131. A multistep income statement separates routine operating results from peripheral or nonoperating items.
132. For a company that uses a perpetual inventory system, a physical count of the inventory can reveal the amount of inventory shrinkage the company has experienced.
133. The entry to record the amount of inventory shrinkage affects both the balance sheet and the income statement.
134. Net sales is calculated by subtracting cost of goods sold from sales revenue.
135. Sales discounts affect net sales, but purchase discounts do not.
136. Common size financial statements are prepared by converting dollar amounts to percentages.
137. A common size income statement is prepared by dividing all amounts on the statement by net income.
138. Sales discounts do not affect a company's gross margin percentage.
139. The return on sales ratio indicates the amount of each sales dollar that is left over after covering the cost of goods sold.
140. With a periodic inventory system, inventory purchases are recorded in the Purchases account at the time of purchase.
141. With a periodic inventory system, the cost of goods sold is recorded at the time of a sale of merchandise.
142. A company's amount of cost of goods sold reported on the income statement will be the same with a periodic inventory system as it would be with a perpetual system.