Question

Question 1 of 2 n !! View Policies Current Attempt in Progress Mr. Etemadi has prepared the following list of statements about service companies and merchandisers. Identify each statement as true or false. 1. Measuring net income for a merchandiser is conceptually the same as for a service company. < 2. For a merchandiser, sales less operating expenses is called gross profit. 3. For a merchandiser, the primary source of revenues is the sale of inventory. < Sales salaries and wages is an example of an operating expense. > 5. The operating cycle of a merchandiser is the same as that of a service company. 6. In a perpetual inventory system, no detailed inventory records of goods on hand are maintained. < 7. In a periodic inventory system, the cost of goods sold is determined only at the end of the accounting period. 8. A periodic inventory system provides better control over inventories than a perpetual system. Type here to search OPP

Answer 1

Solution

1. True Measuring net income for a merchandiser is conceptually the same as for a service company.

2. False For a merchandiser, sales less operating expenses is called gross profit.

3. True For a merchandiser, the primary source of revenues is the sale of inventory.

4. True Sales salaries and wages is an example of an operating expense.

5.False The operating cycle of a merchandiser is the same as that of a service company.

6. False In a perpetual inventory system, no detailed inventory records of goods on hand are maintained.

7.True  In a periodic inventory system, the cost of goods sold is determined only at the end of the accounting period.

8.False A periodic inventory system provides better control over inventories than a perpetual system.