1. Gross profit equals the difference between a. net income and operating expenses. b. sales revenue and cost of goods sold. c. sales revenue and operating expenses. d. sales revenue and cost of goods sold plus operating expenses. 2. Net income will result if gross profit exceeds a. cost of goods sold. b. operating expenses. c. purchases d. cost of goods sold plus operating expenses. Under a perpetual inventory system, a. accounting records continuously disclose the amount of inventory. b. increases in inventory resulting from purchases are debited to purchases. c. there is no need for a year-end physical count. d. the account purchase returns and allowances is credited when goods are returned to vendors. 4. In a perpetual inventory system, cost of goods sold is recorded a. on a daily basis. b. on a monthly basis. C. on an annual basis. d. each time a sale occurs. Gross profit does not appear a. on a multiple-step income statement. b. on a single-step income statement. c. to be relevant in analyzing the operation of a merchandising company. d. on either a multiple-step or single-step income statement. 6. Operating expenses would include a. interest expense. b. income tax expense. c. freight-out. d. freight-out and interest. An advantage of the single-step income statement over the multiple-step form is a. the amount of information it provides. b. its comprehensiveness. c. its simplicity d. its use in computing ratios