Close merchandise accounts and Multiple-Step Income Statement

on merchandiser's multi-step income statement;

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

how many parts generally does a multiple step income statement have?

3 steps gross profit section

True or false: Merchandise inventory is generally converted to cash more quickly than accounts receivable.

False

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

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

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

Income from operations Gross profit Net income

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

It shows only one total for all expenses.

Which are the two classifications of operating expenses on a multiple-step income statement?

Selling; general and administrative

True or false: A single-step income statement shows only one subtotal for expenses.

True

Temporary accounts closed to Income Summary for a merchandiser include

ales, Sales Discounts, Sales Returns and Allowances, and Cost of Goods Sold.

what is the difference between unearned revenues and accrued revenues

explain

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

gross profit income from operations net income but not - net expenses

income from operations

gross profit - operating expenses

3. non-operating activities computation / multi-step IS

includes net income reports non operating items and the final net income or loss figure

The components of a merchandiser's multi-step income statement are shown below. In which order would they appear on the statement?

order: net sales less:contra accounts cogs gross profit expenses net income

2. income from operations computation / multi-step IS

reports gross profit less: detailed operating expenses

1. the gross profit (computation) section of multi step income statement:

reports net sales and its components less: cost of goods sold

multi-step income statement order for merchandiser

sales cost of goods sold gross profit operating expenses income from operations other revenues and expenses

what are the two sections for operating expenses?

sales expenses and general administrative expenses

what does a multiple step income statement format;

shows details for net sales, and many other costs and expenses. also reports subtotals for various categories of items

for financial statements, can there be more than one format, according to GAAP

yes, there are usually 2 common formats; multiple step single step