Accounting Department 8. The income statement for a merchandising company shows each of the following features except: A. gross profit. B. cost of goods sold. C. a sales section. D. Investing activities section. 9. When goods are purchased for resale by a company using a periodic inventory system: A. purchases on account are debited to Inventory. B. purchases on account are debited to Purchases. C. purchase returns are debited to Purchase Returns and Allowances. D. freight costs are debited to Purchases. Question 2:...................................................................... __ ...(9 Points) statement and This section of the exam consists of nine true or false questions determine whether it is true or false.You must circle "A" if the statement is correct and ''B'' if the statement is incorrect. 1. Sales minus operating expenses equals gross profit. A. True B. False 2. Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs. A. True B. False 3. Sales revernies are earned during the period cash is collected from the buyer. A. True B. False 4. Nonoperating activities exclude revenues and expenses that result from secondary or auxiliary operations. A. True B. False 5. Net sales appears on both the multiple-step and single-step forms of an income statement. A. True B. False 6. Gain on sale of and interest expense are reported under other revenues and gains in a multiple-step income statement. A. True B. False 7. Preight-in is an account that is subtracted from the Purchases account to arrive at cost of goods purchased. A. True B. False 8. Under a perlodic inventory system, freight-in on merchandise purchases should be charged to the Inventory account. A. True B. False 9. The terms 2/10,n/30 state that a 2% discount is available if the invoice is paid within the first 10 days of the next month. A. True B. False Please go on to the next page... Accounting Principles I