Smart book chapter 4 review part 2

Identify the financial statements of a merchandiser?

1. Balance sheet 2. Income statement 3. Statement of retained earnings

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

1. CGS 2. GP 3. General and administrative expenses 4. Net Sales 5. Income from operations 6. Selling expenses

A merchandiser has four closing journal entries at the end of an accounting cycle?

1. Close the dividends account 2. Close revenue accounts 3. Close the income summary account 4. Close expense accounts

Dogs R US uses the perpetual inventory system to account for its merchandise. A customer returned merchandise. Assuming that the purchase was originally bought on credit for $400 with a cost to Dog R US of $100, demonstrate required journal entry of Dogs R US to record the return by selecting the correct answers?

1. Credit Accounts Receivable $400 2. Debit Sales Returns and Allowances $400 3. Debit Merchandise Inventory $100 4. Credit CGS $100

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

1. Debit to CGS for $50 2. Credit to Merchandise Inventory for $50

Which of the following are the three main parts of the multiple-step income statement?

1. Income from operations 2. Gross profit 3. Net income

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

1. Sales is closed as a revenue account 2. Sales Returns and Allowances is closed with the expense account 3. Sales discounts is closed with the expense account 4. The dividends account is closed to Retained Earnings 5. Cost of goods sold is closed with the expense accounts

A single-step income statement shows only one subtotal for expenses?

True

The Merchandise Inventory account on a classified balance sheet is reported in the?

current assets section

Merchandise inventory is generally converted to cash more quickly than accounts receivable?

false

A single-step income statement can be identified by which of the following format?

it shows only one total for all expenses

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

net purchases plus beginning inventory equals merchandise available for sale