Question 1

Both wholesalers and retailers are merchandisers.

True

False

Question 2

On the income statement, a merchandising company reports the cost of merchandise inventory that has been sold to customers.

True

False

Question 3

The operating cycle of a merchandiser begins when the company purchases inventory from a vendor and ends when the company then sells the inventory to a customer.

True

False

Question 4

Gross profit is the extra amount the company receives from the customer for merchandise sold over what the company paid to the vendor.

True

False

Question 5

An invoice can be either a sales invoice or a purchase invoice.

True

False

Question 6

Under the perpetual inventory system, two journal entries are used to record the sale of merchandise. One entry records the Sales Revenue and another entry records the Cost of Goods Sold.

True

False

Question 7

Merchandisers must adjust for estimated sales returns and inventory shrinkage.

True

False

Question 8

Cost of Goods Sold appears on a multi-step income statement but not on a single-step income statement.

True

False

Question 9

The gross profit percentage measures the profitability of each sales dollar above the cost of goods sold.

True

False

Question 10

Under the new revenue recognition standards, companies are required to identify the performance obligations associated with each contract.

True

False