Fundamental Accounting Principles Study Set 5
Quiz 5: Accounting for Merchandising Operations
A Company Had Sales of $695,000 and Cost of Goods
A company had sales of $695,000 and cost of goods sold of $278,000. Its gross margin equals: A) $(417,000). B) $695,000. C) $278,000. D) $417,000. E) $973,000.
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A company had sales of $375,000 and its gross profit was $157,500. Its cost of goods sold equals: A) $(217,000). B) $375,000. C) $157,500. D) $217,500. E) $532,500.
The following statements regarding gross profit are except: A) Gross profit is also called gross margin. B) Gross profit less other operating expenses equals income from operations. C) Gross profit is not calculated on the income statement. D) Gross profit must cover all operating expenses to yield a return for the owner of the business. E) Gross profit equals net sales less cost of goods sold.
The following statements regarding merchandise inventory are except: A) Merchandise inventory is reported on the balance sheet as a current asset. B) Merchandise inventory refers to products a company owns and intends to sell. C) Merchandise inventory can include the cost of shipping the goods to the store and making them ready for sale. D) Merchandise inventory does not appear on the balance sheet of a service company. E) Merchandise inventory purchases are not considered part of the operating cycle for a business.
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