Accounting Exam 2- Chapter 6

Which of the following are reported on the income statement?

-Gross Profit -Cost of Goods Sold -Sales Revenue

Create an income statement from top to bottom

-Sales Revenue -Sales Returns, Allowances, and Discounts -Net Sales -Cost of Goods Sold -Gross Profit

Using a perpetual system, purchasing merchandise on account includes a ________.

-debit to inventory -credit to Account Payable

What are the two credits that are required for an inventory account in a perpetual inventory system

-selling inventory on account -selling inventory for cash

In a perpetual system, the Inventory account is debited when a company purchases merchandise on account? True or False

True

The journal entry to record a payment for merchandise previously purchased on account includes a...

debit to Accounts Payable credit to Cash

Operating cycle

is a series of activities that the company undertakes to generate sales and ultimately cash

to determine cost of goods sold for the period requires

subtracting ending inventory from the goods available to sell, which is the beginning inventory plus purchases (BI+P-EI=CGS)

Periodic Inventory System

updates the inventory records for merchandise purchases sales, and returns only at the end of the accounting period