Bountiful Company had sales of $650,000 and cost of merchandise sold of $200,000 during the year

• Bountiful Company had sales of $650,000 and cost of merchandise sold of $200,000 during the year.  The total assets balance at the beginning of the year was $175,000 and at the end of the year was $167,000.  Calculate the ratio of sales to total assets.

	a.	0.29
	b.	3.00
	c.	0.26
	d.	3.80

Answer = d

• If merchandise sells for $3,500, with terms of 3/15, n/45 and the cost of the inventory sold is $2,100, the amount charged to sales is

	a.	$3,395
	b.	$3,500
	c.	$2,037
	d.	$2,100

Answer = a

• If the buyer is to pay the freight costs of delivering merchandise, delivery terms are stated as

	a.	FOB buyer
	b.	FOB shipping point
	c.	FOB destination
	d.	FOB n/30

Answer = b

Merchandise is ordered on November 10; the merchandise is shipped by the seller and the invoice is prepared, dated, and mailed by the seller on November 13; the merchandise is received by the buyer on November 18; the entry is made in the buyer's accounts on November 20.  The credit period begins with what date?

	a.	November 10
	b.	November 18
	c.	November 13
	d.	November 20

Answer = c

• When the perpetual inventory system is used, the inventory sold is shown on the income statement as

	a.	net purchases
	b.	purchases returns and allowances
	c.	purchases
	d.	cost of merchandise sold

Answer = d