Statement of Comprehensive Income (Multi-Step)

Question 1

total amount of revenue that the company was able to generate from selling products.

Answer 1

Sales

Question 2

to record returns of customers.

Answer 2

Sales return

Question 3

discounts given to customers who pay early

Answer 3

Sales discounts

Question 4

the actual cost of merchandise that the company was able to sell.

Answer 4

Cost of Goods Sold

Question 5

the amount of inventory at the beginning of the accounting period. This is also the amount of ending inventory from the previous period.

Answer 5

beginning inventory

Question 6

amount of goods bought during the current accounting period.

Answer 6

purchases

Question 7

to record early payments by the company to the suppliers.

Answer 7

Purchase discount

Question 8

to record merchandise returned by the company to their suppliers.

Answer 8

Purchase returns

Question 9

used to record transportation costs of merchandise purchased by the company.

Answer 9

Freight in

Question 10

total cost of inventory unsold at the end of the accounting cycle.

Answer 10

Ending inventory

Question 11

These expenses are not directly related to the merchandising function of the company but are necessary for the business to operate effectively. Example: salaries of the manager, security guard.

Answer 11

General and Administrative Expenses

Question 12

These expenses are those that are directly related to the main purpose of a merchandising business. Example: salaries of sales agent, salary of driver of the delivery truck, advertising expenses, delivery expenses.

Answer 12

Selling Expenses

Question 13

Allowance for doubtful accounts

Accumulated depreciation

Answer 13

Contra asset accounts