TRUE OR FALSE

Q 38

The gross profit section for a merchandising company appears on both the multiple-step and single-step forms of an income statement.

Q 39

In a multiple-step Income Statement, operating expenses are deducted from Gross Profit to give the Profit from Operations.

Q 40

If Gross Profit is $80,000 and operating expenses are $55,000, then the Profit from Operations is $25,000.

Q 41

Non operating expenses are any expenses which are NOT related to the company's main operations.

Q 42

Profit is the final outcome of a company's operating and non operating activities.

Q 43

If there are no "non- operating" activities, then Profit from Operations equals the company's profit.

Q 44

Gross profit margin is calculated by dividing cost of goods sold by net sales.

Q 45

Gross profit margin is net sales divided by cost of goods sold.

Q 46

To increase their gross profit margin, a company should increase their sales.

Q 47

To increase their gross profit margin, a company should decrease their cost of goods sold.

Q 48

To increase their gross profit margin, a company should decrease their operating expenses.

Q 49

An increase in a company's gross profit will mean an increase in gross profit margin.

Q 50

Gross profit margin is an example of a liquidity ratio.

Q 51

An increase in sales will always increase a company's gross profit margin.

Q 52

A decrease in cost of goods sold will always increase a company's gross profit margin.

Q 53

An increase in profit when accompanied with a decrease in net sales will increase profit margin.

Q 54

A company can improve its profit margin by increasing its gross profit margin.

Q 55

Artist Company has net sales of $350,000 and cost of goods sold is $275,000. If all other expenses equal $40,000, the company's profit margin is 10%.

Q 56

In a periodic inventory system, detailed records of each inventory purchase are maintained.

Q 57

Under a periodic inventory system, the inventory account is updated when the sale is recorded.

Q 58

When a company returns merchandise to its supplier under a periodic inventory system, the Purchases Account is credited.

Q 59

In the periodic system of accounting, the cost of goods sold is NOT recorded at the time of sale of goods.

Q 60

Purchases is a temporary account reported on the income statement as an expense.

Q 61

Cost of goods sold, in a periodic inventory system, is determined by adding the cost of goods purchased to the ending inventory.

Q 62

Net purchases is determined by adding purchase returns and allowances to total purchases.

Q 63

Cost of goods available for sale, in a periodic inventory system, is deducted from beginning inventory to determine cost of goods purchased