Chapter 6—Accounting for Merchandising Businesses [Multiple Choice]

1. Using a perpetual inventory system, the entry to record the sa le of merchandise on account
includes a:
a. debit to Sales
b. debit to Merchandise Inventory
c. credit to Merchandise Inventory
d. credit to Accounts Receivable
ANS: C DIF: 1 OBJ: 02b

2. Which of the following accounts has a normal debit balance?

a. Accounts Payable
b. Sales Returns and Allowances
c. Sales
d. Interest Revenue
ANS: B DIF: 1 OBJ: 02b

3. A sales invoice included the following information: merchandise price, $5,000; transportation,
$300; terms 1/10, n/eom, FOB shipping point. Assuming that a credit for merchandise returned
of $600 is granted prior to payment, that the transportation is prepaid by the seller, and that the
invoice is paid within the discount period, what is the amount of cash received by the sel ler?
a. $4,356
b. $4,400
c. $4,656
d. $4,950
ANS: C DIF: 3 OBJ: 02b

4. Using a perpetual inventory system, the entry to record the return from a customer of
merchandise sold on account includes a:
a. credit to Sales Returns and Allowances
b. debit to Merchandise Inventory
c. credit to Merchandise Inventory
d. debit to Cost of Merchandise Sold
ANS: B DIF: 1 OBJ: 02b

5. Using a perpetual inventory system, the entry to record the return from a customer of
merchandise sold on account includes a:
a. credit to Sales Returns and Allowances
b. credit to Merchandise Inventory
c. credit to Cost of Merchandise Sold
d. debit to Cost of Merchandise Sold
ANS: C DIF: 1 OBJ: 02b

6. If merchandise sold on account is returned to the seller, the seller may inform the customer of
the details by issuing a:
a. sales invoice
b. purchase invoice
c. credit memorandum
d. debit memorandum
ANS: C DIF: 1 OBJ: 02b
 7. A sales invoice included the following information: merchandise price, $8,000; transportation,
$400; terms 2/10, n/eom, FOB shipping point. Assuming that a credit for merchandise returned
of $800 is granted prior to payment, that the transportation is prepaid by the seller, and that the
invoice is paid within the discount period, what is the amount of cash received by the seller?
a. $7,200
b. $7,456
c. $7,600
d. $7,056
ANS: B DIF: 3 OBJ: 02b

8. Sales to customers who use bank credit cards, such as MasterCard and Visa, are gene rally
treated as:
a. sales on account
b. sales returns
c. cash sales
d. sales when the credit card company remits the cash
ANS: C DIF: 1 OBJ: 02b

9. If the buyer is to pay the transportation costs of delivering merchandise, delivery terms are stat ed
as:
a. FOB shipping point
b. FOB destination
c. FOB n/30
d. FOB buyer
ANS: A DIF: 1 OBJ: 02c

10. Which of the following accounts has a normal credit balance?

a. Sales Returns and Allowances
b. Sales
c. Merchandise Inventory
d. Transportation Out
ANS: B DIF: 1 OBJ: 02c