What is the purpose of the closing process?

Multiple Choice

To prepare the accounting records so they are ready to track results for the following year.

To record transactions for the period.

To adjust for accrual and deferral transactions.

To set all account balances to zero.

Adjusting entries are typically prepared:

Multiple Choice

on a weekly basis.

at the beginning of the accounting period.

at the end of the accounting period.

on a daily basis.

A company using a perpetual inventory system made the following entry:

What transaction does this entry represent?

Multiple Choice

A payment within the discount period for inventory previously purchased on credit.

A purchase of inventory at a discount.

A sale of inventory on account.

A return of inventory for credit.

$39$ The accounting records of the Meadowbrook Company reported the following:

Cost of Goods Sold

Income Tax

Interest and Other Expenses

Sales Discounts

Sales Revenue

Selling and Administrative Expense

What is the gross profit?

Multiple Choice

$$58,000$

$$60,000$

$$38,000$

$$36\mathrm{.}000$

$$140,000$

$10,000$

$14,000$

$2,000$

$200,000$

$20,000$

$200,000$

$$38,000$

Multistep income statements:

Multiple Choice

classify Cost of Goods Sold as a selling expense.

are required for merchandising companies.

are required when the perpetual inventory method is used

contain more detail than just listing revenues and expenses.