Chapter 5. – Flashcards
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Gross profit equals the difference between
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B. Net sales and Cost of goods sold.
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Under a perpetual inventory system
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a. accounting records continuously disclose the amount of inventory.
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after gross profit is calculated, operating expense are deducted to determine
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b. Net income
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In a perpetual inventory system, cost of goods sold is recorded each
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d. time a sale occurs
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if a purchaser using perpetual inventory system pays the transportation costs, the the inventory
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a. account is increased.
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freight costs incurred by a seller on merchandise sold to customer will cause an increase in
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b. operating expense for the seller.
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Under perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recored in what account?
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c. inventory
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sales returns and allowances is classified as
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a contra revenue account
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income from operations appears on
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d. multi-step income statement
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multi-step income statements show
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c. both income from operations and gross profit.
