Name: jamby S.

Dapar

Subject: FAR & COST

1. .Merchandise is ordered on November 12; the merchandise is shipped by the seller and the invoice is
prepared, dated, and mailed by the seller on November 15; the merchandise is received by the buyer on
November 17; the entry is made in the seller's accounts on November 15. If the credit terms are 1/10,
n/30, the credit period begins with what date?

a. November 12
b. November 15
c. November 17
d. November 22

2. The inventory system employing accounting records that continuously disclose the amount of inventory
is called:

a. retail
b. periodic
c. physical
d. perpetual

3. Under the perpetual inventory system, all purchases of merchandise are debited to the account entitled:

a. Merchandise Inventory
b. Cost of Merchandise Sold
c. Sales
d. Purchases

4. The arrangements between buyer and seller as to when payments for merchandise are to be made are
called:

a. credit terms
b. net cash
c. cash on demand
d. gross cash

5. In credit terms of 1/10, n/30, the "1" represents the:

a. number of days in the discount period

b. full amount of the invoice
c. number of days when the entire amount is due
d. percent of the cash discount

6. Sales to customers who use bank credit cards such as MasterCard and Visa are usually recorded by a:

a. debit to Bank Credit Card Sales, debit to Credit Card Expense, and a credit to Sales
b. debit to Cash and a credit to Sales
c. debit to Cash, credit to Credit Card Expense, and a credit to Sales
 d. debit to Sales, debit to Credit Card Expense, and a credit to Cash

7. The amount of the total cash paid to the seller for merchandise purchased would normally include:

a. only the list price

b. only the sales tax
c. the list price plus the sales tax
d. the list price less the sales tax

8. In recording the cost of merchandise sold for cash, based on data available from perpetual inventory
records, the journal entry is:

a. debit Cost of Merchandise Sold; credit Sales

b. debit Cost of Merchandise Sold; credit Merchandise Inventory
c. debit Merchandise Inventory; credit Cost of Merchandise Sold
d. debit Accounts Receivable; credit Merchandise Inventory

9. Under a perpetual inventory system, the costs of all sales of merchandise are credited to the account
entitled:
a. Sales Discounts
b. Cost of Merchandise Sold
c. Sales Returns and Allowances
d. Merchandise Inventory

10. When the perpetual inventory system is used, the inventory sold is shown on the income statement as:
a. cost of merchandise sold
b. purchases
c. purchases returns and allowances
d. net purchases

11. A company has sales of $763,000 and cost of goods sold of $306,000. Its gross profit equals:

a. $(457,000).
b. $763,000.
c. $306,000.
d. $457,000.

12. A company purchased $3,100 of merchandise on July 5 with terms 3/10, n/30. On July 7, it returned
$340 worth of merchandise. On July 8, it paid the full amount due. The amount of the cash paid on July
8 equals:

a. $340.
b. $2,667.
c. $2,677.
d. $2,760.

13.A company purchased $3,700 of merchandise on July 5 with terms 2/10, n/30. On July 7, it
returned $850 worth of merchandise. On July 12, it paid the full amount due. Assuming the
 company uses a perpetual inventory system, and records purchases using the gross method,
the correct journal entry to record the payment on July 12 is:

a. Debit Merchandise Inventory $2,850; credit Cash $2,850.

b. Debit Cash $2,850; credit Accounts Payable $2,850.
c. Debit Accounts Payable $2,850; credit Merchandise Inventory $57; credit Cash $2,793.
d. Debit Accounts Payable $3,700; credit Cash $3,700.

14. A company purchased $3,300 worth of merchandise. Transportation costs were an additional $290. The
company returned $230 worth of merchandise and then paid the invoice within the 3% cash discount
period. The total cost of this merchandise is:

a. $3,240.00.
b. $3,093.00.
c. $3,261.00.
d. $3,267.90.

15. Garza Company had sales of $150,200, sales discounts of $2,250, and sales returns of $3,605. Garza
Company's net sales equals:

a. $5,855.
b. $144,345.
c. $147,950.
d. $150,200.

16. On February 3, Smart Company sold merchandise in the amount of $4,300 to Truman Company, with
credit terms of 3/10, n/30. The cost of the items sold is $2,970. Smart uses the perpetual inventory
system and the gross method. Truman pays the invoice on February 8, and takes the appropriate
discount. The journal entry that Smart makes on February 8 is:

a. Cash 2,970

Accounts receivable 2,970

b. Cash 4,300
Accounts receivable 4,300
c. Cash 4,220
Sales discounts 89
Credit Accounts receivable 4,309
d. Cash 4,171
Sales discounts 129
Credit Accounts receivable 4,300
17. On September 12, Vander Company sold merchandise in the amount of $6,600 to Jepson Company,
with credit terms of 3/10, n/30. The cost of the items sold is $4,800. Vander uses the periodic inventory
system and the gross method of accounting for sales. The journal entry or entries that Vander will make
on September 12 is:

a. Sales 6,600
Accounts receivable 6,600
b. Sales 6,600
Credit Accounts receivable 6,600
Cost of goods sold 4,800
Credit Merchandise Inventory 4,800
c. Accounts receivable 6,600
Sales 6,600
d. Accounts receivable 6,600
Credit Sales 6,600
Cost of goods sold 4,800
Credit Merchandise Inventory 4,800

18. On September 12, Vander Company sold merchandise in the amount of $7,400 to Jepson Company,
with credit terms of 3/10, n/30. The cost of the items sold is $4,800. Jepson uses the periodic inventory
system and the gross method of accounting for purchases. Jepson pays the invoice on September 18, and
takes the appropriate discount. The journal entry that Jepson makes on September 18 is:
a. Purchases 7,178
Cash 7,178
b. Accounts payable 7,400
Credit Merchandise inventory 222
Credit Cash 7,178
c. Accounts payable 7,400
Credit Purchases discounts 222
Credit Cash 7,178
d. Cash 7,178
Accounts receivable 7,178

19. Cushman Company had $830,000 in sales, sales discounts of $12,450, sales returns and allowances of
$18,675, cost of goods sold of $394,250, and $285,520 in operating expenses. Net income equals:

a. 798,875.
 b. $150,230.
c. $404,625.
d. $119,105.

20. A company purchased $8,800 of merchandise on June 15 with terms of 3/10, n/45. On June 20, it
returned $440 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any
discount it was entitled to. The cash paid on June 24 equals:
a. $8,109.
b. $8,536.
c. $8,800.
d. $8,360.

21. A company purchases merchandise with a catalog price of $24,500. The company receives a 35% trade
discount from the seller. The seller also offers credit terms of 2/10, n/30. Assuming no returns were
made and that payment was made within the discount period, what is the net cost of the merchandise?
a. $8,575.
b. $13,894.
c. $15,925.
d. $15,606.
22. A company that uses the net method of recording purchases and a perpetual inventory system purchased
$3,600 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $800 worth of
merchandise. On July 28, it paid the full amount due. The correct journal entry to record the payment on
July 28 is:
a. Debit Cash $2,800; credit Accounts Payable $2,800.
b. Debit Accounts Payable $2,800; credit Merchandise Inventory $56; credit Cash $2,744.
c. Debit Accounts Payable $3,600; credit Cash $3,600.
d. Debit Accounts Payable $2,744; debit Discounts Lost $56; credit Cash $2,800.
23. On September 12, Ryan Company sold merchandise in the amount of $7,200 to Johnson Company, with
credit terms of 2/10, n/30. The cost of the items sold is $4,700. Ryan uses the periodic inventory system
and the net method of accounting for sales. Johnson pays the invoice on September 18, and takes the
appropriate discount. The journal entry that Ryan makes on September 18 is:
a. Cash 7,200
Accounts receivable 7,200
b. Cash 4,700
Accounts receivable 4,700
c. Cash 4,606
Sales discounts 94
Credit Accounts receivable 4,700
d. Cash 7,056
Accounts receivable 7,056
24. On September 12, Ryan Company sold merchandise in the amount of $7,200 to Johnson Company, with
credit terms of 2/10, n/30. The cost of the items sold is $4,700. Johnson uses the periodic inventory
system and the net method of accounting for purchases. Johnson pays the invoice on September 18, and
takes the appropriate discount. The journal entry that Johnson makes on September 18 is:
a. Purchases 7,056
Cash 7,056
b. Accounts payable 4,700
Credit Merchandise inventory 94
Cash 4,606
c. Accounts payable 7,200
Purchases discounts 144
Cash 7,056
d. Accounts payable 7,056
Cash 7,056
25. A company's current assets are $18,940, its quick assets are $10,370 and its current liabilities are
$12,500. Its quick ratio equals:
a. 0.83.
b. 1.21.
c. 1.51.
d. 1.83.