Gross profit is the difference between:

a. Net sales and the cost of goods sold.

b. The cost of merchandise purchased and the cost of merchandise sold.

c. Net sales and net income.

d. Net sales and all expenses.

When a customer returns merchandise that it recently purchased on credit, the journal entry to record this transaction would credit Accounts Receivable and the Cost of Goods Sold. It would also debit:

1. Sales Returns & Allowances and Inventory

2. Sales Revenue and Inventory

3. Sales Discounts and Inventory

4.Sales Returns and Allowances and Cash

Inventory Shrinkage is caused by:

1. Shoplifting

2. Breakage

3. Spoilage

4.All three of the above

Under the perpetual inventory system which journal entry would indicate that a company acquired and paid for additional merchandise that increases its inventory?

a. Debit Inventory and credit Cash.

b. Debit Purchases and credit Cash.

c. Debit Costs of Goods Sold and credit Inventory.

d.Debit Inventory and credit Cost of Goods Sold.