Merchandising

Question 1

Merchandising is also called as a

Answer 1

Trading business

Question 2

______________ companies buy goods in salable form and sell them to their customers at a higher cost to make a profit. Examples
are department stores, bookstores, appliance stores, and other resellers

Answer 2

Merchandising

Question 3

_________ companies buys raw materials with the intention of using them in making a new
product.

Answer 3

Manufacturing

Question 4

goods that a merchandising company sells to its customers are called _________ (____)

Answer 4

Inventory (merchandise)

Question 5

The income statement of a service business differs from that of a merchandising concern.

Answer 5

true, they differ from one another

Question 6

Revenue
- Expenses
= Net Income/Loss

Answer 6

The general format of IS of a Service Business

Question 7

Net Sales
 - COGS
= Gross Margin 
 - Operating Expenses
 = Net Income/Loss

Answer 7

The general format of IS of a Merchandising

Question 8

__________________ provides accounting records that continuously disclose the amount of inventory.
Usually used by companies that sell merchandise with a high individual unit value (EX.: jewelry, appliances, cars)

Answer 8

Perpetual Inventory System

Question 9

__________________ the ending inventory is determined by making a physical measurement of the goods on hand at the end of the period.

Normally used by companies that sell merchandise with a low value per unit (EX.: department store, drug store, hardware stores)

Answer 9

Periodic Inventory System

Question 10

Alpha Company purchased merchandise from Omega Enterprise worth P50,000

Answer 10

Alpha (Buyer)
Purchases 50,000
Cash 50,000

Omega (Seller)
Cash 50,000
Sales 50,000

Question 11

Alpha Company purchased merchandise from Omega Enterprise worth P75,000 on account with terms 2/10, n/60

Answer 11

Alpha (Buyer)
Purchases 75,000
Accounts Payable 75,000

Omega (Seller)
Accounts Receivable 75,000
Sales 75,000

Question 12

_______ these include cash discounts to induce the early payment of an account.

Answer 12

Credit Terms

Question 13

__________ deduction from gross invoice price that the buyer can take only if he pays the invoice within the specified period of time.

Answer 13

Cash Discount

Question 14

2/10, n/30 means

Answer 14

2 % discount from the gross invoice price if he pays it within 10 days following the invoice date. The gross invoice price is due 30 days from the invoice date.

Question 15

if ______, it is recorded as a purchase discount; if ___________ it is recorded as a sales discount

Answer 15

BUYER , SELLER

Question 16

Alpha Company returned merchandise to Omega Enterprise worth P1,000 from (cash purchases)

Answer 16

Alpha (Buyer)
Cash 1,000
PR&A 1,000

Omega (Seller)
SR&A 1,000
Cash 1,000

Question 17

Alpha Company returned merchandise to Omega Enterprise worth P2,000 from (credit purchases)

Answer 17

Alpha (Buyer)
Accounts Payable 1,000
PR&A 1,000

Omega (Seller)
SR&A 1,000
Accounts Receivable 1,000

Question 18

________ free on board at shipping point. The (buyer) shoulders the transportation cost from point of shipment up to the point of destination.

Buyer uses the account “Transportation-in or Freight-in”

Shopee*

Answer 18

F0B SHIPPING POINT

Question 19

___________ account is an adjunct account – meaning it is added to the Purchases account of the BUYER

Answer 19

Transportation In

Question 20

________ free on board at destination. The seller shoulders the transportation costs.

Seller uses the account “Transportation-out or Freight-out”

Answer 20

FOB Destination

Question 21

__________ account is an expense account, classified as a selling expense in the income statement

Answer 21

Freight Out

Question 22

Alpha Company purchased merchandise from Omega Enterprise worth P50,000

Answer 22

Alpha 
(Buyer)
Purchases 44,642.86
Input Tax    5,357.14
       Cash          50,000.00

P: [50,000 / 1.12]
IT: Purchases x 12%

Omega
(Seller)

Cash 50,000.00
Output Tax 5,357.14
Sales 44,642.86

Question 23

Alpha Company purchased merchandise from Omega Enterprise worth P75,000 on account with terms 2/10, n/60

Answer 23

Purchases 66,964.29
Input Tax 8,035.71
AP 75,000.00

Purchases = 75,000/1.12
Tax = Purchases x 12&% = 66,964.29 x 12%

AR 75,000
Output Tax 8,035.71
Sales 66,964.29

Question 24

Alpha Company returned merchandise to Omega Enterprise worth P1,000 from cash purchases

Answer 24

Alpha
(Buyer)

Cash 1,000.00
Input Tax 107.14
PRA 892.86

PRA: [1,000 / 1.12]
Tax: PRA x 12%

Omega
(Seller)

SRA 892.86
Output tax 107.14
Cash 1,000.00
`

Question 25

Alpha Company paid Omega Enterprise his balance within the discount period

Answer 25

Alpha
(Buyer)

Accts Payable 48,000
Cash 47,040.00
Input Tax 102.86
Purch disc 857.14

Discount =
48,000 x 2% = P960
960/1.12 = 857.14 x 12%
= 102.86