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Chapter 05 Accounting for Merchandising Operations 20 Mnute Quir Name Student ld True/False TRUE FALSE...

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Chapter 05 Accounting for Merchandising Operations 20 Mnute Quir Name Student ld True/False TRUE FALSE Measuring net income for a merchandising company is conceptually the same as for a service company The cost of goods sold is determined only at the end of the accounting period under a perpetual inventory system. debit Under the perpetual inventory system, the purchase of merchandise is recorded with a to the Purchases account Sales Discounts is a contra revenue account and has a debit balance A customer may receive a sales discount for goods that are damaged or defective in a single step income statement, gross profit and operating income are shown on the income statement. In the balance sheet, inventory is reported as a current asset immediately below accounts receivable income from operations is determined by subtracting other expenses and losses from gross profit. Merchandising companies report nonoperating activities in the income statement mme-diately after the company's primary In preparing a worksheet for a merchandising firm, all income statement column debits represent expenses operating activities. 10. Multiple Choice 1 Sales Discounts

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