Question

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or an uestion. 1) Goods in transit are: A) always included in the transportation company's inventory. B) always included in the buying company's inventory. C) always included in the selling company's inventory D) inventory items being transported from a seller to a buyer. 2) Acme Company's balance sheet shows three inventory accounts-raw materials, work and finished goods. Acme Company must be a: A) service business. C) wholesale distributor. B) manufacturer. D) merchandiser. 3) Assume that a perpetual inventory system is in use. Which of the following statements the journal entries prepared is correct? A) When a customer returns inventory, the seller debits Sales Returns & Allowances perpetual inventory system. B) When a company grants an allowance to a customer, Inventory is credited when u perpetual inventory system. C) When a company receives payment from a customer for a sale, Cash is debited a Payable is credited. D) "Freight-out" or delivery costs associated with sales should be included in Cost Sold. 4) Which of the following items will require an adjusting journal entry on a company's A) Deposits in transit C) NSF check B) Error made by the bank D) Outstanding checks 5) The Allowance for Doubtful Accounts account is a contra-account that offsets B) Bad Debt Expense. D) Accounts Receivable. A) Cash. C) Net Income.

Answer 1

1 1 Goods in transit are the goods which are being transferred from seller to buyer those goods are not get reached the buyer's desk. Recording of these goods by either sellorcon buyer clepends on type of sale ie FOB Shipping point on FOB destination Since, nothing mentioned in the question, Goods in transit means. t D) Inventory items being transferred from from Su a seller to buyer and Answer. B) manufacturing company. * It involves manufacturing of goods from gow materials, Finished goods - goods for which production is completed work in prouss - goods for which production is not get completed. ③ Entry ander perpetual inventory system. Inventory tranking is done continously. A is correct on to Return of goods, sales retry Che allowances is debited and account receivables is credited.

4 ANS check is adjusted through a journal entry. . and rest of them are adjusted in a Bank reconciliation Statement 6 Allowances for a doubtful accounts is a contra asset account which will be set off against account receivables presented on the balance sheet Answer D