The Financial Statements for a Merchandising Business The

The Financial Statements for a Merchandising Business • The Income Statement • Multiple-Step Form • Classified income statement

Classified income statement • • Sales revenue Cost of Goods (merchandise) sold Gross profit Operating expenses selling expenses or administrative expenses Income from operation Nonoperating activities Exhibit (3 -1)

Single-Step Form • • total revenues total expenses Net Income / Loss Exhibit (3 -2)

Classified Balance Sheet • • Current assets Long-term investments Intangible assets Current liabilities Long-term liabilities Owner's Equity Illustrative Example (1) Illustrative Example (2), (3), & (4)

ﺃﺴﺌﻠﺔ ﺍﻟﻤﺤﺎﺿﺮﺓ ﺍﻟﺴﺎﺩﺳﺔ • 1 - A multiple-step income statement format shows detailed computations of net sales and other costs and expenses and reports subtotals for various classes of items. • True – or • False

2 - Purchase allowances refer to merchandise a buyer but then returns to the seller. • True – or • False

3 - Cost of goods sold is reported on both the income statement and the balance sheet. • True – or • False

4 - A company had sales of L. E. 695, 000 and its cost of goods sold of L. E. 278, 000. Its gross margin equals: • • L. E. (417, 000). L. E. 695, 000 L. E. 278, 000. L. E. 417, 000.

5 - On October 1, Rana Company sold merchandise in the amount of L. E. 5, 800 to Rana, with credit terms of 2/10, n/30. The cost of the items sold is L. E. 4, 000. Robertson uses the periodic inventory system. Rana pays the invoice of October 8, and takes the appropriate discount. The journal entry that Robertson makes on October 8 is: • Cash Accounts receivable • Cash…………… Sales discounts………… Accounts receivable • Cash……………… Sales discounts…………. Accounts receivable 5, 800 3, 920 80 4, 000 5, 684 116 5, 800