Reference no: EM132771051

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.