What statement below correctly explains what merchandise inventory is?

What statement below correctly explains what merchandise inventory is?

Which statement below correctly explains what merchandise inventory is? Merchandise inventory is an asset reported on the balance sheet and contains the cost of products purchased for sale.

Which of the following costs are included in merchandise inventory?

Merchandise inventory is finished goods that are held for sale to customers. Costs that are included in “merchandise inventory” include the cost of the product, transportation-in costs, packaging costs, transit insurance, etc.

What are the four closing journal entries for a merchandiser?

A merchandiser has four closing journal entries at the end of an accounting cycle. Select the correct entries below. (Check all that apply.)…

• Sales.
• Cost of Goods Sold.
• Gross Profit.
• Operating Expenses.
• Income from Operations.
• Other Revenues and Expenses.

How do you compute net income for a merchandiser quizlet?

A merchandiser earns net income by buying and selling merchandise. How do you compute net income for a merchandiser. Net sales – cost of goods sold – other expenses.

How do you compute net income for a merchandiser?

To compute net income for a merchandiser, you will start with net sales, subtract cost of goods sold and subtract other _____. expenses. Describe cost of goods sold. Cost of goods sold is the expense of buying and preparing merchandise.

Which inventory costing methods are based on assumptions?

Accountants usually adopt the FIFO, LIFO, or Weighted-Average cost flow assumption. The actual physical flow of the inventory may or may not bear a resemblance to the adopted cost flow assumption.

Which of the following is the equation for cost of goods sold?

At a basic level, the cost of goods sold formula is: Starting inventory + purchases − ending inventory = cost of goods sold.

What is merchandise cost?

The cost of merchandise sold is the cost of goods that have been sold by a wholesaler or retailer. These entities do not manufacture their own goods, instead buying the goods from third parties and selling them to their customers.

How do you calculate merchandise inventory?

To arrive at the value of merchandise inventory, multiply the amount of unsold inventory with the cost of each unit. This merchandise inventory value, which is usually considered the same as the ending inventory, is then entered into the balance sheet.

Which of the following accounts are involved in the closing entries when a merchandising company uses the perpetual inventory system?

Sales Returns and Allowances. Which of the following accounts will normally appear in the ledger of a merchandising company that uses a perpetual inventory system? two journal entries are necessary: one to record the receipt of cash and sales revenue, and one to record the cost of goods sold and reduction of inventory.

What are the closing entries for a merchandising business?

The closing procedure for merchandising companies is the same as for service companies — all income statement accounts are transferred to the Income Summary account, the Income Summary is closed to Retained Earnings, and Dividends are closed to Retained Earnings.

Which of the following is shown on the income statement of both merchandising and service companies?

Which of the following is shown on the income statement of both merchandising and service companies? Only operating expenses are shown on the income statement of both merchandising and service companies.

How do you find net sales in merchandising?

There are three calculated amounts on the multi-step income statement for a merchandiser – net sales, gross profit, and net income.

1. Net Sales = Sales – Sales Returns – Sales Discounts.
2. Gross Profit = Net Sales – Cost of Merchandise Sold.
3. Net Income = Gross Profit – Operating Expenses.

What are the steps of the operating cycle for a merchandiser with credit sales?

An operating cycle consists of lead time, production time, sales time, delivery time, and cash-collection time.

Which of the following are the three main parts of a multiple step income statement?

Definition: A multiple step income statement formats income and expense into subtotals and comprehensive categories to provide more detail to financial statement readers. In other words, a multi-step statement breaks the entire report into three main sections: gross profit, income from operations, and net income.

What is income statement of a merchandising business?

Except for the inventory account, the balance sheet is also the same. But a merchandising company’s income statement includes categories that service enterprises do not use. A single‐step income statement for a merchandising company lists net sales under revenues and the cost of goods sold under expenses.

What form of income statement is prepared by a merchandising business?

Merchandising companies prepare financial statements at the end of a period that include the income statement, balance sheet, statement of cash flows, and statement of retained earnings. The presentation format for many of these statements is left up to the business.

How do you write a merchandise income statement?