KA2e_SelfStudy_Ch05

KA2e_SelfStudy_Ch05 -...

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File: ch05, Chapter 5: Merchandising Operations and the Multiple-Step Income Statement Multiple Choice 1. Which of the following statements about a periodic inventory system is true? a) Companies determine cost of goods sold only at the end of the accounting period. b) Companies continously maintain detailed records of the cost of each inventory purchase and sale. c) The periodic system provides better control over inventories than a perpetual system. d) The increased use of computerized systems has increased the use of the periodic system. Ans: a Response A: Correct! Response B: Detailed records of the cost of each inventory purchase and sale are maintained continuously when a perpetual, not periodic, inventory system is used. Response C: The perpetual system provides better control over inventories than a periodic system. Response D: The increased use of computerized systems has increased the use of the perpetual, not the periodic inventory system. 2. Which of the following items does not result in an adjustment in the merchandise inventory account under a perpetual system? a) A purchase of merchandise. b) A return of merchandise inventory to the supplier. c) Payment of freight costs for goods shipped to a customer. d) Payment of freight costs for goods received from a supplier. Ans: c Response A: When using a perpetual inventory system, a purchase of merchandise is recorded by a debit to the Merchandise Inventory account. Response B: When using a perpetual inventory system, a return of merchandise inventory to the supplier is recorded by a credit to the Merchandise Inventory account. Response C: Correct! Response D: When using a perpetual inventory system, payment of freight costs for goods received from a supplier is recorded by a debit to the Merchandise Inventory account. 3. Which sales accounts normally have a debit balance? a) Sales discounts. b) Sales returns and allowances. c) Both a) and b). d) Neither a) nor b). Ans: c Response A: Sales Discounts does have a normal debit balance, but c is a better answer. Response B: Sales Returns and Allowances does have a normal debit balance, but c is a better answer. Response C: Correct!
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This note was uploaded on 04/22/2009 for the course BCOR 2000 taught by Professor Brush during the Spring '07 term at Colorado.

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KA2e_SelfStudy_Ch05 -...

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