5. What does the inventory turnover measure? a. The average amount of time inventory sits on a company's shelves b. The dollar amount of funds tied up in inventory C. How quickly a company sells its goods d. The profit generated from the selling of inventory Which of the following items are reported on a multiple-step income statement and on a single-step income statement? a. Cost of goods sold and sales b. Gross profit and operating expenses C. Operating expenses and total expenses d. Sales and income from operations What do freight terms of FOB shipping point indicate? a. The seller places the goods free on board the carrier, and the seller pays for the goods. b. Goods are placed free on board to the buyer's place of business and the buyer deducts the freight costs from the purchase price of the goods. c. Goods are placed free on board to the buyer's place of business and the seller pays the freight costs. d. The seller places the goods free on board the carrier, and the buyer pays for the freight costs. With regard to accounting for a merchandising company versus a service company, which of the following is true? a. Additional accounts and entries are typically required for a service company. b. Retailers and wholesalers can be either service companies or merchandising companies. C. The operating cycle of a merchandising company is longer than that of a service company. d. Because inventory is an asset, it is recognized on the balance sheet by both service and merchandising companies. 9. In periods of rising prices, what will LIFO produce? a. Lower income taxes than FIFO b. Higher net income than FIFO C. Higher net income than average costing d. Lower cost of goods sold than FIFO 10. Which of the following relationships is true concerning the Sales Returns and Allowances account? a. It is a contra account that is reported on the balance sheet as a deduction from the related sales. b. It can flag problems of inferior merchandise, inefficiencies in filling orders, and other mistakes. C. It represents the cost of merchandise returned by customers. d. It has a normal credit balance and is added to sales to determine net sales