11) Which of the following is inventory for an office supply store such as Office Max?
A) paper used to maintain Office Max’s accounting records
B) paper available to sell to Office Max’s customers
C) paper used in Office Max’s employee washroom
D) office supply storage costs
12) A company reports its unsold merchandise inventory on the ________.
A) balance sheet as a current asset
B) balance sheet as part of Property, plant & equipment
C) balance sheet as a current liability
D) income statement as an expense
13) If a company uses a periodic inventory system, it most likely updates its inventory records at the time of every ________.
A) purchase
B) sale
C) return
D) physical inventory count
14) A company with a perpetual inventory system purchases inventory on account. What is the effect of this transaction on the accounting equation?
A) increase one asset and decrease another asset
B) increase an asset and decrease retained earnings
C) increase an asset and decrease a liability
D) increase an asset and increase a liability
15) If the terms of purchase are FOB shipping point, title to the goods passes from the vendor to the buyer ________.
A) when the merchandise leaves the vendor’s warehouse
B) halfway between the vendor’s warehouse and the buyer’s warehouse
C) when the merchandise reaches the buyer’s warehouse
D) when the merchandise is sold to the end user
16) If the terms of purchase are FOB destination, title to the goods passes from the vendor to the buyer ________.
A) when the merchandise leaves the vendor’s warehouse
B) halfway between the vendor’s warehouse and the buyer’s warehouse
C) when the merchandise reaches the buyer’s warehouse
D) when the merchandise is sold to the end user
17) A purchase allowance ________.
A) is the amount of cash the purchasing manager is allowed to spend
B) increases the cost of inventory purchased
C) represents the cost of merchandise returned to the vendor
D) is a cost reduction for keeping merchandise that is damaged or defective
18) Which of the following
DECREASES
the cost of inventory purchased?
A) sales tax
B) purchasing merchandise FOB shipping point
C) purchase allowances
D) payment of accounts payable
19) A vendor offers terms of 3/10, n/30. What is the
ANNUAL
interest rate the vendor is charging a buyer who does not pay within 10 days? (Assume there are 360 days in the year.
A) 3%
B) 36%
C) 54%
D) 108%
20) A vendor offers terms of 4/10, n/30. What is the
ANNUAL
interest rate the vendor is charging a buyer who does not pay within 10 days? (Assume there are 360 days in the year.
A) 4%
B) 72%
C) 54%
D) 144%