Multiple Select Question

Select all that apply

Identify the statements below which are correct regarding a merchandiser's multi$-$step income statement.

Expenses are subtracted from gross profit in order to calculate net income.

Accounts receivable is included on the statement.

Cost of goods sold is subtracted from net sales in order to determine gross profit.

Total assets is the last line on the statement.

Merchandise inventory is reported on the statement.Multiple Choice Question

Sales is a$($n$)$ account.

revenue

asset

expense

liabilityMultiple Choice Question

Identify the statement below that is the correct definition of inventory shrinkage.

Shrinkage is the term used to describe the diminished floor space that an inventory item has in a store.

Shrinkage is the term used to refer to the loss of inventory due to theft, breakage or deterioration.

Shrinkage is the discount received against the purchase price of merchandise.

Select all that apply

Identify the statements below that are correct regarding the closing entries for a merchandiser using the perpetual inventory system.

The Dividends account is closed to Retained Earnings

Cost of goods sold is closed with the revenue accounts.

Sales Discounts is closed with the expense accounts.

Cost of goods sold is closed with the expense accounts.

Sales is closed as a revenue account.

Sales Discounts is closed with the revenue accounts.

The Dividends account is closed to Income Summary.

Merchandise Inventory is closed with the expense accounts.

Sales Returns and Allowances is closed with the expense accounts.