1) Operating expenses include A) cost of goods sold B) expenses that occur in an entity's major line of business C) cost of goods sold, selling expenses, and administrative expenses D) loss on sale of plant asset 2) Gross profit is calculated as the difference between net sales revenue and A) purchase expense B) cost of goods sold C) cost of merchandise inventory D) operating expenses 3) On the balance sheet of a retailer, the Merchandise Inventory account A) is not included because it is an income statement account B) is included in the current assets section C) is listed after prepaid assets D) represents the value of inventory that has been sold during the period 4) Merchandise inventory accounting systems can be broadly categorized into two types. They are A) FIFO and LIFO B) perpetual and periodic C) wholesale and retail D) manufacturer and producer 5) What does "2/10" mean, with respect to "credit terms of 2/10, 1/30"? A) A discount of 2 percent will be allowed if the invoice is paid within 10 days of the invoice date. B) Interest of 2 percent will be charged if the invoice is paid after 10 days from the date on the invoice C) A discount of 10 percent will be allowed if the invoice is paid within two days of the invoice date. D) Interest of 10 percent will be charged if invoice is paid after two days. 6) A customer returned merchandise purchased with cash with a sales price of $9,500. The cost of goods was $3.800. Which of the following represents the correct way to record this transaction? A) Refunds Payable 9,500 Sales Revenue 9.500 3,800 3.800 Merchandise Inventory Estimated Returns Inventory B) Refunds Payable Cash 9,5001 9,500 3.800 3,800 Merchandise Inventory Estimated Returns Inventory C) Sales Revenue Cash 9,500 9.5000 3.800 3.800 Merchandise Inventory Cost of Goods Sold D) Sales Returns and Allowances Cash 9,500 9.500 3.800 Estimated Returns Inventory Merchandise Inventory 3,800