71. Closing entries for a merchandising business are similar to those for a service business.
72. The ratio of net sales to assets measures how effectively a business is using its assets to generate sales.
73. Because many companies use computerized accounting systems, periodic inventory is widely used.
74. Computerized systems can be used to capture accounting information such as accounts receivable, inventory items, accounts payable, and sales.
75. The accounts Purchases, Purchases Returns and Allowances, Purchases Discounts, and Freight In are found on the balance sheet.
76.
Match each of the following terms with the appropriate definition below.
1. Early payment discount offered to customers by the seller. Purchases
2. Account used to record merchandise purchased under a perpetual inventory system. Merchandise Inventory
3. Account used to record merchandise purchased under a periodic inventory system. Sales Discounts
4. Expense account for recording shipping costs paid by the seller. Freight Out
5. Discounts off the list price offered by wholesalers. Trade Discount
6. Account used to record shipping cost of merchandise by the buyer under a periodic inventory system. Purchase Returns and Allowances
7. Account where returned merchandise or price adjustments are recorded by the buyer under the periodic inventory system. Freight In
8. Account where returned merchandise or price adjustments are recorded by the seller. Sales Returns and Allowances
77.
Match each of the following terms with the correct definition below.
1. Statement that includes subtotals for net sales, gross profit and net operating income in determining net income. FOB Destination
2. Inventory system that updates the Merchandise Inventory account only at the end of the accounting period based on a physical count of merchandise on hand. Inventory Shrinkage
3. Payment arrangements determined by the seller as to when invoices are due and whether early payment discount is offered. Single-Step Income Statement
4. Shipping terms where the ownership of merchandise passes to the buyer when the seller delivers the merchandise to the freight carrier. Credit terms
5. Inventory system that updates the Merchandise Inventory account for every purchase and sale transaction. Perpetual Inventory system
6. Losses of inventory due to theft, damage, spoilage, etc. that cause the actual inventory on hand to be less than that on record. Periodic Inventory system
7. Statement where net income is determined by deducting all expenses from all revenues. Multiple-Step Income Statement
8. Shipping terms where the ownership of merchandise passes to the buyer when the buyer receives the merchandise. FOB Shipping Point
78. Which one of the following is not a difference between a retail business and a service business?
A. in what is sold
B. the inclusion of gross profit in the income statement
C. accounting equation
D. merchandise inventory included in the balance sheet
79. Net income plus operating expenses is equal to
A. cost of merchandise sold
B. cost of merchandise available for sale
C. net sales
D. gross profit
80. Generally, the revenue account for a merchandising business is entitled
A. Sales
B. Net Sales
C. Gross Sales
D. Gross Profit