quiz for chapter 6 accounting

Which of the following statements regarding merchandising journal entries is true? A. A periodic inventory system does not track the costs of goods sold during the accounting period. B. Merchandise inventory for sale is recorded in the same account as supplies for internal use. C. A perpetual inventory system does not track the change in inventory account as a result of a sale D. Inventory sales are recorded be entries made to the gross profit account

A. A periodic inventory system does not track the costs of goods sold during the accounting period.

FOB shipping point means that ownership of goods passes to the buyer when the goods passes to the buyer when the goods reached their destination True False

false

Few companies take physical count of inventory each year, and rely on inventory records to determine the amount of inventory on hand at the end of the year True False

false

In a perpetual inventory system, only one journal entry is required when goods are sold from inventory True False

false

Most companies report their sales revenue and contra revenue accounts as well as sales net, on their externally reported income statement True False

false

The use of internal controls gives guaranteed protection against losses due to operating activities True False

false

Unlike manufactures and merchandisers, service companies do not incur operating expenses. True False

false

A retailer is a company that buys products from manufacturers and sells them to wholesalers True False

true

Which of the following statements regarding inventory counts is NOT true? A. Companies need to perform a physical count of their inventory at least yearly regardless of which inventory system is being used. B. A perpetual inventory system does not require a physical count during the accounting period to determine cost of goods sold. C. In a perpetual system, the inventory count is compared to the inventory account balance to reveal shrinkage. D. If a company uses a perpetual inventory system and the inventory count at the end of the accounting period is greater than the balance in the inventory ledger account, there must have been shrinkage.

D. If a company uses a perpetual inventory system and the inventory count at the end of the accounting period is greater than the balance in the inventory ledger account, there must have been shrinkage.

A company must solely be a service company, a merchandising company, or a manufacturing True False

False