1.

Normal balance of Sales Discounts is _____

Answer: Debit

2. Sales revenue is a/an _____ account

Answer: Contra Revenue

3. A merchandising company using perpetual system will make _____

Answer: One more adjusting entry than a service company does

4. A merchandising company using perpetual system may record an adjusting entry by

Answer: Debiting cost of goods sold

5. In preparing closing entries for a merchandising company, the Income Summary account will

be credited for the balance of

Answer: Sales Revenue

6. Income from operations will always result if

Answer: Gross profit exceeds operating expenses

7. Freight costs paid by a seller on merchandise sold to customers will cause an increase _____

Answer: To the cost of goods sold of the seller

8. As an incentive for customer to pay their accounts promptly, a business may offer its

customers _____
Answer: A sales discount

9. With respect to the income statement, _____

Answer: Sales discounts are included in the calculation of gross profit

10. When a seller grants credit for returned good, the account that is credited is _____

Answer: Accounts receivable

11. Normal balance of Sales Revenue is _____

Answer: Credit

12. Normal balance of Sales Return and Allowances is _____

Answer: Debit