Ch. 4 - Accounting for Merchandising Operations

Explain what the credit terms of 2/10,n/30 mean (Check all that apply.) a. the full payment is due within a 30-day credit period b/ the buyer can deduct 2% of the invoice amount if payment is made within 10 days of the invoice date c. the buyer can take a discount of 10% if the invoice is paid with 30 days of the invoice date d. the full payment is due within 10 days

a b

cost of goods sold is characterized by which of the following statements? (check all that apply.) a. cost of goods sold is also called cost of sales b. cost of goods includes the expenses of buying and preparing an item for sale c. cost of goods sold is an expense reported on the income statement d. cost of goods sold is an asset reported on the balance sheet e. cost of goods sold is the money received from selling merchandise f. cost of goods is used to figure gross profit

a b c f

Identify the statements below which are correct regarding a merchandiser's multi-step income statement a. cost of goods sold is substracted from net sales in order to determine gross profit b. merchandise inventory is reported on the statement c. the heading of the statement contains three lines d. accounts receivable is included on the statement e. expenses are subtracted from the gross profit in order to calculate net income f. total assets is the last line on the statement

a c e

which statements below are correct regarding cost of goods sold? a. cost of goods sold is an asset account reported on the balance sheet b. cost of goods sold is the expense of buying and preparing merchandise c. cost of goods sold can be determined by subtracting the cost of merchandise sold from its sales price d. cost of goods sols is the price received from selling a product

b