A. gross profit. 8. The income statement for a merchandising company shows features except: 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 perlodic 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) __ This section of the exam consists of nine true or false questions Carefully read each statement and determine whether it is true or false. You must circle "A" if the statemen t 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 revenues 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 equipment and interest are reported under other revenues and gains in a multiple-step income statement. A. True B. False 7. Freight-in is an account that is subtracted from the Purchases account to arri at cost of goods purchased. A. True B. False 8. Under a periodic inventory system , freight-in on merchandise purchases sh be charged to the Inventory account. A. True B. False The terms 2/10,n/30 state that a 2% discount is available if the invoice within the first 10 days of the next month. A. True B. False