1 Which of the following items is not unique to the financial statements of merchandising companies? (a) Cost of goods sold; (b) Accounts receivable; (c) Merchandise inventory.

2.  What is a merchandising company’s gross profit?

3 Why are sales returns and allowances and sales discounts recorded in contra revenue accounts instead of in the Sales account? Is this information likely to be reported outside the company?

4 How long are the credit and discount periods under credit terms of 2/10, n/60?

5 Which of the following items is subtracted from the list price of merchandise to determine the actual sales price? (a) Freight-in; (b) Trade discount; (c) Purchases discount; (d) Purchases return and/or allowance.

6 How is the cost of goods sold determined with a periodic inventory accounting system?

7 What is the meaning of the abbreviation FOB? What is the meaning of the term FOB destination?

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