1. Gross profit equals the difference between
A. sales revenue and cost of goods sold.
B. sales revenue and operating expenses.
C. sales revenue and cost of goods sold plus operating expenses.
D. net income and operating expenses.
2. Two categories of expenses in merchandising companies are
A. other expenses and cost of goods sold.
B. cost of goods sold and financing expenses.
C. cost of goods sold and operating expenses.
D. operating expenses and financing expenses.
3. Sales revenue less cost of goods sold is called
A. marginal income
B. gross profit.
C. net income
D. net profit.
4. After gross profit is calculated, operating expenses are deducted to determine
A. net margin.
B. gross profit on sales.
C. net income
D. gross margin.
5. Inventory becomes part of cost of goods sold when a company
A. receives payment from the customer.
B. pays for the inventory.
C. sells the inventory.
D. purchases the inventory.
6. The LIFO inventory method assumes that the cost of the latest units purchased is
A. the last to be allocated to cost of goods sold.
B. not allocated to cost of goods sold or ending inventory.
C. the first to be allocated to cost of goods sold.
D. the first to be allocated to ending inventory.
7. Carla Vista First Company just began business and made the following four inventory purchases in June:
| June 1 | 144 units | $ 992 |
| June 10 | 192 units | 1344 |
| June 15 | 192 units | 1616 |
| June 28 | 144 units | 1264 |
| $5216 |
A physical count of merchandise inventory on June 30 reveals that there are 202 units on hand. Using the LIFO inventory meth value of the ending inventory on June 30 is
A. $1334
B. $1670
C. $1398
D. $1750
8. Sheridan Company just began business and made the following four inventory purchases in June:
| June 1 | 144 units | $ 952 |
| June 10 | 184 units | $1472 |
| June 15 | 184 units | $1564 |
| June 29 | 144 units | $1296 |
| $5284 |
A physical count of merchandise inventory on June 30 reveals that there are 194 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for June is
A. $1563
B. $1352
C. $1806
D. $1721
9. Pharoah Company just began business and made the following four inventory purchases in June:
| June1 | 174 units | $ 1305 |
| June 10 | 224 units | $ 1792 |
| June 15 | 224 units | $1904 |
| June 28 | 174 units | $1566 |
| $6567 |
A physical count of merchandise inventory on June 30 reveals that there are 234 units on hand. Using the average cost method, the amount allocated to the ending inventory on June 30 is
A. $2076.
B. $1785.
C. $2161.
D. $1931.
10. Which of the following is not a common cost flow assumption used in costing inventory?
A. First-in, first-out
B. Middle-in, first-out
C. Last-in, first-out
D. Average-cost