week 6 principles of accounting 495490

Exam Name___________________________________ TRUE/FALSE. Write ‘T’ if the statement is true and ‘F’ if the statement is false. 1) The periodic inventory system is normally used for relatively inexpensive goods. 1) 2) When a company uses the perpetual inventory method, the inventory account should stay current 2) at all times. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 3) In a periodic system, inventory balances and the cost of goods sold for the current period are 3) determined: A) on a frequent basis. B) on the first day of each year. C) when a physical inventory count is taken. D) at the time of sale. 4) What is the first step in the accounting cycle for a merchandising company? 4) A) The company delivers inventory to customers. B) The company sells inventory to customers, creating accounts receivable. C) The company buys inventory. D) The company collects cash. TRUE/FALSE. Write ‘T’ if the statement is true and ‘F’ if the statement is false. 5) When a company uses the perpetual inventory method, it should NOT be necessary to conduct a 5) physical count of inventory. 6) The entry to close Sales discounts and Sales returns and allowances results in a debit to Income 6) summary. 7) If a physical count of inventory indicates that the Inventory account is overstated, an additional 7) adjusting entry is required. 8) The entry to close Cost of goods sold results in a debit to Income summary. 8) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 9) The following pertains to periodic inventory: On a merchandising income statement, which would 9) NOT be found under the heading of Cost of goods sold? A) Freight-in B) Purchases C) Supplies D) Purchases returns and allowances TRUE/FALSE. Write ‘T’ if the statement is true and ‘F’ if the statement is false. 10) The consistency principle states that a business should use the same accounting methods from…