Question

A company’s chart of accounts includes, in part, the following account numbers and corresponding account titles:

Account No.	Account Title
(1)	Cash
(2)	Merchandise inventory
(3)	Cost of goods sold
(4)	Transportation-out
(5)	Dividends
(6)	Common stock
(7)	Selling expense
(8)	Loss on the sale of land
(9)	Sales

1. Which accounts would affect operating income?

2. Which accounts would affect gross margin?

3. Which accounts would appear on the balance sheet?

Answer 1

1.Accounts affecting Operating Income
Accounts No	Account Title
3	Cost of goods sold
4	Transportation Out
7	Selling Expense
8	Loss on sale of land
9	Sales
2.Accounts affecting Gross margin
Account No	Account Title
3	cost of goods sold
9	Sales
3.Accounts appearing in balance sheet
Account No	Account Title
1	Cash
2	Merchandise Inventory
6	common stock
5	Dividend

2. Accounts affecting gross margin.

1. Accounts affecting operating income.