Exam 4: Merchandising Operations and the Multiple-Step Income Statement

The multiple-step income statement is considered more useful than the single-step income statement because it highlights the components of net income.

The Sales Returns and Allowances account does not provide information to management about

Each of the following companies is a merchandising company except a

A buyer borrows money at 6% interest to pay a $9,000 invoice with terms 1/10, n/30 on the 10th day of the discount period. The loan is repaid on the 30th day of the invoice. What is the buyer's net savings for this total event?

Which of the following statements is true regarding profit margin?

A merchandiser that sells directly to consumers is a

The entry to record the receipt of payment within the discount period on a sale of $900 with terms of 2/10, n/30 will include a

The computer has increased greatly the use of the periodic inventory system.

An advantage of the single-step income statement over the multiple-step form is

Nonoperating activities include revenues and expenses that are related to the company's main line of operations.

The entry to record a sale of $1,800 with terms of 2/10, n/30 will include a

A decline in a company's gross profit could be caused by all of the following except

Farwell Company purchased merchandise with an invoice price of $2,000 and credit terms of 2/10, n/30. Assuming a 360 day year, what is the implied annual interest rate inherent in the credit terms?

Gross profit equals the difference between

Interest expense would be classified on a multiple-step income statement under the heading

Sales revenues, cost of goods sold, and gross profit are amounts on a merchandising company's income statement not commonly found on the income statement of a service company.

Financial information is presented below: Operating expenses \ 40,000 Sales revenue 200,000 Cost of goods sold 150,000 The gross profit rate would be

Sales Discounts and Sales Returns and Allowances both have normal debit balances.

What is the term applied to the excess of net sales over the cost of goods sold?

Which statement is incorrect?