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20 Cards in this Set
- Front
- Back
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Two categories of expenses in merchandising companies are |
cost of goods sold and operating expenses. |
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Sales revenue less cost of goods sold is called |
gross profit.
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The primary difference between a periodic and perpetual inventory system is that a periodic system |
determines the inventory on hand only at the end of the accounting period. |
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A company using a perpetual inventory system that returns goods previously purchased on credit would |
debit Accounts Payable and credit Inventory |
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Freight costs incurred by a seller on merchandise sold to customers will cause an increase |
in operating expenses for the seller. |
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Stan’s Market recorded the following events involving a recent purchase of inventory:
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increased by $86,886. |
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Sales revenues are usually considered earned when |
goods have been transferred from the seller to the buyer. |
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Under the perpetual inventory system, in addition to making the entry to record a sale, a company would |
debit Cost of Goods sold and credit Inventory.
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The Sales Returns and Allowances account is classified as a(n) |
contra revenue account. |
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The collection of an $900 account within the 2 percent discount period will result in a
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x |
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Piper Company sells merchandise on account for $1,500 to Morton Company with credit terms of 2/10, n/30. Morton Company returns $500 of merchandise that was damaged, along with a check to settle the account within the discount period. What entry does Piper Company make upon receipt of the check? |
Cash980 Sales Returns and Allowances 500 Sales Discounts20 Accounts Receivable 1,500 |
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The collection of a $600 account beyond the 2 percent discount period will result in a |
debit to Cash for $600. |
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Interest expense would be classified on a multiple-step income statement under the heading |
Other expenses and losses. |
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The sales section of an income statement for a retailer would not include |
Sales discounts. |
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Financial information is presented below: Operating expenses$36,000 Sales revenue150,000 Cost of goods sold105,000
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0.3 |
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Financial information is presented below: Operating expenses$28,000 Sales returns and allowances7,000 Sales discounts3,000 Sales revenue150,000 Cost of goods sold91,000
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.15. |
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Financial information is presented below: Operating expenses$35,000 Sales returns and allowances12,000 Sales discounts3,000 Sales revenue140,000 Cost of goods sold85,000
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x |
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What is an advantage of using the multiple-step income statement?
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It highlights the components of net income. |
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Sampson Company's accounting records show the following for the year ending on December 31, 2014. Purchase Discounts$5,600 Freight-in7,800 Purchases350,010 Beginning Inventory23,500 Ending Inventory28,800 Purchase Returns and Allowances6,400
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$340,510. |
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United Services and Supplies reports net income of $60,000 and cost of goods sold of $360,000. US&S’s gross profit rate was 40%, net sales were |
x |
