Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

utale Whether the statement is true 1 or false 1. In a merchandise business, sales minus operating expenses equals net income 2. Under the periodic

image text in transcribed
utale Whether the statement is true 1 or false 1. In a merchandise business, sales minus operating expenses equals net income 2. Under the periodic inventory system, the cost of merchandise sold is equal to the beginning merchandise inventory plus the cost of merchandise purchased plus the ending merchandise inventory 3. Gross profit minus selling expenses equals net income. 4. Other incom and expenses are items that are not related to the primary operating activity 5. The chart of accounts for a merchandise business would include an account called Delivery Expense. 6. When companies use a perpetual inventory system, the recording of the purchase of inventory will include a debit to purchases 7. Most companies will not take a purchases discount, because 1% or 2% discounts are insignificant. 8. If the perpetual inventory system is used, an account entitled Cost of Merchandise Sold is included in the general ledger 9. Inventory controls start when the merchandise is shelved in the store area. 10. Of the three widely used inventory costing methods (FIFO, LIFO, and average cost), the LIFO method of costing inventory assumes costs are charged based on the most recent purchases first. 11. During periods of increasing costs, an advantage of the LIFO inventory cost method is that it matches more 12. Unsold consigned merchandise should be included in the consignee's inventory 13. Average inventory is computed by adding the inventory at the beginning of the period to the inventory at the 14. For efficiency of operations and better control over cash, a company should maintain only one bank account. 15. In preparing a bank reconciliation, the amount of outstanding checks is added to the balance per bank recent costs against current revenues. end of the period and dividing by two. statement. Multiple Choice Identify the choice that best completes the statement or answers the question 16. Generally, the revenue account for a merchandising business is entitled a. Sales b. Net Sales

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamental accounting principle

Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta

21st edition

1259119831, 9781259311703, 978-1259119835, 1259311708, 978-0078025587

More Books

Students also viewed these Accounting questions