Task Team of FUNdaMENTAL aCCOUNtIng School of Business. Sun Yat-sen University A. An automaker. such as Ford or gM B. Alocal automobile dealership C A taxicab company D. An auto repair shop that specializes in the installment of tires, mufflers, and brakes 4. Gross profit is the difference between A. Net sales and the cost of goods sold B. The cost of merchandise purchased and the cost of merchandise sold C. Net sales and net income D. Net sales and all expenses 5. In a perpetual inventory system A Merchandising transactions are recorded as they occur B. No effort is made to record the cost of goods sold until year-end C. Entries are made in the Cost of Goods Sold account whenever merchandise is purchased or D. The need forever taking physical inventory is eliminated 6. In a perpetual inventory system, purchases of merchandise on account are recorded by A Cost of Goods sold B. Accounts Payable C. Purchases D Inventory 7. In a perpetual inventory system, two entries usually are made to record each sales transaction The purposes of these entries are best described as follows A One entry recognizes the sales revenue, and the other recognizes the cost of goods sold B. One entry records the purchase of the merchandise, and the other records the sale C. One entry records the cost of goods sold, and the other reduces the balar nce in the invento D. One entry updates the general ledger, and the other updates the subsidiary ledgers 8. Emil Company utilizes a perpetual inventory system. The entries made to record the sale of an item at a price in excess of its cost will A. Have no effect on the cost of goods sold until closing entries are made at the end of the B. Not affect the current balance in the Inventory account C. Result in an increase in total assets D. Update the subsidiary ledger but have no impact on the general ledger accounts until end-of-period closing entries are posted 9. In a periodic inventory system, purchases of merchandise on account are recorded by debitingTask Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Yat-sen University 2 A. An automaker, such as Ford or GM. B. A local automobile dealership. C. A taxicab company. D. An auto repair shop that specializes in the installment of tires, mufflers, and brakes. 4. Gross profit is the difference between: A. Net sales and the cost of goods sold. B. The cost of merchandise purchased and the cost of merchandise sold. C. Net sales and net income. D. Net sales and all expenses. 5. In a perpetual inventory system: A. Merchandising transactions are recorded as they occur. B. No effort is made to record the cost of goods sold until year-end. C. Entries are made in the Cost of Goods Sold account whenever merchandise is purchased or sold. D. The need forever taking physical inventory is eliminated. 6. In a perpetual inventory system, purchases of merchandise on account are recorded by debiting: A. Cost of Goods Sold. B. Accounts Payable. C. Purchases. D. Inventory. 7. In a perpetual inventory system, two entries usually are made to record each sales transaction. The purposes of these entries are best described as follows: A. One entry recognizes the sales revenue, and the other recognizes the cost of goods sold. B. One entry records the purchase of the merchandise, and the other records the sale. C. One entry records the cost of goods sold, and the other reduces the balance in the Inventory account. D. One entry updates the general ledger, and the other updates the subsidiary ledgers. 8. Emil Company utilizes a perpetual inventory system. The entries made to record the sale of an item at a price in excess of its cost will: A. Have no effect on the cost of goods sold until closing entries are made at the end of the accounting period. B. Not affect the current balance in the Inventory account. C. Result in an increase in total assets. D. Update the subsidiary ledger but have no impact on the general ledger accounts until end-of-period closing entries are posted. 9. In a periodic inventory system, purchases of merchandise on account are recorded by debiting: