College Acct 1- Chapter 4

Inventory is reported on the ____________ and as a(n) ___________ asset.

• Statement of Retained Earnings; intangible

• Balance Sheet; current

• Income Statement; plant (long-term)

• Income Statement; current

• Balance Sheet; plant (long-term)

How do you calculate Cost of Goods Sold (COGS)?

• Beginning Inventory + Purchases - Ending Inventory

• Ending Inventory + Beginning Inventory

• Sales - Sales Discounts

• Gross Profit - Expenses

• Revenue - Expenses

Which of the following accounts does NOT appear on the balance sheet of a service company?

• Accounts Payable

• Cash

• Equipment

• Merchandise Inventory

• Supplies

A company purchased $80,000 of merchandise on August 10 with terms of 2/10, n/45. On August 12, it returned $10,000 of that merchandise. On August 19, it paid the balance owed for the merchandise taking any discount that it was entitled to. The cash paid on August 19 equals:

• $80,000

• $70,000

• $68,600

• $1,400

• $8,724

Merchandise Inventory:

• Is a long-term asset

• Must be sold within one month

• Is classified with investments on the balance sheet

• Is a current asset

• Includes supplies the company will use in future periods

Expenses of promoting sales by displaying and advertising merchandise, making sales and delivering goods to customers are:

• Cost of Goods Sold

• Purchasing Expenses

• Nonoperating Expenses

• General and Administrative Expenses

• Selling Expenses

Stuart Company had GROSS sales of $225,000, sales discounts of $5,000, and sales returns of $2,000. Stuart Company's NET sales equals:

• $218,000

• $225,000

• $230,000

• $232,000

• $7,000

A company's gross profit was $52,250 and its net sales were $227,600. Its gross margin ratio equals:

• 77.0%

• 23.0%

• 435.6%

• $227,600

• $175,350

An income statement that separates operating revenues and expenses from non-operating ones and shows multiple subtotals is a:

• Single-step income statement

• Multiple-step income statement

• Condensed income statement

• Classified income statement

• Segmented income statement

The credit terms 2/15, n/45 are interpreted as:

• 15% discount if paid within 2 days

• 2% cash discount if the amount is paid within 15 days, or the balance is due in 45 days

• 2% discount if paid within 45 days

• 2% cash discount if the amount is paid within 2 days, or the balance is due in 45 days

• 45% discount if paid within 15 days