Reference no: EM132788363

TRUE if the statement is correct. Write FALSE if the statement is incorrect and identify the word/group of words that made the statement incorrect.

Question 1: Cash discounts are called Purchases Discounts from the buyer's viewpoint.

Question 2: The Merchandise Inventory account is not affected when a sales allowance is granted.

Question 3: The ending inventory of one period is the beginning inventory of the next period.

Question 4: The term freight prepaid or collect will dictate who shoulders the transportation costs.

Question 5: Purchases Returns and Allowances is a deduction from Purchases.

Question 6: A validated deposit slip indicates that cash and checks were actually deposited.

Question 7: If the seller is to shoulder the cost of delivery, the term is stated as F.O.B. destination.

Question 8: Discounts offered to the buyer to encourage early payment are trade discounts.

Question 9: Sales Returns and Allowances is described as a contra-revenue account.

Question 10: The income statement of an entity that provides services only will not have Cost of Goods Sold