#'s 2-5

2. If the amount of the physical count of the stock of merchandise is less than the recorded amount, the following adjusting entry is made under the perpetual inventory system: A) Debit cost of goods sold and credit merchandise inventory B) Debit merchandise inventory and credit cost of goods sold C) Debit merchandise inventory and credit accounts payable D) Debit sales and credit cost of goods sold. 3. Net sales less cost of goods sold equals: A) Operating expenses B) Gross profit C) Income from operations D) Net income 4. Current assets are listed in the order of their convertibility into cash, usually in the following order: A) Cash, Accounts Receivable, Prepaid items, and Merchandise Inventory B) Cash, Prepaid items, Accounts Receivable, and Merchandise Inventory C) Cash, Merchandise Inventory, Prepaid items, and Accounts Receivable D) Cash, Accounts Receivable, Merchandise Inventory, and Prepaid items 5. Long-term liabilities are debts that are payable over a comparatively long period, usually more than a year. An example of long-term liability is: A) Notes payable B) Mortgage payable C) Accounts payable D) Salaries payable