Under the perpetual inventory system, the Cost of Good Sold account is recorded … a. When purchases occur b. On a monthly basis c. When sales occur d. On an annual basis 2. Which of the following equations is false? a. Net Income = Gross Profit – Operating Expenses b. COGS = Cost of Goods Available for Sale – Ending Inventory c. Sales Revenue – COGS – Operating Expenses = Net Income d. Net Income = Operating Expenses + Gross Profit 3. Pinkan Company sells merchandise to Castle Corporation with terms FOB Shipping Point. In this case, the freight cost will be paid by … a. Pinkan Company b. Castle Corporation c. Shipping Company d. Pinkan Company and Castle Corporation 4. During 2020, Pearl Enterprises generated sales revenues of $85,000. The company’s expenses were as follows: cost of goods sold of $30,000, operating expenses of $13,000 and a loss on the sale of equipment of $9,000. Pearl’s gross profit is … a. $55,000 b. $42,000 c. $33,000 d. $64,000 5. On the September 1, 2021, FATA Company reported Merchandise Inventory of $3,500. During the month, the company made purchases of $9,000. At September 31, 2021, a physical count of inventory reported $3,700 on hand. Cost of goods sold for the month is … a. $3,500. b. $12,500. c. $8,800. d. $3,700.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter8: Inventories: Special Valuation Issues

Section: Chapter Questions

Problem 13E: Retail Inventory Method The following information relates to the retail inventory method used by...

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1. Under the perpetual inventory system, the Cost of Good Sold account is recorded … a. When purchases occur b. On a monthly basis c. When sales occur d. On an annual basis 2. Which of the following equations is false? a. Net Income = Gross Profit – Operating Expenses b. COGS = Cost of Goods Available for Sale – Ending Inventory c. Sales Revenue – COGS – Operating Expenses = Net Income d. Net Income = Operating Expenses + Gross Profit 3. Pinkan Company sells merchandise to Castle Corporation with terms FOB Shipping Point. In this case, the freight cost will be paid by … a. Pinkan Company b. Castle Corporation c. Shipping Company d. Pinkan Company and Castle Corporation 4. During 2020, Pearl Enterprises generated sales revenues of $85,000. The company’s expenses were as follows: cost of goods sold of $30,000, operating expenses of $13,000 and a loss on the sale of equipment of $9,000. Pearl’s gross profit is … a. $55,000 b. $42,000 c. $33,000 d. $64,000 5. On the September 1, 2021, FATA Company reported Merchandise Inventory of $3,500. During the month, the company made purchases of $9,000. At September 31, 2021, a physical count of inventory reported $3,700 on hand. Cost of goods sold for the month is … a. $3,500. b. $12,500. c. $8,800. d. $3,700.

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