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Determine Cost of Goods Sold.
Purchases - Purchases Return and Allowances - Purchases Discounts = Net Purchases
Net Purchases + Freight In = Delivered Cost of Purchases
Beginning Inventory + Delivered Cost of Purchases - Ending Merchandise Inventory = Cost of Goods Sold
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Periodic Inventory System.
Does not require an entry to Merchandise Inventory until a physical inventory has been taken.
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The unearned revenue account would be used when a company...
Collects cash and earns the revenue over two fiscal periods.
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Unearned revenue is classified as a(n)...
Liability account.
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The service income account is classified as a(n)...
Revenue account.
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Under a perpetual inventory system, a shortage in inventory requires an adjusting entry that...
Debits Cost of Goods Sold and Credits Merchandise Inventory.
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The appropriate journal for recording the adjusting entry for Merchandise Inventory is...
The general journal.
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Which of the following lists of items is used to compare the Cost of Goods Available for Sale...
Beginning & Ending Inventory.
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On the income statement, adding Delivered Cost of Purchases to Beginning Merchandise Inventory results in...
Cost of Goods Available for Sale.
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Cost of Goods Sold may be compared to...
Subtracting Ending Inventory from Cost of Goods Available for Sale.
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On an income statement, net sales minus Cost of Goods Sold equals...
Gross Profit.
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Assuming net sales is $180,000, Cost of Goods Sold is $79,000, Selling Expenses are $28,500 and General Expenses are $22,800, then gross profit is...
$101,000.
Net Sales - Cost of Goods Sold.
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Assuming net sales is $180,000, Cost of Goods Sold is $79,000, Selling Expenses are $28,500, General Expenses are $22,800 and Interest Expense $2,000, then income from operation is...
$49,700.
Net sales - Cost of Goods Sold - Operating Expenses.
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Assuming net sales is $180,000, Cost of Goods Sold is $79,000, Selling Expenses are $28,500, General Expenses are $22,800 and Interest Expense $2,000, then net income is...
$47,700.
Income from operation - Interest Expense.
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Net purchases is equal to...
Purchases minus Purchases Returns & Allowances - Purchases Discounts.
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An example of other income for a firm other than a bank or real estate office is...
All of these.
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If Ending Merchandise Inventory is $22,000, Purchases are $85,000, Purchases Discounts are $1,800, Freight In is $3,500 and Beginning Merchandise Inventory is $28,000, the Cost of Goods Sold is...
$92,700.
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When goods are bought under the Periodic Inventory System, Merchandise Inventory is debited.
False.
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When goods are bought under the Perpetual Inventory System, Merchandise Inventory is credited.
False.
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Both wholesalers and retailers are types of merchandising companies.
True.
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The interest income account is classified as other income on the income statement.
True.
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The purchases account is not classified as a selling expense.
True.
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Income from operations is gross profit minus operating expense.
True.
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The sales discounts account is shown with the other expenses on the income statement.
False.
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Which of the following accounts normally has a debit balance?
Assets, expenses, losses, and the owner's drawing account.
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Second Merchandise Inventory Adjusting Entry.
In the second adjusting entry (to enter the ending inventory), debit Merchandise Inventory and credit Income Summary.
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First Merchandise Inventory Adjusting Entry.
In the first adjusting entry (to remove the beginning inventory), debit Income Summary and credit Merchandise Inventory.
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Wages Payable.
For accrued wages: debit Wages Expense and credit Wages Payable.
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Ending Merchandise Inventory.
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Unearned Revenue.
For unearned revenue: debit the unearned revenue account and credit the revenue account (to record revenue earned).
Cash received in advance for goods or services to be delivered later; considered to be a liability until the revenue is earned.
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Beginning Merchandise Inventory.
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