Merchandise Inventory and Cost of Sales

Freight-out is included in the cost of sales computation.

• TRUE

• FALSE

If gross profit is bigger than operating expense, its results is profit.

• TRUE

• FALSE

Operating expenses under merchandising are classified into Selling or Distribution Expenses and General & Administrative Expenses.

• TRUE

• FALSE

Net Sales is arrived at after deducting sales returns and allowances and sales discounts from sales.

• TRUE

• FALSE

The work conducted to determine the quantity of goods on hand is termed as "physical inventory count."

• TRUE

• FALSE

Beginning inventory plus net purchase equals total goods available for sale.

• TRUE

• FALSE

The excess of Sales over Cost of Sales equals Gross Profit.

• TRUE

• FALSE

F.O.B. means "free on board."

• TRUE

• FALSE

Merchandise in transit may or may not be owned by the buyer depending upon the term of shipment.

• TRUE

• FALSE

When the merchandise is still in the carrier and already on the way to the buyer’s place of business, these are called merchandise in transit.

• TRUE

• FALSE