Merchandising and inventories

Gross profi t will result if:

• operating expenses are less than net income.

• sales revenue are greater than opearting expenses.

• sales revenues are greater than cost of goods sold.

• operating expenses are greater than cost of goods sold.

Under a perpetual inventory system, when goods are purchased for resale by a company:

• purchases on account are debited to Inventory

• purchases on account are debited to Purchases.

• purchase returns are debited to Purchase Returns and Allowances.

• freight costs are debited to Freight-Out.

The sales accounts that normally have a debit balance are:

• Sales Discounts.

• Sales Returns and Allowances.

• Both (a) and (b).

• Neither (a) nor (b).

A credit sale of NT$7,500 is made on June 13, terms 2/10, net/30. A return of NT$500 is granted on June 16. The amount received as payment in full on June 23 is:

• NT$7,000.

• NT$6,860.

• NT$6,850.

• NT$6,500

Which of the following accounts will normally appear in the ledger of a merchandising company that uses a perpetual inventory system?

• Purchases.

• Freight-In.

• Cost of Goods Sold.

• Purchase Discounts.

To record the sale of goods for cash in a perpetual inventory system:

• only one journal entry is necessary to record cost of goods sold and reduction of inventory.

• only one journal entry is necessary to record the receipt of cash and the sales revenue.

• 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

• 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:

• an additional adjusting journal entry for inven tory may be needed in a merchandising company.

• closing journal entries are not required for a merchandising company.

• a post-closing trial balance is not required for a merchandising company.

• an income statement is required for a merchan dising company.

The income statement for a merchandising company shows each of the following features except:

• gross profit.

• cost of goods sold.

• a sales section.

• investing activities section.

If sales revenues are €400,000, cost of goods sold is €310,000, and operating expenses are €60,000, the gross profi t is:

• €30,000.

• €90,000.

• €340,000.

• €400,000.

In a worksheet using a perpetual inventory system, Inventory is shown in the following columns:

• adjusted trial balance debit and statement of f i nancial position debit.

• income statement debit and statement of fi nan cial position debit.

• income statement credit and statement of fi nan cial position debit.

• income statement credit and adjusted trial bal ance debit.