Response to the following multiple choice questions:
1.Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as
selling expenses.
general expenses.
other expenses.
administrative expenses.
2.Sometimes a(n) __________ is offered to buyers as a means of encouraging them to pay before the end of the credit period.
accounts receivable
credit card
sales discount
cash sale
3.Generally, the revenue account for a merchandising business is entitled
Sales.
Net Sales.
Gross Sales.
Gross Profit.
4.The difference between sales and cost of merchandise sold for a merchandising business is
sales.
net sales.
gross sales.
gross profit.
5.The credit terms of a sale are normally indicated on a(n)
purchase order.
invoice.
bill of lading.
account receivable.
6.Gross profit is determined by subtracting the cost of merchandise sold from what?
The cost of merchandise purchased
Fees earned
Accounts receivable
Net sales
7.Multiple-step income statements show:
gross profit but not income from operations.
neither gross profit nor income from operations.
both gross profit and income from operations.
income from operations but not gross profit.
8.Inventory shortage is recorded when
merchandise is returned by a buyer.
merchandise purchased from a seller is incomplete or short.
merchandise is returned to a seller.
there is a difference between a physical count of inventory and inventory records.
9.Dig, Inc. had the following merchandise transactions in October:
Purchases $50,000
Purchase returns $ 4,000
Purchase discounts $ 1,000
Transportation in $ 2,000
What is the total cost of merchandise purchased for Dig, Inc.?
$50,000
$47,000
$52,000
$48,000
10.Which of the following would be subtracted from gross profit to reach operating income?
Operating expenses
Other expenses
Income taxes
All of these