Net income will result if gross profit exceeds a. cost of goods sold. b. operating expenses. c. purchases. d. cost of goods sold plus operating expenses. Two categories of expenses in merchandising companies are a. cost of goods sold and financing expenses b. operating expenses and financing expenses. c. cost of goods sold and operating expenses d. sales and cost of goods sold. The primary difference between a periodic and perpetual inventory system is that a periodic system a. keeps a record showing the inventory on hand at all time b. provides better control over inventories. c. records the cost of the sale on the date the sale is made. d. determine the inventory on hand only at the end of the accounting period. Which of the following is not a common cost flow assumption used in costing inventory? a. First-in, first-out b. Middle-in, first-out c. Last-in, first-out d. Average cost Adjusting entries are made to ensure that a. expense are recognized in the period in which they are incurred. b. revenues are recorded in the period in which they are earned. c. balance sheet and income statement accounts have correct balances at the end of an accounting period. d. All of the above. An adjusting entry: a. affects two balance sheet accounts b. affects two income statement accounts c. affects a balance sheet account and an income statement account d. is always a compound entry