61) Net sales is net of ________.
A) goods in transit
B) cost of goods sold
C) sales returns and allowances
D) gross profit
62) Sales returns and allowances and Sales discounts are ________.
A) contra-asset accounts and are netted against Accounts receivable on the balance sheet
B) contra-expense accounts and netted against Cost of goods sold on the income statement
C) expense accounts and added to Sales on the income statement
D) contra-revenue accounts and netted against Sales on the income statement
63) A purchase requisition is completed after merchandise is received from a vendor.
64) A purchase allowance is a record of the company's request to a vendor for goods or services.
65) The purchase of inventory is recorded as an expense called cost of goods sold.
66) Credit terms of 2/10, n/30 provide for a 10 percent discount if the buyer pays within 30 days.
67) If the shipping terms are FOB destination, the seller has to pay for freight costs.
68) If the shipping terms are FOB shipping point, the seller has to pay for freight costs.
69) If the shipping terms are FOB shipping point, the buyer has to pay for freight costs.
70) Freight out is an operating expense recorded on the seller's books for the costs of shipping merchandise to buyers.
71) Sales returns and allowances is a contra-asset account.
72) Describe the operating cycle for a merchandising firm.