Reference no: EM132794017

true or false

Question 1. Under the periodic inventory system, the Merchandise Inventory account appears in the  closing entries made at the end of the period.

Question 2. When preparing closing entries under the periodic inventory system, Sales and Purchases  Returns and Allowances are both closed in the same entry.

Question 3. Sales Discounts is a contra-revenue account with a normal credit balance.

Question 4. Purchases Discounts would be recorded as a credit.

Question 5. The closing entry for transportation in debits purchases and credits income summary.

Question 6. Debiting income summary and crediting beginning merchandise inventory eliminates the  beginning inventory at the end of the period.

Question 7. Both Transportation In and Transportation Out accounts are closed by crediting the accounts

Question 8. Using the nature of expense method of presenting expenses in the income statement has  the advantage of simplicity because no allocation of operating expenses between functional  classifications is necessary.

Question 9. The function of expense method reports gross margin and income from operations.

Question 10. Operating income is not computed in the nature of expense method.