Test Bank for Merchandising Business Accounting. Chapter 6
Merchandising Business - Answers A business that sells merchandise purchased from other companies
and can be classified as a wholesaler or a retailer.
Wholesaler - Answers A type of merchandising business that sells merchandise to other companies
rather than to the final consumer.
Retailer - Answers A type of merchandising business that purchases merchandise from other companies
and sells directly to the final consumer.
Business-to-Business (B2B) Transactions - Answers Transactions between companies, such as wholesaler
to retailer.
Business-to-Consumer (B2C) Transactions - Answers Transactions between retailers and final consumers.
Gross Profit - Answers The profit before deducting operating expenses, calculated by subtracting the
cost of goods sold from sales.
Operating Income - Answers The profit after deducting operating expenses from gross profit.
Asset Turnover Ratio - Answers A financial metric used to evaluate a company's operating performance,
calculated as sales divided by average total assets.
Cost of Goods Sold (COGS) - Answers The cost of merchandise sold by a merchandising business,
subtracted from sales to calculate gross profit.
Inventory - Answers Merchandise on hand (unsold) at the end of an accounting period, reported as a
current asset on the balance sheet.
Chart of Accounts - Answers A list of all accounts used by a company to record transactions, typically
organized by account type and number.
Subsidiary Ledger - Answers A ledger that groups individual accounts with a common characteristic, with
a controlling account in the general ledger summarizing the total.
Perpetual Inventory System - Answers An inventory system where each purchase and sale of
merchandise is immediately recorded in the inventory account and related subsidiary ledger.
Periodic Inventory System - Answers An inventory system where a physical inventory count is done at
the end of the accounting period to determine the amount of merchandise on hand.
Purchases Discounts - Answers Supplier's discount to buyer for early payment.
B2B - Answers Business-to-business transactions.
2/10, n/30 - Answers Discount terms: 2% if paid in 10 days, total due in 30 days.
Merchandising Business - Answers A business that sells merchandise purchased from other companies
and can be classified as a wholesaler or a retailer.
Wholesaler - Answers A type of merchandising business that sells merchandise to other companies
rather than to the final consumer.
Retailer - Answers A type of merchandising business that purchases merchandise from other companies
and sells directly to the final consumer.
Business-to-Business (B2B) Transactions - Answers Transactions between companies, such as wholesaler
to retailer.
Business-to-Consumer (B2C) Transactions - Answers Transactions between retailers and final consumers.
Gross Profit - Answers The profit before deducting operating expenses, calculated by subtracting the
cost of goods sold from sales.
Operating Income - Answers The profit after deducting operating expenses from gross profit.
Asset Turnover Ratio - Answers A financial metric used to evaluate a company's operating performance,
calculated as sales divided by average total assets.
Cost of Goods Sold (COGS) - Answers The cost of merchandise sold by a merchandising business,
subtracted from sales to calculate gross profit.
Inventory - Answers Merchandise on hand (unsold) at the end of an accounting period, reported as a
current asset on the balance sheet.
Chart of Accounts - Answers A list of all accounts used by a company to record transactions, typically
organized by account type and number.
Subsidiary Ledger - Answers A ledger that groups individual accounts with a common characteristic, with
a controlling account in the general ledger summarizing the total.
Perpetual Inventory System - Answers An inventory system where each purchase and sale of
merchandise is immediately recorded in the inventory account and related subsidiary ledger.
Periodic Inventory System - Answers An inventory system where a physical inventory count is done at
the end of the accounting period to determine the amount of merchandise on hand.
Purchases Discounts - Answers Supplier's discount to buyer for early payment.
B2B - Answers Business-to-business transactions.
2/10, n/30 - Answers Discount terms: 2% if paid in 10 days, total due in 30 days.
