Reference no: EM132788356

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. The Sales Discounts account is a contra-income account and will -have a debit balance.

Question 2. The perpetual inventory system requires recording the cost of each sale as it occurs.

Question 3. The periodic inventory system relies on a physical count of merchandise for its balance sheet amount.

Question 4. The purchase of equipment not for resale should be debited to the Purchases account.

Question 5. Advertising Expense appears as a Distribution Cost on the income statement.

Question 6. The chart of accounts for a merchandising entity differs from that of a service entity.

Question 7. A credit term of "2/10, n/3011 means that the buyer may deduct 2% from the invoice if payment is made within 10 days from the end of the month.

Question 8. For cash sales, the operating cycle is from Cash to Inventory to Accounts Receivable and back to Cash.

Question 9. The two main systems for accounting for merchandise are periodic and perpetual.

Question 10. Transportation In is considered a cost of merchandise purchased.