Question

Hi this is for my study guide, please show work where its applicable. Much appreciated.

B. All oods in C. Al goods on D. Only damsged goods E. Only items thit are on the sthelf in a purehaser's inventory A. At any time c, when the E. Ater the half-way point between the buyer and seller 9. Goods on consignment: A. Are goods shipped by the owner to the consi who sells the soods for thes for the owner B. Are reported in the consignee's books as i C. Are goods shipped to the consignor who sells the goods for the D. Are not reported in the consignor's inventory since they do not have possession of the inventory E. Are always paid for by the consignee when they take possession of the goods 10. Given the following items and costs as of the balance sheet date, determine the value of to another company. The goods are in transit and shipping terma r company to Faltron. The goods are in transit and shipping terms Faltron Company's merchandise inventory § $1,000 goods sold by Faltron are FOB destination. § $2,000 goods sold by anothe are FOB destination s $3,000 owned by Faltron but in the possession of another company the consi s Damaged goods owned by Faltron which originally cost $4,000, but which now have a $500 net realizable value. A. $10,000 B. $6,500 C. $5,500 D. $5,000 E. $4,500 11. The main principles of internal control include which of the following? A. Establish responsibilities B. Maintain minimal records C. Use only computerized systems D. Bond all employees E. Require automated sales systems

1. A merchandising company:

A. earns net income by buying and selling merchandise

B. Receives fees only in exchange for services

C. Earns profit from commissions only

D. Earns profit from fares only

E. Buys products from consumers

2. Cost of goods sold:

A. Is another term for merchandise sales

B. Is the term for the cost of buying and preparing merchandise for sale

C. Is another term for revenue

D. Is also called gross margin

E. Is a term only used by service firms

3.A company has sales of $695,000 and its cost of goods sold of $278,000. Its gross margin equals:

A. $(417,000_

B. $695,000

C. $278,000

D. $417,000

E. $973,000

3. A company had sales of $375,000 and its gross profit was $157,500. It's cost of goods sold equal:

A. $(217,000)

B. $375,000

C. $157,500

D. $217,500

E. $532,500

5. A company had expenses other than cost of goods sold of $250,000. Determine sales gross profit given cost of goods sold was $100,000 and net income was $150,00.

A. Sales $350,000; Gross Profit $150,000

B. Sales $350,000; Gross Profit $50,000

C. Sales $500,000; Gross Profit $400,000

D. Sales $500,000; Gross Profit $50,000

E. Sales $400,000; Gross Profit $500,000

6. Damaged and obsolete goods:

A. Are never included in the inventory

B. Are included in the inventory at their full cost

C. Are included in inventory at their net realizable value.

D. Should be disposed of immediately

E. Are assigned a value of zero

Answer 1

Answer 1- (a)  Earns net income by buying and selling merchandise.

A merchandise company buy goods and sells it at higher prices. And that's how a merchandise company earns net income by buying and selling merchandise.

Answer 2- ( b) is the term used for the cost of buying and preparing merchandise for sale.

Cost of goods sold is the cost of sale, it is the term used for the cost of buying and preparing merchandise sales.

Answer 3- ( D) $4,17,000

Gross Margin = Sales - Cost of goods sold

Gross Margin= $6,95,000 -$2,78,000

Gross Margin= $4,17,000.

Answer -4 ( D) $2,17,500

Formula

Cost of goods sold = Sales - Gross profit

Cost of goods sold = $3,75,000 - $1,57,500

Cost of goods sold = $2,17,500.

Answer -5 ( c) Sales $5,00,000 and Gross profit =$4,00,000

Sales refers to the all net income during sales.

Therefore, Sales = Expense other than Cost of goods sold + Cost of goods sold + net income

Sales =$ 2,50,000 + 1,00,000 +1,50,000

Sales =$5,00,000

and Gross profit = sales - Cost of good sold

Gross profit = 5,00,000 - 1,00,000

Gross profit = $4,00,000.

Answer- 6(c ) Are iuncluded in inventory at their net realizable value.

Damaged and obsolete goods are the goods which has been damaged due to some certain situation or loose there value.So, for the correct preparation of financial statement it is taken at their net realizable value.

Answer 7- ( a) All goods owned by company and held for sale.

A merchandise company buy goods and sell it at higher prices. So, merchandise inventory includes all goods which is owned by a company and held it for selling.

Answer 8-(b) When the purchaser is responsible for paying freight charges.

Goods in transits are included in a purchasers invoice if the purchasers has the responsibility of paying freight charges of it.

Answer 9-( a) are goods shipped by the owner to the consignee who sells the goods for the owner.

Goods on consignment are the goods which the owner sends to the agent for selling. Here agent called as consignee.

Answer 10- (E)$4,500

As we know that merchandise inventory includes all the inventory which a company purchases and held for sale. So, here from the given information we can calculate merchandise inventory:

So, the merchandise inventory include the $1000 +$3000 + $ 500 = $ 4500.

While calculating merchandise inventory, $2000 Goods are not included and net realizable value of damaged goods are taken.

Answer 11- (a) Establish responsibilities.

Internal control refers to the policies made in the company for reliability of accounting systrem and the company. Its main principles are establish responsibility, maintain records and many more for efficiency in company.