Textbook Notes (280,000)
CA (160,000)
UTSC (20,000)
MGA (400)
MGAB01H3 (100)

MGAB01H3 Chapter Notes -Gross Profit, Net Income, Income Statement

Financial Accounting
Course Code
Liang Chen

This preview shows page 1. to view the full 4 pages of the document.
Summary of Merchandising Entries
Merchandising Financial Statements
¾ There are two forms of income statements that are widely used by merchandising
companies: a multiple-step income statement or a simplified income statement
Multiple-step Income statement
¾ This income statement shows two main steps: Cost of goods sold is subtracted from
net sales to determine gross profit and operating expenses are deducted from gross
profit to determine net income
¾ The multiple-step income statement also distinguishes between operating and non-
operating activities
¾ The statement also highlights intermediate components of income and shows
subgroupings of expenses
Net Sales
¾ As a contra revenue account, sales returns and allowances is deducted from sales in
the income statement to arrive at net sales
Gross Profit
You're Reading a Preview

Unlock to view full version