Chapter 5 Accounting

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In terms of liquidity, inventory is

More liquid than prepaid expenses

Gross profit is calculated by

Net sales minus cost of goods sold

Single step statement is classified in two categories...

Revenues and expenses

Net sales for the month is calculated by....

Sales - sales returns and allowances - sales discounts

Net sales equals...

Sales revenue minus the addition of sales returns and allowances plus the sales discount

Freight costs incurred by...

The seller on outgoing merchandise are an operating expense to the seller

FOB shopping point means

The sellers places the goods free on board the carrier

The one thing that is not true on a true statement about a multiple step income statement is...

There may be a section for operating assets

A key of walmart's incredible growth is its attribute to its sophisticated inventory system

...

If net sales are $700,000 and the cost of goods sold is $490,000, the gross profit percentage is

30%

On a classified balance sheet, inventory is classified as

A current asset

Income from operations appears on

A multiple step income statement

Gross profit does not appear on...

A single step income statement

Periodic inventory system is...

Companies don't keep detailed inventory records of goods on hand.

FOB stands for

Free on board

Gross profit is

Generated revenue minus the cost of goods sold

The multiple step that is not shown on a single step income statement is...

Gross profit

Gross profit rate equals

Gross profit divided by net sales


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