5 Written questions
4 Matching questions
- A merchandiser using a perpetual system will require one additional adjusting entry to make the records agree with the actual inventory on hand.
- In determining Cost of goods sold
A. Purchase Discounts are deducted from Net Purchases
B. Freight-out is added to Net Purchases.
C. Purchase Returns and Allowances are deducted from Net Purchases.
D. Freight-in is added to Net Purchases.
- Income from operations appears on
A. both a multiple-step and a single-step income statement.
B. neither a multiple-step nor a single-step income statement.
C. a multiple-step income statement only.
D. a single-step income statement only.
- A company has the following account balances: Sale Revenue, $1,000,000; Sales Returns and Allowances, $180,000; Sales Discounts, $20,000; and Cost of Goods Sold, $600,000. What is the company's gross profit rate?
- a B
- b TRUE
- c D
- d C
5 Multiple choice questions
5 True/False questions
Income from operations is
A. Net sales less Cost of goods sold.
B. Net sales less Operating expenses.
C. Gross profit less Other expenses and losses.
D. Gross profit less Operating expenses. → D
A perpetual inventory system would more likely be used by a (n)
A. automobile dealership.
B. hardware store.
D. convenience store. → D
To record the sale of goods for cash in a perpetual inventory system
A. only one journal entry is necessary to record cost of goods sold and reduction of inventory.
B. only one journal entry is necessary to record the receipt of cash and the sales revenue.
C. two journal entries are necessary: one to record the receipt of cash and sales revenue, and one to record the cost of goods sold and reduction of inventory.
D. two journal entries are necessary: one to record the receipt of cash and reduction of inventory, and one to record the cost of goods sold and sales revenue. → B
Gross profit will result if
A. operating expenses are less than net income.
B. sales revenues are greater than operating expenses.
C. sales revenues are greater than cost of goods sold.
D. operating expenses are greater than cost of goods sold. → C
The steps in the accounting cycle for a merchandising company are the same as those in a service company except
A. an additional adjusting journal entry for inventory may be needed in a merchandising company.
B. closing journal entries are not required for a merchandising company.
C. a post-closing trial balance is not required for a merchandising company.
D. a multiple-step income statement is required for a merchandising company. → D