Those questions choose True or False

1. The normal balance of Sales Returns and Allowances is a credit.

2. Merchandise is sold for $5,000 with terms 1/10, n/30. If $1,000 of the merchandise is returned prior to payment and the invoice is paid within the discount period, the amount of the sales discount is $40.

3. Gross profit is the difference between net sales and cost of goods sold.

4. The multiple-step income statement is considered more useful than the single-step income statement because it highlights the components of net income.

5. Operating expenses are subtracted from revenue for a service enterprise and from gross profit for a merchandising enterprise.

6. Sales revenue minus operating expenses equals gross profit.

7. In accounting for inventory, the assumed flow of costs must match the physical flow of goods.

8. When the terms of a sale are FOB destination, legal title to the goods passes to the buyer when the goods reach the buyer's place of business.

9. Computers have made the periodic inventory system more popular and easier to apply.

10. The First-in, First-out (FIFO) inventory method results in an ending inventory valued at the most recent cost.