MULTIPLE CHOICE QUESTIONS
56. Net income from operations is gross profit less
a.financing expenses.
b.operating expenses.
c.other income and expense.
d.other expenses.
57. Which of the following would
not
be considered a merchandising company?
a.Retailer
b.Wholesaler
c.Service firm
d.Dot Com firm
58. A merchandising company that sells directly to consumers is a
a.retailer.
b.wholesaler.
c.broker.
d.service company.
59. Two categories of expenses for merchandising companies are
a.cost of goods sold and financing expenses.
b.operating expenses and financing expenses.
c.cost of goods sold and operating expenses.
d.sales and cost of goods sold.
60. The primary source of revenue for merchandising companies is
a.investment income.
b.service fees.
c.the sale of merchandise.
d.the sale of fixed assets the company owns.
61. Sales revenue less cost of goods sold is called
a.gross profit.
b.net profit.
c.net income.
d.marginal income.
62. After gross profit is calculated, operating expenses are deducted to determine
a.gross margin.
b.net income.
c.gross profit on sales.
d.net margin.
63. Cost of goods sold is determined only at the end of the accounting period in
a.a perpetual inventory system.
b.a periodic inventory system.
c.both a perpetual and a periodic inventory system.
d.neither a perpetual nor a periodic inventory system.
64. Which of the following expressions is
incorrect?
a.Gross profit – operating expenses = net income
b.Sales – cost of goods sold – operating expenses = net income
c.Net income + operating expenses = gross profit
d.Operating expenses – cost of goods sold = gross profit
65. Detailed records of the cost of each inventory purchase and sale are
not
maintained under a
a.perpetual inventory system.
b.periodic inventory system.
c.double entry accounting system.
d.single entry accounting system.