Reference no: EM132771048

TRUE OR FALSE

Question 1. Cost of goods sold is a major expense of a merchandising business.

Question 2. The sales returns and allowances account has a normal debit balance.

Question 3. Net sales is not an account name.

Question 4. The worksheet of a merchandising entity that uses the perpetual inventory system will not have a Transportation In account.

Question 5. When preparing a worksheet for a merchandising entity that uses the perpetual inventory system, the cost of goods sold can be derived from the balances of several accounts in the Income Statement columns.

Question 6. Cost of goods sold is the primary difference between a merchandising and a service business income statement.

Question 7. When preparing a worksheet for a merchandising entity that uses the periodic inventory system, the merchandise inventory amount shown on the trial balance will be carried over to the Balance Sheet debit column.

Question 8. On the worksheet of a merchandising entity that uses the periodic inventory system, both Purchases and Purchases Returns and Allowances appear in the Income Statement columns.

Question 9. The Purchases account is closed to the Merchandise Inventory account.

Question 10.The ending inventory amount appears in both Income Statement columns on the worksheet of a merchandising entity that uses the periodic inventory system.