Chapter 5 RAT - Merchandising Operations

11 terms by Mig_dela7

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The operating cycle of a merchandising company ordinarily is shorter than that of a service company.

False

Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.

True

The computer has greatly increased the use of the periodic system

False

Freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller.

True

A merchandiser that sells directly to consumers is a

Retailer

When using the periodic system the physical inventory count is used to determine

Both the cost of goods sold and the cost of ending inventory

Conway company purchased merchandise inventory with a price of $6000 and credit terms of 2/10, n/30. What is the net cost of the goods if Conway company pays within the discount period?

$5880

Sales revenues are usually considered earned when

Goods have been transferred from the seller to the buyer.

Fehr Company sells merchandise on account for $2000 to Kelley Company with credit terms of 2/10, n/30. Kelley Company returns $400 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the discount of the check?

$1568

At the beginning of the year, Uptown Athletic had an inventory of $400,000. During the year, the company purchased goods costing $1,600,000. If Uptown Athletic reported ending inventory of $600,000 and sales of $2,000,000, their cost of goods sold and gross profit rate would be

$1,400,000 and 30%

Haverty Industries increased it's gross profit rate from 18.4% in 2009 to 23.7% in 2010. Which of the following would be a possible explanation for this change?

Haverty's global sourcing efforts at the beginning of 2010 resulted in a lower cost of merchandise sold.

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