MUHASEBE I - Deneme Sınavı - 20

A retailer buys merchandise inventory either from a producer or a wholesaler and then sells those goods to consumers.

The operating cycle of a merchandising company starts with the purchase of inventories from a producer or an individual, called a vendor. Then these inventories are sold to customers, either in cash or on account. When the cash is collected from customers, the operating cycle ends the first round.

The operating cycle of a merchandising company starts with the purchase of inventories from a producer or an individual, called a vendor. Then these inventories are sold to customers, either in cash or on account. When the cash is collected from customers, the operating cycle ends the first round.

If the merchandise inventory is sold, its cost is taken from inventory account in balance sheet and recognized as an expense (cost of goods sold) in the income statement.

When COGS is deducted from sales revenue, gross profit is calculated. Gross
profit evaluates the company’s profitability in terms of selling activities.

In periodic inventory system, companies use “Purchase” account to record their purchases of inventories and there is no record for Cost of Goods Sold (COGS) until the end of accounting period

The formula that is used to calculate COGS is:
COGS = Beginning Inventory + Purchases – Ending Inventory

The Merchandise Inventory account increases when a purchase is made, so we used the debit side of Merchandise Inventory account. The Cash account decreases when a purchase is made, so we used the credit side of Cash account.

“Sales Discounts” account is a contra-sales revenue account, and it is deducted from the gross sales revenue to reach net sales revenue in the income statement.

The correct answer to the problem is the operating cycle

Sales Discounts account is a contra-sales revenue account and it is deducted from the gross sales revenue to reach net sales revenue in the income statement. The correct answer is C.

In income statement are sales returns, sales discount and sales allowances  shown. The correct answer is option B.

The correct answer is D. The invoice is the document given by the seller to the customer in return for collection. The service business does not buy products. Trading businesses buy products from suppliers and sell them to customers. Gross profit is the excess of sales revenue over cost of goods sold.

Inventories are included in assets in the balance sheet.

According to the information given in the question, cash account is debit 800 TL. Sales income account is credited as 800 TL.

The cost of goods sold is (130.000-45.000)=85.000 TL

The correct answer to question is option A. The expression given in this case belongs to the  periodic inventory system.

The correct answer is C. Merchandise inventory account decreases as a result of sales discount.

The correct answer is B. If the FOB shipping point type of shipment is preferred, the transportation cost belongs to the buyer. Therefore, transportation cost is added to the cost of merchandise, because it is a part of purchase cost.

Manufacturing companies is type of businesses in which raw materials are converted to finished goods and then sold to customers.