Asked by Melissa Gonzalez on May 22, 2024
Verified
Two categories of expenses for merchandising companies are
A) cost of goods sold and financing expenses.
B) operating expenses and financing expenses.
C) cost of goods sold and operating expenses.
D) sales and cost of goods sold.
Cost of Goods Sold
The total cost directly attributed to the production of goods sold by a company, including materials and labor costs but excluding indirect expenses.
Operating Expenses
Costs associated with a company's main operational activities, excluding the cost of goods sold.
Merchandising Companies
Companies that buy and sell goods without fundamentally changing their condition; they are involved in retail or wholesale.
- Distinguish between perpetual and periodic inventory systems.
- Understand the function and computation of gross profit in evaluating the profitability of a company.
Verified Answer
RC
Rosalinda CoronelMay 24, 2024
Final Answer :
C
Explanation :
Merchandising companies have expenses related to the purchase and sale of goods, which are included in cost of goods sold. They also have expenses related to the operation of their business, such as rent, salaries, and advertising, which are included in operating expenses. Financing expenses are related to borrowing and interest payments and are not directly related to the company's operations. Sales do not represent an expense, but rather a revenue source.
Learning Objectives
- Distinguish between perpetual and periodic inventory systems.
- Understand the function and computation of gross profit in evaluating the profitability of a company.