Activity 1. True or False. Write "TRUE" if the statement is correct and "FALSE" if the statement is incorrect. 1. The cost of sales method presents expenses in the income statement according to its nature. 2. The main source of revenue in a merchandising business is sales. 3. Selling expenses are expenses necessary in the management of the office. 4. Merchandise inventory beginning plus net cost of purchases is cost of goods sold. 5. Sales less cost of goods sold is gross profit. 6. The multi-step income statement is used only in a service concern business. 7. The income statement shows the result of operating as well as the financial standing of a company as to a given date. 8. Other expenses are expenses directly related to the sale of merchandise. 9. Goods available for sale less merchandise inventory beginning is cost of goods sold. 10.In preparing the income statement 1/3 of a company, management may choose between the single-step income statement or multiple-step income statement basedpp/I 0 on convenience.

Activity 1. True or False. Write "TRUE" if the statement is correct and "FALSE" if the statement is incorrect. 1. The cost of sales method presents expenses in the income statement according to its nature. 2. The main source of revenue in a merchandising business is sales. 3. Selling expenses are expenses necessary in the management of the office. 4. Merchandise inventory beginning plus net cost of purchases is cost of goods sold. 5. Sales less cost of goods sold is gross profit. 6. The multi-step income statement is used only in a service concern business. 7. The income statement shows the result of operating as well as the financial standing of a company as to a given date. 8. Other expenses are expenses directly related to the sale of merchandise. 9. Goods available for sale less merchandise inventory beginning is cost of goods sold. 10.In preparing the income statement 1/3 of a company, management may choose between the single-step income statement or multiple-step income statement basedpp/I 0 on convenience.

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter5: Inventories And Cost Of Goods Sold

Section: Chapter Questions

Problem 5.1KTQ: Merchandise Accounting Merchandise Inventory Raw materials Work in process Finished goods Gross...

See similar textbooks

Similar questions

Identify each of the following items relating to sections of an income statement as Revenue from Sales (S), Cost of Goods Sold (CGS), Selling Expenses (SE), General Expenses (GE), Other Income (OI), or Other Expenses (OE). a. Utilities Expense b. Advertising Expense c. Purchases Discounts d. Sales Returns and Allowances e. Interest Income f. Freight In g. Depreciation Expense, Equipment h. Interest Expense i. Rent Expense j. Sales
Which of the following is an example of a contra revenue account? A. sales B. merchandise inventory C. sales discounts D. accounts payable
Merchandise Accounting Merchandise Inventory Raw materials Work in process Finished goods Gross profit Net sales Sales revenue Cost of goods available for sale Cost of goods sold Perpetual system Periodic system Transportation-In Purchases FOB destination point FOB shipping point Gross profit ratio An adjunct account used to record freight costs paid by the buyer. A system in which the Inventory account is increased at the time of each purchase and decreased at the time of each sale. Terms that require the seller to pay for the cost of shipping the merchandise to the buyer. Terms that require the buyer to pay for the shipping costs. A system in which the Inventory account is updated only at the end of the period. Beginning inventory plus cost of goods purchased. An account used in a periodic inventory system to record acquisitions of merchandise. Sales revenue less sales returns and allowances and sales discounts. Cost of goods available for sale minus ending inventory. Gross profit divided by net sales. Net sales less cost of goods sold. The cost of unfinished products in a manufacturing company. The account wholesalers and retailers use to report inventory held for sale. The inventory of a manufacturer before the addition of any direct labor or manufacturing overhead. A manufacturers inventory that is complete and ready for sale. A representation of the inflow of assets from the sale of a product.
Which of the following accounts are used when recording the sales entry of a sale on credit? A. merchandise inventory, cash B. accounts receivable, merchandise inventory C. accounts receivable, sales D. sales, cost of goods sold
For each of the following accounts, identify whether the normal balance is a debit or a credit. Also specify whether the account is a contra account. a. Sales Returns and Allowances b. Merchandise Inventory c. Sales d. d Freight In e. Purchases Returns and Allowances f. Sales Tax Payable g. Purchases
Assume that the business in Exercise 6-9 maintains a perpetual inventory system. Determine the cost of goods sold for each sale and the inventory balance after each sale, assuming the first-in, first-out method. Present the data in the form illustrated in Exhibit 3.
Sales Returns and Allowances is classified as a contra-cost account on the income statement.
Assume that the business in Exercise 7-9 maintains a perpetual inventory system. Determine the cost of merchandise sold for each sale and the inventory balance after each sale, assuming the first-in, first-out method. Present the data in the form illustrated in Exhibit 3.
Which of the following is true about the Sales Returns and Allowances account? a. It is used to record the sale of merchandise. b. It is used to record the reduction of inventory. c. It is a contra account, deducted from sales. d. It is used to record discounts for prompt payment. e. None of the above.
Assuming that Merchandise business use simple step income statement. Which of the following will be correct result of Net Income by the business? a. Total expenses will be divided by Total revenue b. Total revenue will be multiplied by cost of goods sold c. Total Expenses will be deducted from Total Revenue d. Total Revenue will be deducted from Total expenses
The revenue account for a merchandising business is typically called ___________. Group of answer choices inventory sales. unearned revenue. fees earned. sales or sales of merchandise.
Accounting for Merchandising Businesses and Inventory and Assets Define the following: Cost of goods sold Credit memo Credit terms Debit memo FIFO FOB Gross profit Invoice LIFO Net sales Periodic inventory Perpetual inventory Sales Selling expense Subsidiary ledger Trade discount Weighted average