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Questions and Answers
Which of the following would not be reported as
inventory?
Which of the following would not be reported as inventory?
Income from operations is gross profit less
Income from operations is gross profit less
- Two categories of expenses for merchandising companies are
- Two categories of expenses for merchandising companies are
- Sales revenue less cost of goods sold is called
- Sales revenue less cost of goods sold is called
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51 Cost of goods sold is determined only at the end of the accounting period in
51 Cost of goods sold is determined only at the end of the accounting period in
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A perpetual inventory system would likely be used by a(n
A perpetual inventory system would likely be used by a(n
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In a perpetual inventory system, cost of goods sold is recorded
In a perpetual inventory system, cost of goods sold is recorded
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Under a perpetual inventory system, acquisition of merchandise for resale is debited to the
Under a perpetual inventory system, acquisition of merchandise for resale is debited to the
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The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit
The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit
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The Merchandise Inventory account is used in each of the following except the entry to
record
The Merchandise Inventory account is used in each of the following except the entry to record
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Study Notes
Inventory Reporting
- Income from operations is gross profit less expenses, which implies that inventory is not reported as income.
Merhcandising Companies
- Two categories of expenses exist for merchandising companies.
Gross Profit Calculation
- Sales revenue less cost of goods sold is called gross profit.
Inventory Systems
- Cost of goods sold is determined only at the end of the accounting period in a periodic inventory system.
Perpetual Inventory System
- A perpetual inventory system would likely be used by a large retail company.
- In a perpetual inventory system, cost of goods sold is recorded each time a sale is made.
- Under a perpetual inventory system, acquisition of merchandise for resale is debited to the Merchandise Inventory account.
Recording Purchases and Returns
- The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit the Merchandise Inventory account and debit Accounts Payable or Cash.
Merchandise Inventory Account
- The Merchandise Inventory account is used in each of the following except the entry to record cost of goods sold.
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Description
Test your knowledge on inventory reporting by identifying which items would not be reported as part of inventory.
