Question 1

A retailer purchases goods from a manufacturer and sells them to customers.

Accepted Answer

This is the basic definition of a retailer. They purchase goods from a manufacturer or wholesaler and sell them to end customers.

Question 2

The operating cycle of a merchandiser begins when the company purchases inventory from a vendor and ends when the company collects cash from customers.

Accepted Answer

The operating cycle for a merchandiser typically includes the following steps:

1. Purchasing inventory from a vendor
2. Holding inventory in stock
3. Selling inventory to customers on credit
4. Collecting cash from customers
5. Paying vendors for inventory purchases

Therefore, the operating cycle begins with inventory purchases and ends with cash collections from customers.

Question 3

An entity that buys goods and sells them to customers at a markup is a ________.
A)merchandiser
B)service provider
C)manufacturer
D)producer

Accepted Answer

A merchandiser is specifically involved in buying goods and reselling them to customers at a higher price. The other options - service provider, manufacturer, and producer - may sell goods or provide services, but they do not necessarily involve the buying and reselling of goods at a markup.

Question 4

The perpetual inventory system keeps a running record of inventory and cost of goods sold.

Accepted Answer

The perpetual inventory system is designed to maintain a continuous record of inventory levels and cost of goods sold, allowing for real-time tracking and management of inventory. This system uses technology such as barcode scanning and inventory software to update inventory levels as sales are made and shipments are received.

Question 5

The main expense of a merchandiser is usually ________.
A)cost of goods sold
B)current assets
C)selling and administrative expenses
D)production overhead

Accepted Answer

The answer of The main expense of a merchandiser is...

Question 6

G-mart,a small-scale grocer,wants to introduce an inventory system to track its inventory.G-mart does not currently use optical scanning registers and computer systems.The perpetual inventory system is most suitable for its operations.

Accepted Answer

The answer of G-mart,a small-scale grocer,wants to introduce an inventory...

Question 7

Even in a perpetual inventory system that updates the inventory account as and when transactions occur,the business must count its inventory at least once in a year.

Accepted Answer

Even in a perpetual inventory system, physical inventory counts are still necessary to reconcile any discrepancies and ensure accuracy in the inventory records. A physical count also helps to identify any obsolete or damaged inventory that may need to be written off.

Question 8

Gross profit is the extra amount the company receives from the customer for merchandise sold over what the company paid to the vendor.

Accepted Answer

Gross profit is calculated by subtracting the cost of goods sold (what the company paid to the vendor) from the revenue (amount received from the customer). Therefore, the statement is true.

Question 9

Gross profit is calculated as the difference between net sales revenue and ________.
A)purchases
B)cost of goods sold
C)cost of merchandise inventory
D)selling and administrative expenses

Accepted Answer

Gross profit is calculated by subtracting the cost of goods sold from the net sales revenue. Option A, purchases, refers to the amount of inventory bought during a period and is not directly related to gross profit. Option C, cost of merchandise inventory, refers to the cost of inventory still on hand and is not directly related to gross profit. Option D, selling and administrative expenses, are not included in the calculation of gross profit.

Question 10

Which of the following line items will appear on the income statement of a merchandiser but not of a service company?
A)Salaries Expense
B)Depreciation Expense
C)Cost of Goods Sold
D)Supplies Inventory

Accepted Answer

Cost of Goods Sold is unique to a merchandiser, as it represents the cost of the products that were sold during a period. Service companies do not have inventory or cost of goods sold, as they do not sell physical products. So, A, B, and D can appear on the income statement of both a merchandiser and a service company.

Question 11

Best Value,Inc.started its operations on January 1,2017.It engages in buying and selling different types of electronic gadgets.The first step in its operating cycle would be to ________.
A)collect cash from customers
B)sell goods to customers
C)purchase inventory from vendors
D)record the sales in accounts

Accepted Answer

The first step in the operating cycle of a merchandising business like Best Value, Inc. would be to purchase inventory from vendors. This starts the process of acquiring goods that the company will eventually sell to customers. The other choices (A, B, and D) all occur later in the operating cycle after inventory has been acquired and the company has started selling goods to customers.

Question 12

When a company uses a perpetual inventory system,all merchandise transactions are updated as and when they occur.However,the inventory account may not show the current balance at all times.

Accepted Answer

In a perpetual inventory system, the inventory account is updated continuously as merchandise transactions occur, but the balance may not always reflect the current inventory level due to factors such as theft, loss, or human error. Therefore, the statement is true.

Question 13

On the income statement,a merchandising company reports the cost of merchandise inventory that has been sold to customers.

Accepted Answer

This is true. The cost of merchandise inventory that has been sold to customers is also known as cost of goods sold (COGS), and it is reported on the income statement as a deduction from the company's revenue to calculate its gross profit.

Question 14

List the three steps,in order of occurrence,of the operating cycle of a merchandising business.

Accepted Answer

The answer of List the three steps,in order of occurrence,of...

Question 15

A wholesaler is a merchandiser who buys merchandise from a manufacturer and sells the same to a retailer.

Accepted Answer

This is the definition of a wholesaler.

Question 16

In a periodic inventory system,the Cost of Goods Sold account is continuously updated as and when sales occur.

Accepted Answer

In a periodic inventory system, the Cost of Goods Sold account is only updated at the end of an accounting period through a physical inventory count and calculation. It is not continuously updated during the period as sales occur like in a perpetual inventory system.

Question 17

On the income statement,a service company reports the cost of merchandise inventory that has been sold to customers.

Accepted Answer

A service company does not have merchandise inventory to sell. Thus, it does not report the cost of merchandise inventory sold on the income statement. Instead, it reports the cost of providing services.

Question 18

The term "inventory," for a merchandiser,refers to ________.
A)raw materials that are used for production
B)equipment that are used in production process
C)the cost of goods sold
D)goods held for sale to customers

Accepted Answer

Inventory for a merchandiser refers to goods held for sale to customers.

Question 19

________ are the expenses that occur in an entity's major line of business.
A)Interest expense
B)Interest revenue
C)Operating expenses
D)Loss on sale of plant asset

Accepted Answer

Operating expenses are the expenses that a company incurs in its day-to-day operations, which are directly related to the main business activities such as rent, salaries, utilities, and any other expenses incurred to produce and sell goods or services. Interest expense and revenue are related to borrowing and lending activities, and loss on sale of plant asset is a one-time event that doesn't necessarily occur in the company's main line of business.

Question 20

The operating cycle of a merchandiser begins when the company purchases inventory from a vendor and ends when the company then sells the inventory to a customer.

Accepted Answer

The operating cycle of a merchandiser begins when the company purchases inventory from a vendor and ends when the company collects cash from customers.

Quiz 5: Merchandising Operations

A retailer purchases goods from a manufacturer and sells them to customers.

The operating cycle of a merchandiser begins when the company purchases inventory from a vendor and ends when the company collects cash from customers.

An entity that buys goods and sells them to customers at a markup is a ________.

The perpetual inventory system keeps a running record of inventory and cost of goods sold.

The main expense of a merchandiser is usually ________.

G-mart,a small-scale grocer,wants to introduce an inventory system to track its inventory.G-mart does not currently use optical scanning registers and computer systems.The perpetual inventory system is most suitable for its operations.

Even in a perpetual inventory system that updates the inventory account as and when transactions occur,the business must count its inventory at least once in a year.

Gross profit is the extra amount the company receives from the customer for merchandise sold over what the company paid to the vendor.

Gross profit is calculated as the difference between net sales revenue and ________.

Which of the following line items will appear on the income statement of a merchandiser but not of a service company?

Best Value,Inc.started its operations on January 1,2017.It engages in buying and selling different types of electronic gadgets.The first step in its operating cycle would be to ________.

When a company uses a perpetual inventory system,all merchandise transactions are updated as and when they occur.However,the inventory account may not show the current balance at all times.

On the income statement,a merchandising company reports the cost of merchandise inventory that has been sold to customers.

List the three steps,in order of occurrence,of the operating cycle of a merchandising business.

A wholesaler is a merchandiser who buys merchandise from a manufacturer and sells the same to a retailer.

In a periodic inventory system,the Cost of Goods Sold account is continuously updated as and when sales occur.

On the income statement,a service company reports the cost of merchandise inventory that has been sold to customers.

The term "inventory," for a merchandiser,refers to ________.

________ are the expenses that occur in an entity's major line of business.

The operating cycle of a merchandiser begins when the company purchases inventory from a vendor and ends when the company then sells the inventory to a customer.