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Merchandising Operations and Inventory in Accounting Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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Question 1 1. When recording a cash sale on the perpetual inventory system, which of the following two accounts are debited?

Question 2 2. Which of the following inventory systems requires you to calculate cost of goods sold at the end of each accounting period?

Question 3 3. Brandon's Bike Shop just sold a high end racing bike for $4,000. He paid the manufacturer $3,000 for it and incurred $200 in carrying costs. What is his profit on the sale?

Question 4 4. Gomez's Grocery has run out of a fast selling salsa product. Gomez hates losing business, so he calls his wholesaler and orders three cases for overnight delivery. The added cost he pays for overnight delivery is a (an) _____ cost.

Question 5 5.

Brandon's Bike Shop started selling the popular 'Mountain Climber' bike in June. Details of his purchases for these bikes are shown in the table below:

Date Number Cost per bike
May 10th 5 $800
May 29th 10 $900
June 14th 15 $600

During the month of June, twenty of these bikes were sold. What is the value of the remaining inventory at the end of June, under the weighted average inventory method?

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Question 6 6. Specific identification would be a good inventory system for which of these companies?

Question 7 7. Brandon's Bike Shop has received an order of 50 new bikes. Five of them were damaged in transit but he believes that he can sell three of them at a reduced price and he will return the other two bikes. How will he handle the inventory book-keeping for these bikes?

Question 8 8. When Carly's Clothing has merchandise in her store for sale that she is selling on commission for the clothing maker, the goods _____.

Question 9 9. If an error was made in counting inventory that leads to the amount of reported inventory being greater than what is actually there, it will lead to _____

Question 10 10. The net realizable value of a bicycle at Brandon's Bike Shop is _____

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Question 11 11. Brandon has an older style bike in his inventory he needs to sell to make room for newer models. He paid $600 for it and it will need $200 worth of repairs, maintenance and cleaning to get it sold for $1,000. What is the net realizable value of the bike?

Question 12 12.

Brandon's Bike Shop started selling the popular 'Mountain Climber' bike in June. Details of his purchases for these bikes are shown in the table below:

Date Number Cost per bike
May 10th 5 $800
May 29th 10 $900
June 14th 15 $600

During the month of June, twenty of these bikes were sold. What is the value of the remaining inventory at the end of June, under the LIFO inventory method?

Question 13 13. The calculation for _____ is sales - cost of goods sold - expenses.

Question 14 14. Brandon has an older style bike in his inventory he needs to sell to make room for newer models. He paid $600 for it and it will need $200 worth of repairs, maintenance and cleaning to get it sold for $1,000. He would like to make a $200 profit upon sale. What is the value of this bike at lower of cost or market?

Question 15 15. Brandon has an older style bike in his inventory he needs to sell to make room for newer models. He paid $600 for it and it will need $200 worth of repairs, maintenance and cleaning to get it sold for $1,000. He would like to make a $200 profit upon sale. What is the market ceiling and floor for this bike?

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Question 16 16. Gomez's Grocery makes a standard order of salsa every month. He buys it from a grocery wholesaler at a list price of $75 per case. His standard order is 5 cases which gets him a trade discounts of 20% for ordering more than 3 cases. Gomez also takes advantage of a 3% purchase discount for paying the bill within 10 days. The cases cost a $30 flat rate to ship by truck. What is the final cost of Gomez salsa order?

Question 17 17. The concept of inventory valuation _____

Question 18 18.

Carly's Clothing, a mall retailer of women's apparel, has the following merchandise items outstanding at the end of July.

50 tops ordered FOB shipping point

20 swimsuits she is selling on consignment

10 dresses ordered FOB destination

5 pairs of shorts that are the wrong sizes and which the seller has agreed to take back

Which items need to be included in her month end inventory?

Question 19 19. Which of the following inventory systems will give an actual inventory count at any given point in time?

Question 20 20. The term 'market' in lower of cost or market is defined as _____

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Question 21 21.

Carly's Clothing, a mall retailer of women's apparel, had the following items on her books for the month of July:

Sales $140,000

Beginning inventory $60,000

Inventory purchases $100,000

Ending inventory $45,000

Expenses $15,000

What is Carly's cost of goods sold for the month of July?

Question 22 22.

Brandon's Bike Shop started selling the popular 'Mountain Climber' bike in June. Details of his purchases for these bikes are shown in the table below:

Date Number Cost per bike
May 10th 5 $800
May 29th 10 $900
June 14th 15 $600

During the month of June, twenty of these bikes were sold. What is the value of the remaining inventory at the end of June, under the FIFO inventory method?

Question 23 23. Which inventory system records inventory on a continual basis?

Question 24 24. Which of the following is created within a business when a customer pays for merchandise with their store credit card?

Question 25 25. Which of the following is NOT a part of the inventory process?

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Question 26 26. What happens to profits if you overestimate the amount of inventory you had at the beginning of a period?

Question 27 27. What is the acquisition price of inventory called?

Question 28 28. The return that you would expect to get on an item after the item has been sold and the cost of selling that item has been subtracted is called what?

Question 29 29. What are items that are acquired by a distributor for the purpose of resale to a third party called?

Question 30 30. What is the accounting equation for calculating the cost of purchasing inventory?

Merchandising Operations and Inventory in Accounting Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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