ACC 291T Week 1 | Quizzes and Exercises | Questions with explained answers | 2025 Update | 100% Correct.

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,Gross profitis calculated by taking the net | sales (sales/costs) of a product and | subtracting
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cost of the goods sold.



Which statement below correctly explains what merchandise inventory is?

Merchandise inventory s an expense account reported on the income statement and contains the cost
Merchandise inventory is subtracted from net sales on the income statement to determine gross profit fo
® Merchandise inventory is an asset reported on the balance sheet and represents the cost of products pu
Merchandise inventory is increased when products are sold to customers.




Determine which statements below are correct regarding merchandise available for sale during a period. (C

] Ending inventory
+ Cost of goods sold = Merchandise availabie for sale

Beginning inventory + Encing inventory = Merchandise available for sale

Merchandise available for sale

Cost of goods sold + Beginning inventory = Merchandise available for sale


Correct Answer

Ending inventory + Cost of goods sold = Merchandise available for sale
Beginning inventory + Net purchases = Merchandise availablefor sale

,Determine which of the definitions on the right go with the entity on the left

An intermediary that buys products from
a
Retailer — sells them to c


An intermediary that buys products fro
Wholesaler — retailer


Merchandiser — Earms netincome by buying




XMart purchased $300 of merchandise on account, Demonstrate the journal entry to record this transaction
is used
Debit Merchandise Inventory $300; crediit Sales $300.
) Debit Purchases $300; credit Accounts Payable $300,
© Credit Merchandise Inventory $300; debit Accounts Payable $300.
Debit Merchandise Inventory $300; credit Accounts Payable $300.

Correct Answer

Debit Merchandise Inventory $300; credit Accounts Payable $300.

, Which of the statements below are correct regarding cost of goods sold?

@® Cost of goods sold is the expense of buying and preparing merchandise.
) Cost of goods sold can be determined by subtracting the Cost of a merchandise sold from its sales pri
Reason: This is gross profit
Cost of goods sold s the price received from selling a product.
Cost of goods sold is an asset account reported on the balance sheet.
Reason: Cost of goods sold is an expense reported on the income statement.


Correct Answer

Cost of goods sold is the expense of buying and preparing merchandise.




Determine which of the definitions below describes gross profit.

The total money paid by the merchandiser to its supplier including freight costs
The amount of money received on the sale of goods
The original cost of the merchandise when purchased from the supplier
@® The difference between net sales and the cost of the goods sold