Gross profit is sales

a.less cost of merchandise sold.

b.plus cost of merchandise sold.

c.less inventory.

d.less operating expenses.

Gross profit is

a.profit after deducting other expenses.

b.profit before deducting operating expenses.

c.profit after deducting operating expenses.

d.None of these choices are correct.

The purpose of the gross method of accounting for sales discounts is to

a.record the largest amount of sales to show robust revenues.

b.assume the customer will not take the discount.

c.abide by the GAAP requirements to record sales in the amount most likely to be received.

d.avoid recording a subsequent adjusting entry.

The closing entry for a merchandising business will include which of the following?

a.Debit to Cost of Merchandise Sold

b.Debit to Sales Revenue

c.Debit to the owner's drawing account

d.None of these choices are correct.

The following financial statement data for the year ending December 31 are for Aero Company:

Sales$561,400Total assets:Beginning of year384,000End of year418,000

What is the asset turnover for the year?

a.1.34

b.1.46

c.1.43

d.1.40

The inventory records of Spiro Company indicate that $62,500 of merchandise should be on hand at the end of the month. The physical inventory indicates that $58,800 is actually on hand. The journal entry to adjust inventory shrinkage will include

a.a credit to Merchandise Inventory for $3,700.

b.a credit to Cost of Merchandise Sold for $3,700.

c.a debit to Merchandise Inventory for $3,700.

d.a credit to Cash for $3,700.

In a perpetual inventory system,

a.each purchase and sale of inventory is recorded in the inventory account.

b.the inventory records cannot be computerized.

c.the amount of inventory for sale and the amount sold are not listed in the inventory account.

d.None of these choices are correct.

Which of the following accounts is used in the journal entry for the freight cost under the FOB (free on board) destination method?

a.Merchandise Inventory

b.Delivery Expense

c.Accounts Payable

d.Accounts Receivable

Global Company purchased merchandise on account from Planet Company for $58,000 with terms 2/15, net 45. Global Company returned $8,000 of the merchandise and received full credit from Planet Company. Which of the following will be included in the journal entry for the payment, assuming that the amount due was paid within the discount period?

a.Debit to Purchases, $58,000

b.Credit to Cash, $56,840

c.Debit to Accounts Payable, $58,000

d.Credit to Cash, $49,000

The two types of adjusting entries for merchandising companies include

a.Inventory Shrinkage and Customer Returns and Allowances.

b.Inventory and Customer Replacements.

c.Inventory Shrinkage and Customer Payables.

d.None of these choices are correct.

Merchandise inventory is reported as a(n)

a.current liability.

b.current asset.

c.long-term asset.

d.expense.

At year-end, Castleton Company has the following balances in its general ledger:

Sales$502,000Accounts Receivable272,000Allowance for Sales Discounts5,400

What is the balance of net accounts receivable on the year-end balance sheet?

a.$224,600

b.$277,400

c.$272,000

d.$266,600

The asset turnover is computed as

a.Average Total Assets Sales.

b.Sales Average Total Inventory.

c.Sales Average Total Assets.

d.Sales (Cash + Accounts Receivables + Inventory).

Which method of accounting for sales discounts uses a contra account in the journal entries to adjust for the discount?

a.The net method of recording sales discounts

b.The gross method of recording sales discounts

c.Both the gross and net methods of recording sales discounts

d.Neither the gross nor the net method of recording sales discounts

During the month, merchandise is sold for $80,700 cash and for $119,300 on account. The cost of merchandise sold is $101,400. What is the amount of revenue?

a.$200,000

b.$101,400

c.$80,700

d.$119,300

A change in the asset turnover from 2.0 to 1.8 would indicate

a.an increase in the effectiveness of assets in producing sales.

b.an unfavorable trend in using assets to generate sales.

c.a favorable trend in using assets to generate sales.

d.None of these choices are correct.

An adjusting entry needed to estimate future customer behavior includes

a.inventory shrinkage.

b.customer refunds.

c.customer replacements.

d.None of these choices are correct.

When the first closing entry is prepared and the debits to the revenue accounts add up to $155,690 and the credits to the expense accounts add up to $93,975, which of the following is true?

a.Total expenses equal $61,715.

b.Net income equals $61,715.

c.Total revenues equal $61,715.

d.Net loss equals $61,715.