Accounting Exam 2 Chapter 4

Robert Company had $830,000 in sales, sales discounts of $12,450, sales returns and allowances of $18,675, cost of goods sold of $394,250, and $285,520 in operating expenses. Net income equals:

$119,105. Explanation: Net Income = $830,000 − $12,450 − $18,675 − $394,250 − $285,520 = $119,105

Cushman Company had $838,000 in sales, sales discounts of $12,570, sales returns and allowances of $18,855, cost of goods sold of $398,050, and $288,270 in operating expenses. Net income equals:

$120,255 Explanation Net Income = $838,000 − $12,570 − $18,855 − $398,050 − $288,270 = $120,255

Bobby's Company had sales of $149,000, sales discounts of $2,225, and sales returns of $3,575. Bobby Company's net sales equals:

$143,200. Explanation: Net Sales = $149,000 − $2,225 − $3,575 = $143,200

Garza Company had sales of $152,200, sales discounts of $2,300, and sales returns of $3,655. Garza Company's net sales equals:

$146,245 Explanation: 152,200 - 2,300 - 3,655 = $146,245

Prince Company had cash sales of $94,825, credit sales of $83,775, sales returns and allowances of $1,925, and sales discounts of $3,700. Prince's net sales for this period equal:

$172,975 Explanation: $94,825 + $83,775 - $1,925 - $3,700 = $172,975

A company has net sales of $375,000 and its gross profit is $157,500. Its cost of goods sold is:

$217,500 Explanation: $375,000 - $157,500 = $217,500

A company has net sales of $838,000 and cost of goods sold of $555,500. Its net income is $100,100. The company's gross profit and operating expenses, respectively, are:

$282,500 and $182,400 Explanation: Gross Profit = Net Sales − Cost of Goods Sold; $838,000 − $555,500 = $282,500 Operating Expenses = Gross Margin − Net Income; $282,500 − $100,100 = $182,400

Cushman Company had $812,000 in sales, sales discounts of $12,180, sales returns and allowances of $18,270, cost of goods sold of $385,700, and $279,330 in operating expenses. Gross profit equals:

$395,850 Explanation: Gross Profit (Margin) = $812,000 − $12,180 − $18,270 − $385,700 = $395,850

A company has net sales of $718,800 and cost of goods sold of $287,800. Its gross profit equals.

$431,000. Explanation: Gross Profit = Net Sales − Cost of Goods Sold Gross Profit = $718,800 − $287,800 = $431,000

The company has net sales of $752,800 and cost of goods sold of $301,800. Its gross profit equals:

$451,000 Explanation: $752,800 - $301,800 = $451,000

Cushman Company had $812,000 in net sales, $355,250 in gross profit, and $203,000 in operating expenses. Cost of goods sold equals:

$456,750 Explanation: Cost of Goods Sold = Net Sales − Gross Profit; $812,000 − $355,250 = $456,750

Expenses that support a company's overall operations and include expenses related to accounting, human resources, and finance are known as:

General and administrative expenses

Which of the following statements regarding gross profit is false - Gross profit is also called gross margin - Gross profit less other operating expenses equals income from operations - Gross profit is calculated on the single-step income statement, not the multi-step income statement - Gross profit must cover all operating expenses to yield a return for the owner of the business - Gross profit equals net sales less cost of goods sold.

Gross profit is calculated on the single-step income statement, not the multi-step income statement

Cost of Goods Sold

Is the term used for the expense of buying and preparing merchandise

Sales less sales discounts, less sales returns and allowances equals

Net sales

Which of the following statements related to the multiple-step income statement is false? - Interest revenue is included with other revenue and gains. - Non-operating items are reported separately from operations. - Only one total for all expenses is shown. - Subtotals for total selling expenses and general and administrative expenses are reported. - The first section of the statement reports gross profit.

Only one total for all expenses is shown

The expenses of advertising merchandise, making sales, and delivering goods to customers are known as:

Selling Expenses

A merchandiser

earns net income by buying and selling merchandise

Merchandise Inventory

is a current asset

Beginning inventory plus net purchases is:

merchandise available for sale