•Is the term supplied for the expense of buying and preparing merchandise for sale.

You are watching: Merchandise inventory refers to products that a company owns and intends to sell to customers.

•Is one more term for revenue.

•Is also referred to as gross margin.

•Is a term just provided by service firms.

Correct Answer: •Is the term provided for the expense of buying and preparing merchandise for sale.

The following statements regarding gross profit are true except:

•Gross profit is additionally called gross margin.

•Gross profit less other operating prices equals income from operations.

•Gross profit is not calculated on the multiple-step revenue statement.

•Gross profit have to cover all operating prices to yield a return for the owner of the company.

•Gross profit equals net sales less cost of goods offered.

Correct Answer: •Gross profit is not calculated on the multiple-step earnings statement.

The following statements about merchandise inventory are true except:

Multiple Choice Merchandise inventory is reported on the balance sheet as a existing asset.

Merchandise inventory describes products a agency owns and inhas a tendency to offer.

Merchandise inventory might incorporate the prices of freight in and also making them ready for sale.

Merchandise inventory shows up on the balance sheet of a business firm.

Purchasing merchandise inventory is part of the operating cycle for a service.

Correct Answer: Merchandise inventory appears on the balance sheet of a company firm.

The existing period’s finishing inventory is:

Multiple Choice

The following period’s beginning inventory.

The present period’s expense of products offered.

The prior period’s beginning inventory.

The present period’s net purchases.

The existing period’s start inventory.

Correct Answer: The next period’s beginning inventory.

Beginning inventory plus net purchases is:

Multiple Choice

Cost of items offered.

Merchandise (goods) obtainable for sale.

Ending inventory.

Sales.

Shvery own on the balance sheet.

Correct Answer: Merchandise (goods) accessible for sale.

Rapid assets are identified as:

Multiple Choice

Cash, momentary investments, and also inventory.

Cash, momentary investments, and present receivables.

Cash, inventory, and also present receivables.

Cash, nonpresent receivables, and also prepassist prices.

Accounts receivable, inventory, and also prephelp prices.

Correct Answer: Cash, short-lived investments, and also existing receivables.

Liquidity problems are most likely to exist once a company’s acid-test ratio:

Multiple Choice

Is much less than the present ratio.

Equals 1.

Is higher than 1.

Is considerably lower than 1.)

Is higher than the current ratio.

Correct Answer: Is dramatically lower than 1.

The gross margin ratio:

Multiple Choice

Is likewise referred to as the net profit ratio.

Indicates the percent of sales revenue staying after extending the expense of the products offered.

Is additionally called the profit margin.

Is a meacertain of liquidity and must exceed 2.0 to be acceptable.

Should be greater than 1 for merchandising providers.

Correct Answer: Indicates the percent of sales revenue continuing to be after covering the price of the goods sold.

The credit terms 2/10, n/30 are interpreted as:

Multiple Choice

2% cash discount if the amount is paid within 10 days, or the balance due in 30 days.

10% cash discount if the amount is passist within 2 days, or the balance due in 30 days.

30% discount if paid within 2 days.

30% discount if passist within 10 days.

2% discount if phelp within 30 days.

Correct Answer: 2% cash discount if the amount is passist within 10 days, or the balance due in 30 days.

The amount taped for merchandise inventory consists of all of the adhering to except:

Multiple Choice

Acquisition discounts.

Retransforms and allowances.

Freight costs paid by the buyer.

Freight costs passist by the seller.

Trade discounts.

Correct Answer: Freight expenses passist by the seller.

A firm offers the perpetual inventory mechanism and taped the adhering to entry: ———————————————- Accounts Payable _________2,500

Merchandise Inventory ______________50 Cash ___________________________________2,450 ———————————————- This entry reflects a:

Multiple Choice

Acquisition of merchandise on crmodify.

Rerevolve of merchandise.

Sale of merchandise on credit.

Payment of the account payable much less a 2% cash discount taken.

Payment of the account payable much less a 1% cash discount taken.

Correct Answer: Payment of the account payable less a 2% cash discount taken.

All of the complying with statements about sales retransforms and allowances are true except:

Multiple Choice

A reduction in the marketing price because of damaged merchandise is included in sales returns and also allowances.

Tright here is no partnership in between sales returns and also allowances and the opportunity of lost future sales.

Sales retransforms and also allowances are recorded in a separate contra-revenue account.

Sales retransforms and allowances are seldom disclosed in publimelted financial statements.

Sales returns and also allowances are closed to the Income Outline account.

Correct Answer: Tbelow is no relationship between sales returns and allowances and the opportunity of lost future sales.

Sales much less sales discounts less sales retransforms and allowances equals:

Multiple Choice

Net purchases.

Cost of products marketed.

Net sales.

Gross profit.

Net Income.

Correct Answer: Net sales.

All of the following statements about inventory shrinkage are true EXCEPT:

Multiple Choice

Inventory shrinkage refers to the loss of inventory.

Inventory shrinkage is figured out by comparing a physical count of inventory with tape-recorded inventory quantities.

Inventory shrinkage is well-known by debiting an operating cost.

Inventory shrinkage is recognized by debiting Cost of Goods Sold.

Inventory shrinkage have the right to be caused by theft or degradation.

Correct Answer: Inventory shrinkage is known by debiting an operating cost.

Which of the adhering to accounts would certainly be closed at the finish of the accounting period through a debit?

Multiple Choice

Sales Discounts.

Sales Retransforms and Allowances.

Cost of Goods Sold.

Operating Expenses.

Sales.

Correct Answer: Sales.

An earnings statement that has price of goods sold as an additional price and also mirrors only one subtotal for complete expenses is a:

Multiple Choice

Balanced revenue statement.

Single-action earnings statement.

Multiple-step earnings statement.

Integrated revenue statement.

Simplified earnings statement.

Correct Answer: Single-step income statement.

Expenses that support the overall operations of a service and also include the expenses relating to bookkeeping, huguy resource administration, and also financial monitoring are called:

Multiple Choice

Cost of products marketed.

Selling prices.

Purchasing prices.

General and also administrative expenses.

Non-operating activities.

Correct Answer: General and governmental prices.

Multiple-action income statements:

Multiple Choice

Are required by the FASB and IASB.

Contain more detail than an easy listing of profits and prices.

Are required for the periodic inventory mechanism.

List expense of items sold as an operating cost.

Are just supplied in perpetual inventory systems.

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Correct Answer: Contain even more information than an easy listing of revenues and prices.

Expenses to promote sales by displaying and advertising merchandise, make sales, and also deliver items to customers are known as: