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TRUE OR FALSE 1. Cost of goods sold is an operating expense.

TRUE OR FALSE 1. Cost of goods sold is an operating expense.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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TRUE OR FALSE 1. Cost of goods sold is an operating expense. 2. Gross profit is equal to net sales plus cost of goods sold. 3. Net sales is equal to sales revenue plus sales returns and minus sales discounts. 4. Credit terms of 3/15, n/30 means the purchaser can deduct 3% of the invoice price if paid within 15 days. 5. FOB shipping point means title to the goods passes to the purchaser upon receipt of the goods and the seller is responsible for the cost of the freight. 6. In the closing entry process, the sales returns and allowances account is debited. 28. If the ownership of merchandise passes to the buyer when the se. delivers the merchandise for shipment, the terms are stated as FOB destination. 29. The abbreviation FOB stands for Free On Board. 30. If the buyer bears the transportation costs related to a purchase, the terms are said to be FOB destination. 31. The seller may prepay the transportation costs even though the terms are FOB shipping point. 32. Title to merchandise shipped FOB shipping point passes to the buyer upon delivery of the merchandise to the buyer's place of business. 33. Purchased goods in transit should be included in the ending inventory if the goods were shipped FOB shipping point. 34. Purchased goods in transit, shipped FOB destination, should be excluded from ending inventory. 35. The accounts Purchases, Purchases Returns and Allowances, Purchases Discounts, and Transportation in are found on the balance sheet.
Transcribed Image Text:TRUE OR FALSE 1. Cost of goods sold is an operating expense. 2. Gross profit is equal to net sales plus cost of goods sold. 3. Net sales is equal to sales revenue plus sales returns and minus sales discounts. 4. Credit terms of 3/15, n/30 means the purchaser can deduct 3% of the invoice price if paid within 15 days. 5. FOB shipping point means title to the goods passes to the purchaser upon receipt of the goods and the seller is responsible for the cost of the freight. 6. In the closing entry process, the sales returns and allowances account is debited. 28. If the ownership of merchandise passes to the buyer when the se. delivers the merchandise for shipment, the terms are stated as FOB destination. 29. The abbreviation FOB stands for Free On Board. 30. If the buyer bears the transportation costs related to a purchase, the terms are said to be FOB destination. 31. The seller may prepay the transportation costs even though the terms are FOB shipping point. 32. Title to merchandise shipped FOB shipping point passes to the buyer upon delivery of the merchandise to the buyer's place of business. 33. Purchased goods in transit should be included in the ending inventory if the goods were shipped FOB shipping point. 34. Purchased goods in transit, shipped FOB destination, should be excluded from ending inventory. 35. The accounts Purchases, Purchases Returns and Allowances, Purchases Discounts, and Transportation in are found on the balance sheet.
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