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Chapter 5 Financial Accounting Exam Questions and Complete Solutions Graded A+
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Chapter 5 Financial Accounting Exam Questions and Complete Solutions Graded A+
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Chapter 5 FinancialAccounting Exam
Questions and Complete
Solutions Graded A+
Denning [Date] [Course title]
, What are Merchandising Companies? - Answer: Companies that buy and sell goods (rather than sell
services)
What are the 2 types of Merchandising Companies? - Answer: Retailers
Wholesalers
Define: Retailer - Answer: company sells its merchandise to customers who are the final consumers of
the product
ex) Walmart
What are Wholesalers? - Answer: Companies who sell products to retailers who later sell it to the final
customers (much less well known)
What is the difference in how revenue is recorded for wholesalers vs. retailers? - Answer: There is no
difference- revenue is recorded the same.
The primary source of revenues is referred to as - Answer: sales revenue, sales or revenue (These are
synonyms)
What tends to be the largest expense on the income statement? - Answer: Cost of goods sold
For this reason, it's the first expense listed
How do we find Gross Profit? - Answer: Revenues - Cost of Goods Sold
What 2 things are ignored in the income statement of a service company? - Answer: Cost Goods Sold
and Gross Profit
What is the Operating Cycle of a Service Company? - Answer: Cash-->Perform Services-->Accounts
Receivable-->Mail-->Receive Cash
What is the Operating Cycle of a Merchandising Company? - Answer: Cash-->Buy Inventory-->Deliver--
>Inventory-->Sell Inventory-->Accounts Receivable-->Mail-->Receive Cash
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