ACCT 4-6

Income from operations Selling expenses General and administrative expenses Net sales Cost of goods sold Gross profit

Identify the items or sub-headings below that would appear on a multiple-step income statement.

The Dividends account is closed to Retained Earnings Sales Discounts is closed with the expense accounts. Sales is closed as a revenue account. Cost of goods sold is closed with the expense accounts. Sales Returns and Allowances is closed with the expense accounts.

Identify the statements below that are correct regarding the closing entries for a merchandiser using the perpetual inventory system.

3/15, n/45

Review the following credit terms and identify the one that states that the buyer will receive a 3% discount if the payment is made within 15 days. Otherwise, full payment is expected within 45 days of the invoice date.

Debit to Cost of Goods Sold for $50 Credit to Merchandise Inventory for $50

Sticky Company's merchandise inventory balance at year end is $15,050, but a physical count reveals that only $15,000 of inventory exists. The adjusting entry to record the shrinkage includes:

the revenue but not the cost of goods sold is recorded

Under a periodic inventory system

Net purchases plus beginning inventory equals merchandise available for sale

Which of the following equations correctly identify the cost flow of a merchandising company?