Chapter Questions
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.
Under a perpetual inventory system, when goods are purchased for resale by a company:a. purchases on account are debited to Inventory.b. purchases on account are debited to Purchasesc. purchase returns are debited to Purchase Returns and Allowances.d. freight costs are debited to Freight-out.
The sales accounts that normally have a debit balance are:a. Sales Discountsb. Sales Returns and Allowancesc. Both (a) and (b).d. Neither (a) nor (b).
A credit sale of $$\$ 750$$ is made on June 13, terms $$2 / 10$$, net/30. A return of $$\$ 50$$ is granted on June 16. The amount received as payment in full on June 23 is:a. $$\$ 700$$.c. $$\$ 685$$.b. $$\$ 686$$.d. $$\$ 650$$.
Which of the following accounts will normally appear in the ledger of a merchandising company that uses a perpetual inventory system?a. Purchasesc. Cost of Goods Sold.b. Freight-in.d. Purchase Discounts.
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.
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.
The multiple-step income statement for a merchandising company shows each of the following features except:a. gross profit.b. cost of goods sold.c. a sales revenue section.d. investing activities section.
If sales revenues are $$\$ 400,000$$, cost of goods sold is $$\$ 310,000$$, and operating expenses are $$\$ 60,000$$, the gross profit is:a. $$\$ 30,000$$.c. $$\$ 340.000$$.b. $$\$ 90,000$$.d. $$\$ 400,000$$.
A single-step income statement:a. reports gross profit.b. does not report cost of goods sold.c. reports sales revenues and "Other revenues and gains" in the revenues section of the income statement.d. reports operating income separately.
Which of the following appears on both a single-step and a multiple-step income statement?a. inventory.b. gross profit.c. income from operations.d. cost of goods sold.
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.
If beginning inventory is $$\$ 60,000$$, cost of goods purchased is $$\$ 380,000$$, and ending inventory is $$\$ 50,000$$, cost of goods sold is:a. $$\$ 390,000$$.c. $$\$ 330,000$$.b. $$\$ 370.000$$.d. $$\$ 420,000$$.
When goods are purchased for resale by a company using a periodic inventory system:a. purchases on account are debited to Iaventory.b. purchases on account are debited to Purchases.c. purchase returns are debited to Purchase Returns and Allowances.d. freight costs are debited to Purchases.
In a worksheet, Inventory is shown in the following columns:a. Adjusted trial balance debit and balance sheet debit.b. Income statement debit and balance sheet debit.c. Income statement credit and balance sheet debit.d. Income statement credit and adjusted trial balance debit.