1.) 1. In a perpetual inventory system, transportation charges are recorded with a debit to the merchandise inventory account. 2. An income statement in which the details of the cost of goods sold are shown is called a single-step income statement.

1st statement is false

1st statement is true

both statements are false

both statements are true

2.) a merchandiser will earn an operating income exactly zero when

operating expenses equals net sales

gross margin equals operating expenses

net sales equals cost of goods sold

cost of goods sold equals gross margin

3.) 1. sales returns and allowances is described as a contra revenue account 2. for a merchandising entity, the difference between net sales and operating expenses is called gross margin.

both statements are true

both statements are false

1st statement is true

1st statement is false

4.) 1. there is no need for physical inventory count in the perpetual system 2. the perpetual inventory system requires recording the cost of each sale as it occurs

1st statement is true

1st statement is false

both statements are true

both statements are false

5.) Under the periodic inventory system, the Purchases account is used to record

only purchases of merchandise inventory on account

purchases of merchandise inventory for cash or on account

purchases of any asset on account or note payable

only cash purchases of merchandise inventory

6.) Which of the following is shown on both a multiple-step and a single-step income statement?

other expenses & losses

net sales

income from operations

gross profit

7.) after all the adjusting entries are posted, the balances of all asset, liability, income and expense accounts correspond exactly to the amounts in the

unadjusted trial balance

trial balance of balances

post closing trial balance

financial statements

8.) the basic differences between the FS of merchandising and service entity include COGS section of the Income statement and the

other income section of the income statement

inclusion of merchandise inventory on the BS as a current asset

equity section of the balance sheet

profit figure

9.) 1. The bill of lading is a document prepared by the seller detailing the terms of delivery 2. the sales invoice is the evidence for credit sales and purchases.

1st statement is true

1st statement is false

both statements are true

both statements are false

10.) 1. the balance of the merchandise inventory account at the beginning of the period represents the cost of the merchandise on hand at that time 2. the ending inventory of one period is the beginning inventory of the next period

both statements are true

1st statement is false

both statements are false

1st statement is true