6. In a perpetual inventory system, when merchandise is returned to the supplier, Cost of Goods
Sold is debited as part of the transaction.
7. In a perpetual inventory system, merchandise returned to vendors reduces the inventory
8. The form of the balance sheet in which assets, liabilities, and stockholders' equity are
presented in a downward sequence is called the report form.
9. Purchased goods in transit, shipped FOB destination, should be excluded from ending
inventory of the buyer.
10. If the ownership of merchandise passes to the buyer when the seller delivers the merchandise
for shipment, the terms are stated as FOB destination.