Item$3$

Part $3$ of $8$

$2\mathrm{.}77$

points

eBookPrintReferencesCheck my workCheck My Work button is now disabledItem $3$Required information

Required information

Learning Objective $04-$C$1$: Describe merchandising activities and cost flows.

Skip to question

Merchandisers buy products and resell them. Examples of merchandisers include Walmart and Home Depot. A merchandiser$$s costs on the income statement include cost of goods sold. Gross profit, or gross margin, equals sales minus cost of goods sold.

The current asset section of a merchandising company$$s balance sheet includes the cost of products held for resale as of the balance sheet date. When the merchandise is sold, its cost is transferred from the balance sheet to the income statement, where it is reported as cost of goods sold.

Income Statement

Knowledge Check $01$

A company reports net sales of $$600,000,$ cost of goods sold of $$200,000,$ and net income of $$100,000.$ Its gross profit equals:

multiple choice

$$100,000$

$$300,000$

$$400,000$

$$500,000$