Question1.During the month of March, Wang Company so

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Gross Margin – Merchandise Inventory at the end of the period = Net Income
Gross Margin – Selling and Administrative Expenses = Net Income
Gross Margin + Selling and Administrative Expenses = Net income
Sales Revenue x Gross Margin Percentage= Net Income

Advertising Expense
Sales Commissions
Cost of Goods Sold
Interest Expense

asset on the balance sheet.
direct reduction of equity on the statement of changes in stockholders’ equity.
addition to Sales Revenue on the income statement.
expense on the income statement.

If the merchandise inventory at the end of the year was $100,000, the Cost of Goods Sold was $510,000.
If the merchandise inventory at the end of the year was $100,000, the Cost of Goods
Sold was $710,000.
If the beginning inventory was $95,000, the Cost of Goods Sold was $515,000.
If the beginning inventory was $95,000, the Cost of Goods sold was $705,000.

manufacture the goods they sell.
generate revenue primarily by providing services to customers.
buy the merchandise they sell from suppliers.
include dry cleaning companies and law firms.

decrease assets.
increase expense.
decrease equity.
all of the above.

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Sales Revenue divided by the balance in Merchandise Inventory at the end of the period.
the balance in Merchandise Inventory at the beginning of the period plus the amount of inventory purchased during the year.
Sales Revenue minus Cost of Goods Sold.
Sales Revenue minus Cost of Goods Available for Sale.

Insurance that the company buys to protect itself from loss due to employee dishonesty
Proper procedures for processing accounting transactions
Procedures to provide reasonable assurance that the objectives of a company are accomplished
Guidelines that limit the actions and authority of different levels of management

A small volume of high-denomination currency represents a significant amount of value.
Ownership of cash is difficult to prove.
Cash has universal appeal.
Money is the common unit of measurement in business.

An account invoice
A debit memo
A credit memo
A certified check

An account invoice
A debit memo
A credit memo
A certified check

NSF checks.
interest earned on the account.
accounts or notes receivable collected by the bank.
deposits in transit.

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Safeguarding the company’s assets
Ensuring that the company is using the most effective marketing plan
The assessment of the degree of compliance with company policies and public laws
The evaluation of performance

increase total assets by $3,700.
increase total liabilities by $7,200.
increase total liabilities by $3,500.
increase total assets by $7,200.

to obtain fidelity bonds for all employees.
to perform random physical counts frequently.
to implement an effective system of internal controls.
to perform extensive background checks before hiring employees.

a record of all cash collections should be prepared immediately upon receipt.
employees who receive cash should give customers a written receipt.
there should be a significant amount of cash on hand in order to avoid writing checks.
cash receipts should be deposited in a bank as soon as possible.