Question

True-Pake F 1. FOB shipping point means the seller incurs the shipping costs. A company is more likely to know the amount of inventory on hand at any time if it uses 2. the perpetual system than if it uses the periodic system. ue less cost of goods sold equals gross profit. of F 3. Net sales revenue T sales discounts and sales returns/allowances equals net sales. 5. A reduction given by the seller for sales discount by the seller. reduction given by the seller for prompt payment of a credit sale is recorded as a F T Multiple Choice 6. A company that returns goods that previously were purchased on credit A. A/P xX Purchases XX B. Sales A/R xX C. Cash A/P Xx D. A/P Inventory E. Inventory xx A/P xx 7. When a perpetual inventory system is used A. a purchases account is used to collect information on current period purchases. B. inventory is updated with each transaction. C. a physical inventory needs to be taken at the end of the period to establish ending inventory D. an up-to-date inventory balance is not known during the period. 8. With freight terms of FOB shipping point, a freight invoice would be recorded by the buyer by debiting what account? A. Freight-out expense B. Inventory C. The buyer would not be responsible for the freight costs. 9. With freight terms of FOB destination, a freight invoice would be recorded by the seller by debiting what account? A. Freight-out expense. B. Inventory C. The seller would not be responsible for the freight costs.

Answer 1

			Remarks
	F	FOB shipping Point means seller incurs the shipping Costs	It is the duty of Seller to reach the goods at shipping point. Buyer incurs the cost after that
	T	A company is more likely to know the amount of inventory on hand at any time if it uses the perpetual system	In perpetual system cost of goods is entered for every sales transaction and inventory is updated
	T	Net Sales revenue less cost of goods sold equals gross profit
	T	Sales less sales discounts and sales return/allowances equals net sales
	T	A reduction given by the seller for prompt payment of a credit sales is recorded as sales discount by the seller
	6	A company returns goods previously was purchased on credit
	D	Accounts Payable(A/P)……Dr
		Inventory……………………………………………..Cr
	7	When Perpetual inventory system is used
	B	Inventory is updated with each transaction
	8	With Freight term FOB shipping point,a freight invoice will be recorded by buyer by debiting	With Freight term FOB shipping point,buyer is responsible for payment of freight expenses from shipping point to destination
	B	Inventory
	9	With Freight term FOB destination,a freight invoice will be recorded by the seller by debiting	With Freight term FOB destination, the seller is responsible for payment of freight expenses tilldestination
	A	Freight out expense