Exam 5: Merchandising Operations and the Multiple-Step Income Statement

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

Aber Company sells merchandise on account for $3,000 to Borth Company with credit terms of 2/10, n/30.Borth Company returns $500 of merchandise that was damaged, along with a check to settle the account within the discount period.What is the amount of the check?

Sales allowances and sales discounts are both designed to encourage customers to pay their accounts promptly.

Income from operations appears on both the single-step and multiple-step forms of an income statement.

Multiple-step income statements show

A credit sale of $1,400 is made on July 15, terms 2/10, net/30, on which a return of $100 is granted on July 18.What amount is received as payment in full on July 24?

The credit terms offered to a customer by a business firm were 2/10, n/30, which means

An advantage of using the periodic inventory system is that it requires less record keeping than the perpetual inventory system.

The gross profit amount is generally considered to be more informative than the gross profit rate.

Net income will result if gross profit exceeds

Which of the following is a true statement about inventory systems?

When sales of merchandise are made for cash, the transaction may be recorded by the following entry:

At the beginning of the year, Wildcat Athletic had an inventory of $300,000.During the year, the company purchased goods costing $1,200,000.If Wildcat Athletic reported ending inventory of $450,000 and sales of $1,500,000, their cost of goods sold and gross profit rate would be

If Indiana Ink, Inc.has net sales of $400,000 and cost of goods sold of $320,000, Indiana Ink's gross profit rate is

If Hostell Company has net sales of $500,000 and cost of goods sold of $350,000, Hostell's gross profit rate is

Crowder Corporation recorded the return of $200 of goods originally sold on credit to Discount Industries.Using the periodic inventory approach, Crowder would record this transaction as:

Rains Company is a furniture retailer.On January 14, 2022, Rains purchased merchandise inventory at a cost of $60,000.Credit terms were 2/10, n/30.The inventory was sold on account for $100,000 on January 21, 2022.Credit terms were 1/10, n/30.The accounts payable was settled on January 23, 2022, and the accounts receivables were settled on January 30, 2022.Which statement is correct?

Gross profit equals the difference between

Haverty Industries increased its gross profit rate from 18.4% in 2021 to 23.7% in 2022.Which of the following would be a possible explanation for this change?

Under a perpetual inventory system,