Chapter 7, Problem 7.5BE

Explain the calculation of net sales and net purchases.

16. Which of the following is a contra account? a. Sales discounts b. Purchase returns and allowances c. Allowance for doubtful accounts d. All of the above

From page 5-2 of the VLN, which of the following accounts are subtracted from sales to compute Net sales? Allowance for uncollectible accounts Deferred revenue Sales discounts Sales returns and sales allowances Accumulated depreciation Trade discount

Are net sales = Sales less?a. Sales returnsb. Sales discountsc. Sales returns & allowancesd. Sales returns & allowances and sales discounts

1. Net purchases equal the invoice amount and?a. plus freight-in, plus discountsb. less purchase returns, plus purchase allowancec. plus freight-in, less purchase discountsd. plus discounts, less purchase returns 2. Cost of Goods Sold is classified as which type of account?a. Assetb. Liabilityc. Revenued. Expense

The COGS is estimated by deducting the gross profit from sales revenue. Distinguish between gross profit as a percentage of cost and gross profit as a percentage of sales price and how do you convert the gross profit % based upon cost to gross profit % based upon selling price?

The Allowance for Sales Discounts account: (Select all that apply). Multiple select question. Is reported on the income statement as a reduction to the Sales account. Is reported on the balance sheet as a reduction to the Accounts Receivable account. Is a contra revenue account. Is a contra asset account.

Which of the following is true about accounts payable? Accounts payable are also called trade accounts payable. When accounts payable are recorded at the net amount, a Purchase Discounts account will be used. When accounts payable are recorded at the gross amount, a Purchase Discounts Lost account will be used.       1   2   3   Both 2 and 3 are true

How do you calculate accounts receivable turnover? Select an answer: Take the beginning A/R balance, add the ending A/R balance, divide by two, then divide the result into sales revenue Take the beginning A/R balance, add the ending A/R balance, then divide the result into sales revenue divided by two Take the ending A/R balance, subtract the beginning A/R balance, then divide the result into sales revenue. Take the starting A/R balance, subtract the ending A/R balance, then divide the result into sales revenue divided by two.