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Which of the following is subtracted from net sales to determine gross profit?

(A)Mark one answer:

(B)Cost of goods sold

(C)Expenses

(D)Both cost of goods sold and expenses

(E)Cost of goods sold, expenses, and taxes

(F)Taxes

The Correct Answer

One purpose of GAAP is to provide _____ between accounting periods.

(A)Relativity

(B)Compression

(C)Contention

(D)Collaboration

(E)Comparability

Correct Answer: E

Jenny's Bakery recently delivered a bad batch of cakes to a local restaurant. Jenny quickly refunded the cost of the cakes to the restaurant. Her accountant made a _____ to her Refunds of Sales account for this transaction:

(A)note (B)debit (C)credit (D)cost adjustment (E)deposit

Correct Answer: B

In the statement of owner’s equity, owner’s equity or capital is calculated using: Mark one answer:

(A)Gross income (B)The positive or negative cash flow figure from the statement of cash flows (C)Assets (D)Total income from operating activities (E)Net income

Correct Answer: E

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