1) Gross profit is

A) Net sales less cost of goods sold

B) A special general ledger account

C) Only calculated when using the perpetual inventory system

D) The same as profit

E) Subtracted from operating income to get profit

2) Cost of goods sold is

A) An operating expense

B) The cost of goods sold to customers

C) Another term for net sales

D) Also called gross margin

E) The term used for the cost of buying and preparing merchandise

3) A merchandising company

A) Buys products from manufacturers and sells to retailer

B) Reports cost of goods sold on the income statement

C) Earns profit from buying and selling merchandise

D) Buys products from manufacturers and sells them to consumers

E) All of the above

4) Merchandise inventory is

A) Includes supplies

B) Included on a service company's balance sheet

C) Reported on the balance sheet under plant and equipment

D) Products a company owns for resale to customers

E) Reported on the income statement as an expense

5) Z-Mart had sales of $572,300. Gross profit was $239,106. What is the cost of goods sold? 5) _______

A) $811,406 B) $40,088 C) $333,194 D) $279,194 E) $360,194

6) Goods in transit are included in inventory

A) When the purchaser is responsible for paying freight charges

B) At any time in transit

C) When the purchaser is responsible for paying freight charges and when ownership has passed to the

purchaser

D) When ownership has passed to the purchaser

E) When the supplier pays the freight charges