Provide information about dissatisfied customers and the possibility of lost future sales.
B) Are recorded in separate contra-revenue accounts.
C) Are omitted from published statements.
D) Both A and B.
E) All of the above.
9. A debit to Sales Returns and Allowances and a credit to Accounts Receivable:
A) Should be a credit to Sales Returns and Allowances and a debit to Accounts Receivable.
B) Recognizes that a customer returned merchandise.
C) Requires a debit memorandum to recognize the customer's return.
D) Both A and B.
E) All of the above.
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