70.2K

Verified Solution

Link Copied!

Answer T or F

1. The ending merchandise inventory for 2005 is the as thebeginning merchandise inventory or 2006.
2. In a multi-step income statement the dollar amount for incomefrom operations is always the same as net income.
3. Net sales are equal to sales minus cost of merchandisesold.
4. Gross profit minus selling expenses equals net income.
5. The form on the balance sheet in which asserts, liabilities,and owner’s equity are presented in a downward sequence is calledthe report form.
6. On the income statement in the single-step form, the total ofall expenses is deducted from the total of all revenues.
7. The single-step income statement is easier to prepare, but acriticism of this format is that gross profit and income fromoperations are nor readily available.
8. Income that cannot be associated definitely with operations,such as gains from the sale of a fixed asset, is listed as OtherIncome on the multi-step income statement.
9. Under the perpetual inventory system, when a sale is made, boththe retail and cost values are recorded.
10. Under perpetual inventory system, the cost of merchandise soldis recorded when sales are made.
11. If payment is due by the end of the month in which sale ismade, the invoice terms are expressed as n/30.
12. When merchandise that was sold is returned, a credit to salesreturns and allowances is made.
13. In perpetual inventory system, when merchandise is returned tothe seller, Cost of Merchandise Sold is one to the accounts debitedto record the transaction.
14. Sales return is a contra-revenue account.
15. Sales Discounts is a revenue account with a creditbalance.
16. Sales to customers who use bank credit cards, such asMasterCard and Visa, are generally treated as credit sales.