Accounting Chapter 5
False
A company had a gross profit of $300,000 based on sales of $400,000. Its cost of goods sold equals $700,000. True/False
False
A company had net sales of $545,000 and cost of goods sold of $345,000. Its gross margin equals $890,000. True/False
True
A company had sales of $350,000 and cost of goods sold of $200,000. Its gross profit equals $150,000. True/False
D. $217,500
A company has sales of $375,000 and its gross profit is $157,500. Its cost of goods sold equals: A. ($217,000) B. $375,000 C. $157,500 D. $217,500
D. $417,000
A company has sales of $695,000 and cost of goods sold of $278,000. Its gross profit equals: A. $(417,000) B. $695,000 C. $278,000 D. $417,000
A. Earns net income by buying and selling merchandise.
A merchandiser: A. Earns net income by buying and selling merchandise. B. Receives fees only in exchange for services C. Earns profit from commissions only. D. Earns profit from fares only.
True
A merchandising company's operating cycle begins with the purchase of merchandise and ends with the collection of cash from the sale. True/False
False
A retailer is an intermediary that buys products from manufacturers and sells them to wholesalers. True/False
False
A service company earns net income by buying and selling merchandise. True/False
False
A wholesaler is an intermediary that buys products from manufacturers or other wholesalers and sells them to consumers. True/False
True
Assets tied up in inventory are not considered productive assets. True/False
True
Cash sales shorten the operating cycle for a merchandiser; credit sales lengthen operating cycles. True/False
B. Is the term used for the expense of buying and preparing merchandise for sale.
Cost of goods Sold: A. Is another term for merchandise sales B. Is the term used for the expense of buying and preparing merchandise for sale. C. Is another term for revenue D. Is also called gross margin
True
Cost of goods sold is also called cost of sales. True/False
True
Cost of goods sold represents the cost of buying and preparing merchandise for sale. True/False
True
Gross profit is also called gross margin. True/False
B. Is a current asset
Merchandise Inventory: A. Is a long-term asset B. Is a current asset C. Includes supplies the company will use in future periods D. Is classified with investments on the balance sheet
False
Merchandise inventory is reported in the long-term assets section of the balance sheet. True/False
True
Merchandise inventory refers to products that a company owns and intends to sell to customers. True/False
B. The operating cycle is shortened by credit sales
The following statements are true regarding the operating cycle of a merchandising company except: A. The operating cycle begins with the purchase of merchandise B. The operating cycle is shortened by credit sales C. The operating cycle ends with the collection of cash from the sale of merchandise D. The operating cycle can vary in length among different merchandising companies.
C. Gross profit is not calculated on the multiple-step income statement.
The following statements regarding gross profit are true except: A. Gross profit is also called gross margin B. Gross profit less other operating expenses equals income from operations. C. Gross profit is not calculated on the multiple-step income statement. D. Gross profit must cover all operating expenses to yield a return for the owner of the business.
D. Merchandise inventory appears on the balance sheet of a service company.
The following statements regarding merchandise inventory are true except: A. Merchandise inventory is reported on the balance sheet as a current asset B. Merchandise inventory refers to products a company owns and intends to sell. C. Merchandise inventory may include the costs of freight in and making them ready for sale. D. Merchandise inventory appears on the balance sheet of a service company.
