Which of the following describes how a merchandise income statement is different from a service income statement? The revenue from a merchandise business is reported as sales. The program and production expenses are subtracted from gross profit to arrive at operating income. Depreciation and amortization expenses are added to the cost of goods sold. A merchandise business shows a gross profit line. 2) Which of the following statements is false? The accounting equation is reflected in the balance sheet. The balance sheet is classified to categorize the various items within the statement. Classifying items helps the user see where a company gets its resources. Classifying items on a balance sheet helps show the company's financial position. 3) Which of the following statements is true? The sale of goods and services results in revenue. The costs of operating a company are called expenses. A company must generate net income in order to be sustainable. The income statement reports the financial performance of a company over a specific period of time. 4) Which statement summarizes and explains the changes in retained earnings during the accounting period? Balance Sheet Income Statement Statement of Retained Earnings Trial Balance
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Step 1
A merchandise income statement includes a "Sales" line for revenue and a "Gross Profit" line, which is calculated by subtracting the cost of goods sold (COGS) from sales. A service income statement typically does not have a COGS or gross profit line because Show more…
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Akash M.
1. Internet companies that simply act as agent or broker for the transfer of goods must record revenue based on: a. the cost of the product sold. b. the fees it charges sellers. c. the sales price of the product. d. the gross profit of the product sold. 2. Which of the following statements is not true regarding the cash flow statement? a. The cash flow statement provides information about changes in all the balance sheet accounts. b. The change in cash is classified into cash flow from three categories: operating activities, investing activities and financing activities. c. The cash flow statement generally shows that cash flows and accrual earnings are substantially the same. d. The cash flow statement explains the causes for year-to-year changes in cash and cash equivalents.
Adi S.
Item a: The adjusted trial balance of Entity B included the following selected accounts: Debit Credit Sales Revenue $900,000 Sales Returns and Allowances $45,000 Sales Discounts $18,500 Cost of Goods Sold $376,425 Freight-Out $7,000 Advertising Expense $35,000 Interest Expense $22,000 Salaries and Wages Expense $125,000 Rent Expense $120,000 Depreciation Expense $12,000 Income tax expense $40,000 Dividend Revenue $45,000 Instructions: 1. Use the above information to prepare a multiple-step income statement for the year ended December 31, 2023. 2. Calculate the profit margin and gross profit rate. 3. Suggest three ways that either the gross profit rate or profit margin might be increased. Item b: Entity C sold Entity D $15,000 of merchandise, terms 2/10, net 30. Entity C paid $5,000 for the merchandise. Instructions: 1. Journalize the sale on Entity C's books. 2. If Entity D returned $3,000 of the merchandise, and paid for the remainder 9 days from the date of the sales invoice, how much did Entity D remit (pay) Entity C?
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