Accounting 1 Ch 4 P 2 SB

Sales is a(n) ___________ (expense/revenue/asset) account and is reported on the ____________ (income/balance) __________ (statement/sheet).

Blank 1: revenue Blank 2: income Blank 3: statement

A __________ discount benefits a seller through earlier cash receipts and reduced collection efforts.

sales

Explain how to determine gross profit on an income statement by selecting the correct statement below.

Cost of goods sold is subtracted from net sales.

Gross profit is computed as net __________ minus cost of goods sold.

sales

X-Mart uses the perpetual inventory system to account for its merchandise. On May 1, it sold $1,400 of merchandise for cash. The original cost of the merchandise to X-Mart was $500. Demonstrate the required journal entry to record the sale and the cost of the sale by selecting all of the correct actions below.

Credit Merchandise Inventory $500. Debit Cash $1,400. Credit Sales $1,400. Debit Cost of Goods Sold $500.

A journal entry for a sale of merchandise on account will result in all of the following:

Credit to Merchandise Inventory Credit to Sales Debit to Cost of Goods Sold Debit to Accounts Receivable

Sales is a(n) ______ account.

revenue