Reference no: EM132531731

Question 1: Closing revenue and expense accounts to the Income Summary account is an optional Book-keeping procedure. Closing entries are unnecessary if the business plans to continue operating in the future and issue financial statements each year. - do you agree with this? Justify your opinion.

Question 2: Freight costs incurred by the seller on merchandise are an operating expense to the seller. - do you agree with this statement? Briefly explain your rationale.

Question 3: In Periodic System, records continuously show inventory that should be on hand. - do you agree with this statement? Briefly explain your rationale.

Question 4: Once cost is established for a plant asset, it becomes the basis of accounting for the asset unless the asset appreciates in value, in which case, market value becomes the basis for accountability. The book value of a plant asset is always equal to its fair market value. - do you agree with these statements? Briefly explain your rationale.

Question 5: An error that overstates the ending inventory will also cause net income for the period to be overstated. - do you agree with these statements? Briefly explain with example.