ACC chapter 4

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. Net income equals:

$116,520

Garza Company had sales of $146,200, sales discounts of $2,200, and sales returns of $3,510. Garza Company's net sales equals:

$140,490

garza company had sales of 147000, sales dicounts of 2200, and sales returns of 3530. garza net sales equals

$141,270

Prince Company had cash sales of $94,700, credit sales of $83,700, sales returns and allowances of $1,875, and sales discounts of $3,650. Prince's net sales for this period equal:

$172,875

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

$217,500

Cushman Company had $826,000 in sales, sales discounts of $12,390, sales returns and allowances of $18,585, cost of goods sold of $392,350, and $284,145 in operating expenses. Gross profit equals:

$402,675 (operating expenses aren't deducted in order to get gross profit)

a company has net sales of $729,000 and cost of goods sold of $292,000. It's gross profits equal:

$437,000

A company has net sales of $732,400 and cost of goods sold of $293,400. Its gross profit equals:

$439,000

Cushman company had $826,000 in net sales, $361,375 in gross profit, and $206,500 in operating expenses. Cost of goods sold equals:

$464,625

Determine which statements below are correct regarding merchandise available for sale during a period. (Check all that apply.)

-Ending inventory + Cost of goods sold = Merchandise available for sale -Beginning inventory + Net purchases = Merchandise available for sale

Identify the statements below which are correct regarding a merchandiser's multi-step income statement.

-Expenses are subtracted from gross profit in order to calculate net income. -Cost of goods sold is subtracted from net sales in order to determine gross profit.

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

-General and administrative expenses -Net sales -Income from operations -Cost of goods sold -Selling expenses -Gross profit

Demonstrate how to prepare a multiple-step income statement by ranking the items below in the order they would appear on a multiple-step income statement of a merchandiser. Instructions

-Sales -Cost of goods sold -Gross profit -Operating expenses -Income from operations -Other revenues and expenses

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

-net income -gross profit -income from operations

Merchandise inventory can be described as:

-products that a company owns and intends to sell. -an account increased with a debit. -an account appearing on a balance sheet of a merchandiser. -an asset account.

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

A company has net sales of $879,000 and cost of goods sold of $583,000. Its net income is $105,100. The company's gross profit and operating expenses, respectively, are:

296,000 (net sales-cogs) and 190,900 (net sales - cogs - net income)

Wholesaler

An intermediary that buys products from manufacturers and sells them to retailers

Retailer

An intermediary that buys products from manufacturers or wholesalers and sells them to consumers

Cushman Company had $834,000 in net sales, $364,875 in gross profit, and $208,500 in operating expenses. Cost of goods sold equals:

Cost of Goods Sold = Net Sales − Gross Profit; $834,000 − $364,875 = $469,125

Explain how to determine gross profit on an income statement by selecting the correct statement below.

Cost of goods sold is subtracted from net sales.

Which of the statements below are correct regarding cost of goods sold?

Cost of goods sold is the expense of buying and preparing merchandise.

A merchandiser:

Earns net income by buying and selling merchandise.

Merchandiser

Earns net income by buying and selling products

yields the highest net income

FIFO

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

How is gross profited calculated?

Gross profit is calculated by taking the net (sales/costs) of a product and (adding/subtracting) the cost of the goods sold.

Which of the following statements regarding gross profit is false?

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

Merchandise inventory:

Is a current asset

Cost of goods sold:

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

Review the statements below and select the one that accurately describes a perpetual inventory system.

It is an inventory system that continually updates accounting records for merchandise transactions.

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

It shows only one total for all expenses.

better matches current costs with revenues

LIFO

has the lowest tax expense because of reporting the lowest net income

LIFO

results in the highest cost of goods sold

LIFO

The inventory costing method that results in the lowest taxable income in a period of rising costs is:

LIFO method

Beginning inventory plus net purchases is

Merchandise available for sale

Which statement below correctly describes merchandise inventory?

Merchandise inventory is an asset reported on the balance sheet and contains the cost of products purchased for sale.

Sales less sales discounts, less sales returns and allowances equals:

Net sales

How do you compute net income for a merchandiser?

Net sales - cost of goods sold - other expenses.

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

Selling expenses

Determine which of the definitions below describes gross profit.

The difference between net sales and the cost of the goods sold

Goods in transit are included in a purchaser's inventory:

When the goods are shipped FOB shipping point

Complete the following statement. Merchandise inventory that is still available for sale is considered a(n) ______ (asset/expense/revenue) and is reported on the ______ (balance sheet/income statement) and merchandise that is sold during the period is considered a(n) ______ (asset/expense/liability) and reported on the _____ (balance sheet/income statement).

asset -> balance sheet -> expense -> income statement

how to find cost of goods available for sale?

beginning inventory + net purchases

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

current assets section

A merchandiser:

earns net income by buying and selling merchandise

Regardless of the inventory costing system used, cost of goods available for sale must be allocated at the end of the period between:

ending inventory and cost of goods sold

To compute net income for a merchandiser, you will start with net sales, subtract cost of goods sold and subtract _______.

expenses

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

false

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

how to find cost of goods sold?

goods available for sale - ending inventory (goods not sold)

Merchandise consists of ____, that a company acquires to resell to ______.

goods, customers

how to find net income?

gross profit - expenses (not including inventory) OR revenue - expenses

how to find net sales?

gross sales - sales returns - sales discounts

merchandise inventory:

is a current asset

beginning inventory plus net purchases is

merchandise available for sale

A multiple-step income statement will have all of the following main parts except:

net sales

Sales less sales discounts, less sales returns and allowances equals:

net sales

how to find gross profit?

net sales - cost of goods sold

quiz: Which of the following statements related to the multiple-step income statement is false?

only one total for all expenses is shown

Gross profit is computed as net ____ minus cost of goods sold.

sales

Gross profit is computed as _____ minus cost of goods sold.

sales or revenue

precisely matches the costs of items with the revenue they generate

specific identification

The inventory costing method that identifies each item in ending inventory with a specific purchase and invoice is the:

specific identification method

Which of the following statements related to goods on consignment is false?

the cosignee reports the goods in its inventory until sold

weighted average cost per unit

total cost of goods available for sale/total units available for sale

how to find the average cost per unit?

total cost of goods available/total units available

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

true

COGS

units sold x weighted average cost per unit