ch05_tb_so4 - CHAPTER 5 Test Bank: Study Objective 4...

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CHAPTER 5 Test Bank: Study Objective 4 TRUE-FALSE STATEMENTS AND SOLUTIONS 33. The terms 2/10, n/30 mean that a 2 percent discount is allowed on payments made over 10 but before 30 days after the invoice date. 34. The multiple-step income statement is considered more useful than the single- step income statement because it highlights the components of net income. 35. General and administrative expenses are a category of operating expense. 36. Advertising expense appears as a selling expense in the income statement. 37. Gross profit appears on both the single-step and multiple-step forms of an income statement. 38. Non-operating activities include revenues and expenses that are related to the company’s main line of operations. 39. Selling expenses relate to general operating activities such as human resources management. 40. Income from operations appears on both the single-step and multiple-step forms of an income statement. 41. A merchandising company’s net income is determined by subtracting operating expenses from gross profit. 42. Sales revenues, cost of goods sold, and gross profit are amounts on a merchandising company's income statement not commonly found on the income statement of a service company. 43. The income statement for a merchandising company presents only two amounts not shown on a service company income statement. 44. Gross profit is a measure of the overall profit of a company. 45. Gross profit represents the merchandising profit of a company. 46. If net sales are $750,000 and cost of goods sold is $600,000, the gross profit rate is 20%.
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Answers to True-False Statements 1. T 9. T 17. T 25. F 33. F 41. T 49. F 2. F 10 F 18. T 26. T 34. T 42. T 50. T 3. F 11. F 19. F 27. F 35. T 43. F 51. F 4. T 12. F 20. F 28. T 36. T 44. F 52. F 5. F 13. T 21. T 29. F 37. F 45. T 6. T 14. T 22. T 30. T 38. F 46. T 7. T 15. T 23. F 31. T 39. F 47. T 8. F 16. T 24. F 32. T 40. F 48. T
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MULTIPLE CHOICE QUESTIONS AND SOLUTIONS 139. Indicate which one of the following would not appear on both a single-step income statement and a multiple-step income statement. a. Gross profit b. Operating expenses c. Sales revenues d. Cost of goods sold 140. The form of income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a a. multiple-step statement. b. revenue statement. c. report-form statement. d. single-step statement. 141. Gross profit does not appear a. on a multiple-step income statement. b. on a single-step income statement. c. to be relevant in analyzing the operation of a merchandising company. d. on either a multiple-step or single-step income statement. 142. Gross profit equals the difference between sales and a. operating expenses. b.
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ch05_tb_so4 - CHAPTER 5 Test Bank: Study Objective 4...

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