Under a perpetual inventory system, acquisition of merchandise for resale is debited to

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Asked by MagistrateRook14153 on coursehero.com

Multiple Choice

1. Two categories of expenses for merchandising companies are

a.  cost of goods sold and financing expenses.

b.  operating expenses and financing expenses.

c.  cost of goods sold and operating expenses.

d.  sales and cost of goods sold.

2. Sales revenue less cost of goods sold is called

a.  gross profit.

b.  net profit.

c.  net income.

d.  marginal income.

3. Cost of goods sold is determined only at the end of the accounting period in

a.  a perpetual inventory system.

b.  a periodic inventory system.

c.  both a perpetual and a periodic inventory system.

d.  neither a perpetual nor a periodic inventory system.

4. Which of the following expressions is incorrect?

a.  Gross profit - operating expenses = net income

b.  Sales - cost of goods sold - operating expenses = net income

c.  Net income + operating expenses = gross profit

d.  Operating expenses - cost of goods sold = gross profit

5. Under a perpetual inventory system, acquisition of merchandise for resale is debited to the

a.  Inventory account.

b.  Purchases account.

c.  Supplies account.

d.  Cost of Goods Sold account.

6. The purchase and sale of inventories affects

a.  only the statement of financial position.

b.  only the income statement.

c.  both the statement of financial position and the income statement.

d.  neither the statement of financial position nor the income statement.

7. In a manufacturing business, inventory that is ready for sale is called

a.  raw materials inventory.

b.  work in process inventory.

c.  finished goods inventory.

d.  store supplies inventory.

8. Which of the following should be included in the physical inventory of a company?

a.  Goods held on consignment from another company.

b.  Goods in transit to another company shipped FOB shipping point.

c.  Goods in transit from another company shipped FOB shipping point.

d.  Both goods in transit to and from another company shipped FOB shipping point.

9. Chang Company took a physical inventory at December 31, 2019 and determined that ¥3,990,000 of goods were on hand. Included in the count was inventory of ¥700,000 on consignment from Keiko Company. On December 30, Chang sold and shipped f.o.b. destination ¥820,000 worth of inventory. These goods arrived at the buyer's place of business on January 2, 2020. What amount should Chang report for inventory on its December 31, 2019 statement of financial position?

a.  ¥3,990,000.

b.  ¥4,110,000.

c.  ¥3,410,000.

d.  ¥4,810,000.

10. Brocken Co. has the following data related to an item of inventory:

Inventory, May 1                                   3,000 units @ £4.20

Purchase, May 7                                  10,500 units @ £4.40

Purchase, May 16                                 2,100 units @ £4.50

Inventory, May 31                                 3,900 units

The value assigned to cost of goods sold if Brocken uses FIFO is

a.  £50,700.

b.  £50,880.

c.  £51,207.

d.  £51,246

Answered by BarristerVulture2424 on coursehero.com

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When a perpetual inventory system is used what account does the company debit?

When a company uses the perpetual inventory system, the general ledger account Inventory is continually being updated for all the purchases and sales of goods: The costs of the goods purchased are debited to Inventory.

When goods are sold inventory account is debited under perpetual system?

As inventory is purchased, the Merchandise account is debited. As inventory is sold, the Merchandise Inventory account is credited, and Cost of Goods Sold is debited for the cost of the inventory sold. One of the features of the perpetual system is to provide the firm with information concerning its inventory levels.

What account is debited for the purchase of merchandise inventory?

The Merchandise Inventory account is debited when recording the purchase of inventory using the perpetual inventory system.

When goods are purchased for resale by a company using the perpetual inventory system?

Under a perpetual inventory system, when a company purchases goods for resale, purchases on account are debited to the Inventory account.

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