Q 134

Taking a physical inventory count involves all of the following EXCEPT A) counting the units on hand. B) applying unit costs to the total inventory on hand for each item of inventory. C) evaluating whether inventory needs to be written off as obsolete. D) totalling the cost of each item of inventory to determine the total cost of goods on hand.

Q 135

Which of the following expressions is INCORRECT? A) Gross profit - operating expenses = profit. B) Sales - cost of goods sold - operating expenses = profit. C) Profit + operating expenses = gross profit. D) Operating expenses - cost of goods sold = gross profit.

Q 136

The sales revenue section of an income statement for a retailer would NOT include A) Sales returns and allowances. B) Sales. C) Net sales. D) Cost of goods sold.

Q 137

The operating expense section of an income statement for a wholesaler would NOT include A) office supplies expense. B) telephone expense. C) cost of goods sold. D) insurance expense.

Q 138

Profit from operations will result if A) the cost of goods sold exceeds operating expenses. B) revenues exceed cost of goods sold. C) revenues exceed operating expenses. D) gross profit exceeds operating expenses.

Q 139

Gross profit for a merchandising concern is net sales minus A) operating expenses. B) cost of goods sold. C) sales returns and allowances. D) cost of goods available for sale.

Q 140

Gross profit does NOT appear A) on a multiple-step income statement. B) on a single-step income statement. C) to be relevant in analyzing the operation of a merchandising company. D) on the income statement if the periodic inventory system is used because it cannot be calculated.

Q 141

Which of the following is NOT a true statement about a multiple-step income statement? A) Operating expenses may be classified as selling and administrative expenses. B) There may be a section for non-operating activities. C) There may be a section for operating assets. D) There is a section for cost of goods sold.

Q 142

Under IFRS, expenses must be classified on an income statement on the basis of A) size. B) importance. C) nature or function. D) usual or unusual expenses.

Q 143

Profit margin is improved when A) sales revenue increases. B) gross profit decreases. C) operating expenses increase. D) the cost of goods sold increases.

Q 144

Profit margin measures the extent by which selling price covers A) operating expenses. B) the cost of goods sold. C) all expenses. D) income taxes.

Q 145

If a company has net sales of $250,000 and cost of goods sold of $175,000, the gross profit margin is A) 70%. B) 30%. C) 15%. D) 100%.

Q 146

Use the following information for questions 146 and 147. A company shows the following balances: -What is the gross profit margin? A) 60% B) 80% C) 40% D) 20%

Q 147

Use the following information for questions 146 and 147. A company shows the following balances: -What is the company's profit margin? A) 7.5% B) 10% C) 15% D) 30%

Q 148

Which of the following is NOT needed to calculate the gross profit margin? A) Sales B) Sales Returns and Allowances C) Cost of Goods Sold D) Operating Expenses

Q 149

Profit margin is calculated as A) profit sales revenue. B) profit net sales. C) gross profit sales revenue. D) gross profit cost of goods sold.

Q 150

In a profitable company, the gross profit margin will always be _________ the profit margin. A) higher than B) lower than C) equal to D) The gross profit margin and the profit margin can never be the same.

Q 151

If sales have decreased in the past 5 years and the cost of goods sold value remains the same each year, this will create A) an increase in gross profit margin. B) an increase in profit margin. C) a decrease in gross profit margin. D) a decrease in cost of goods sold.

Q 152

The Purchase Returns and Allowances account is classified as A) an asset account. B) a contra asset account. C) an expense account. D) a contra expense account.

Q 153

The Purchase Discounts account is classified as A) an asset account. B) a contra asset account. C) an expense account. D) a contra expense account.

Q 154

Which of the following accounts has a normal debit balance? A) Purchase Returns and Allowances B) Purchase Discounts C) Sales D) Sales Returns and Allowances

Q 155

Using a periodic inventory system, the cost of freight in A) increases the cost of merchandise inventory. B) is debited to the Purchases account C) is reflected in an expense account called Freight In D) reflects the cost of delivering goods to customers.

Q 156

Midgic Farm Store had a beginning merchandise inventory of $9,000. During the period, Purchases were $35,000; Purchase Returns, $1,500; and Freight In $3,000. A physical count of inventory at the end of the period revealed that $6,000 was still on hand. Using a periodic inventory system, the cost of goods sold was A) $44,000. B) $39,500. C) $45,500. D) $42,500.

Q 157

The calculation of net purchases includes all of the following EXCEPT A) freight in. B) freight out. C) purchases discounts. D) purchases returns.

Q 158

In a periodic inventory system, when the buyer pays for freight costs, this entails A) a debit to the Freight In account. B) a debit to the Purchases account. C) a debit to the Inventory account. D) a debit to the Sales account.

Q 159

In a periodic inventory system, the cost of goods sold is calculated as A) beginning inventory plus the cost of goods purchased less ending inventory. B) ending inventory less cost of goods purchased. C) beginning inventory less cost of goods purchased. D) cost of goods purchased plus ending inventory less beginning inventory.

Q 160

Use the following information for questions *160 - *162. Yatsu Limited has the following information in its accounting records as at December 31, 2014: A physical inventory count revealed that there was $68,000 in ending inventory. -Net purchases are A) $129,860. B) $134,360. C) $121,810. D) $117,310.

Q 161

Use the following information for questions *160 - *162. Yatsu Limited has the following information in its accounting records as at December 31, 2014: A physical inventory count revealed that there was $68,000 in ending inventory. -The cost of goods purchased is A) $129,860. B) $134,360. C) $121,810. D) $117,310.

Q 162

Use the following information for questions *160 - *162. Yatsu Limited has the following information in its accounting records as at December 31, 2014: A physical inventory count revealed that there was $68,000 in ending inventory. -The cost of goods sold is A) $129,860. B) $134,360. C) $116,310. D) $110,810.

Q 163

The journal entry to record a return of merchandise purchased on account under a periodic inventory system would be

Q 164

Under a periodic inventory system, the sale of merchandise on credit requires a debit to A) Merchandise Inventory. B) Sales. C) Accounts Receivable. D) Cash.

Q 165

Under a periodic inventory system, the sale of merchandise on credit requires a credit to A) Merchandise Inventory. B) Sales Revenue. C) Accounts Receivable. D) Cash.

Q 166

Under a periodic inventory system, the return of merchandise sold on credit requires a credit to A) Merchandise Inventory. B) Sales Revenue. C) Accounts Receivable. D) Cash.