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  • Senior High School Department Fundamentals of Abm1: Q4 W3 Perforance Task No. 3: Merchandising Business

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    This document contains a performance task and questions about merchandising businesses. It tests the understanding of key aspects of merchandising businesses, including: 1) Merchandising businesses earn income by buying and selling products, not services. When merchandise is sold, the revenue is reported as fees earned and the cost is recognized as cost of goods sold. 2) The operating cycle for merchandising businesses begins with purchasing inventory and ends with the sale of that inventory to customers. 3) Questions assess the understanding of accounting terms like depreciation expense, gross profit, and net income as they relate to merchandising versus service businesses.

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    This document contains a performance task and questions about merchandising businesses. It tests the understanding of key aspects of merchandising businesses, including: 1) Merchandising businesses earn income by buying and selling products, not services. When merchandise is sold, the revenue is reported as fees earned and the cost is recognized as cost of goods sold. 2) The operating cycle for merchandising businesses begins with purchasing inventory and ends with the sale of that inventory to customers. 3) Questions assess the understanding of accounting terms like depreciation expense, gross profit, and net income as they relate to merchandising versus service businesses.

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    Senior High School Department Fundamentals of Abm1: Q4 W3 Perforance Task No. 3: Merchandising Business

    Uploaded by

    Early Tizon
    This document contains a performance task and questions about merchandising businesses. It tests the understanding of key aspects of merchandising businesses, including: 1) Merchandising businesses earn income by buying and selling products, not services. When merchandise is sold, the revenue is reported as fees earned and the cost is recognized as cost of goods sold. 2) The operating cycle for merchandising businesses begins with purchasing inventory and ends with the sale of that inventory to customers. 3) Questions assess the understanding of accounting terms like depreciation expense, gross profit, and net income as they relate to merchandising versus service businesses.

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    of 1

    PRENZA NATIONAL HIGH SCHOOL

    Prenza I, Marilao, Bulacan


    SENIOR HIGH SCHOOL DEPARTMENT
    FUNDAMENTALS OF ABM1
    Q4 W3

    PERFORANCE TASK No. 3: MERCHANDISING BUSINESS

    A. Directions: Write true if the statement is correct and false if it is incorrect.


    _False_1. Merchandising business is the same as the service business.
    _True__2. Merchandising companies earn income by buying and selling products or
    merchandise.
    _True__3. When this merchandise is sold, the revenue is reported as fees earned, and
    its cost is recognized as an expense called the cost of merchandise/goods sold.
    _False__4. The operating cycle begins with receiving cash from customers, and it ends
    with spending for the business.
    _True___5. A merchandising business must first purchase the merchandise for sale.

    B. Directions: Identify each item below. Write your answer before the item number.
    _A____1. Which of the following accounts is used in merchandising but not in service?
    A. Depreciation expense
    B. Allowance for bad debts
    C. Sales return and allowances
    D. Freight-out
    __A___ 2. Which of the following is equal to gross profit plus the cost of sale?
    A. Beginning inventory
    B. Goods available for sale
    C. Ending inventory
    D. Sale

    . __D___ 3. Which of the following is equal to fees earned plus operating expenses?
    A. Net Income
    B. Cost of sales
    C. Goods available for sale
    D. Gross profit
    ___A__ 4. Statement 1: The operations of a service business involve the purchase of
    merchandise for sale (purchasing activity), the sale and distribution of the products
    to customers (sales activity).
    Statement 2: Operating cycles differ, depending upon the nature of the
    business and its operations.
    A. Only statement 1 is correct.
    B. Only statement 2 is correct.
    C. Both statements are correct.
    D. Both statements are incorrect.
    _C____ 5. Statement 1: The revenue activities of a merchandising business involve
    providing services to customers.
    Statement 2: When merchandise is sold, the revenue is reported as fees
    earned, and its cost is recognized as an expense called the cost of merchandise sold.
    A. Only statement 1 is correct.
    B. Only statement 2 is correct.
    C. Both statements are correct.
    D. Both statements are incorrect.

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