Question

Question 112 points) The income statement format that contains several sections and subsections is multiple-step Income statement. True False Question 2 (2 points) Purchase discounts reduce sales. True False Question 3 (2 points) Errors in the physical inventory count at the end of the accounting period affect both the income statement and balance sheet. True False Question 4 (2 points) High inventory turnover will result in a high average days inventory on hand. True False Question 5 (2 points) Under a perpetual inventory system, you will still need to take a physical inventory from time to time to confirm accuracy of your perpetual records. True False Question 6 (2 points) The sales discount account is a contra account to Sales. True False Question 7 (2 points) Interest expense is an example of an expense classified under "other expense". True False

Answer 1

1. False. Mutilpe step income statement is a statement that categorises incomes and expenditures into two important sub-categories that are known as operating items and non-operating items.

2. False. Purchase discounts reduces purchase.

3. true. on the income statement it impacts cost of goods sold and consecutively gross profit and net income. on the balance sheet side it affects the inventory asset and owner's equity.

4. false. inventory turnover and days inventory on hand are inversely related.