MBA 601 Module 4 - Video 1 Questions and Answers.

Paying cash to purchase inventory is - Answer an asset exchange transaction. Product costs are expensed when they are incurred. This statement is - Answer False When a merchandising company pays cash to purchase inventory - Answer None of the answers is correct. Which of the following shows the effects of purchasing inventory on account? Balance SheetIncome Statement Statement ofCash Flows Assets=Liab.+EquityRev.-Exp.=Net Inc.A.+=++NANA-+=-NAB.+=NA++NA-NA=NA+ OAC.+=++NANA-NA=NANAD.+=++NANA-NA=NA+ OA - Answer Option C When a merchandising company sells inventory it will - Answer recognize revenue and expense. Edwards Shoe Store sold shoes that cost the company $5,700 for $8,200. Which of the following shows how the recognition of the cost of goods sold will affect the Company's financial statement? (Ignore the effects of the associated revenue recognition.) Balance SheetIncome StatementStatement ofCash Flows Assets=Liab.+EquityRev.-Exp.=Net Inc.A.−=NA+−NA-+=−− OAB.−=NA+−NA-NA=NANAC.+=NA+++-NA=++ OAD.−=NA+−NA-+=−NA - Answer Option D The gross margin appears on a - Answer multistep income statement. Keisha Dress Shops experienced the following events during its third accounting period. (1) Sold merchandise that cost $92,000 for $140,000 cash. (2) Paid $30,000 of operating expenses. (3) Paid a $4,000 cash dividend. Based on this information, the amount of the gross margin is - Answer $48,000. Inventory is - Answer an asset account that appears on the balance sheet.