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

1.

Under a perpetual inventory system, acquisition of merchandise for resale is debited to
A) the Merchandise Inventory account.
B) the Purchases account.
C) the Supplies account.
D) the Cost of Goods Sold account.
2. The primary source of revenue for a wholesaler is
A) investment income.
B) service revenue.
C) the sale of merchandise.
D) the sale of plant assets the company owns.
3. Under the perpetual inventory system, in addition to making the entry to record a sale, a company would
A) debit Merchandise Inventory and credit Cost of Goods Sold.
B) debit Cost of Goods Sold and credit Purchases.
C) debit Cost of Goods sold and credit Merchandise Inventory.
D) make no additional entry until the end of the period.
4. Which of the following should not be included in the physical inventory of a company?
A) Goods held on consignment from another company.
B) Goods in transit from another company shipped FOB shipping point.
C) Goods shipped on consignment to another company.
D) All of the above should be included.
5. Which of the following items does not result in an adjustment in the merchandise inventory account under a perpetual system?
A) A purchase of merchandise.
B) A return of merchandise inventory to the supplier
C) Payment of freight costs for goods shipped to a customer
D) Payment of freight costs for goods received from a supplier

Answer

1. Correct Option is A Merchandise Inventory Account - Under perpetual method inventories are recorded continuously. 2. Correct Option is C Sale of Merchandise - Wholesalers sell merchandise to earn profits. 3. Correct Option is C Debit Cost of Goods Sold and Credit Merchandise Inventory - Under perpetual method inventories are recorded continuously. Correct Option is A Goods held on consignment for other company - Since these are not owned by company. 4. 5. Correct Option is C Payment of freight costs for goods shipped to a customer This amount is not reflected in inventory cost.

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