Inventory Systems and Transactions

Under the perpetual inventory system, all increases and decreases in a goods on hand are recorded in the “inventory” Accounts. _______________

• TRUE

• FALSE

Under the periodic inventory system, a sale transaction is recorded using two entries-one to record the sale and other one to record the cost of goods sold. _______________

• TRUE

• FALSE

The "Purchases," "Freight-in," "Purchase returns" and "Purchase discounts" accounts are used under the perpetual inventory system. _______________

• TRUE

• FALSE

Under the periodic inventory system, no entry is made for the cost of goods sold when the entity makes a sale. _______________

• TRUE

• FALSE

The balance sheet columns of Entity B's worksheet show total debits of ₽100,000 and total credits of 80,000. Entity B earned a profit of ₽20,000 for the year. _______________

• TRUE

• FALSE

Entity A purchases goods worth P100 and incurs transportation costs of ₽5 to have the goods delivered to its warehouse. If Entity A uses the perpetual inventory system, the ₽5 transportation costs are recorded in the "Inventory" account rather than in the "Freight-in" account. _______________

• TRUE

• FALSE

Entity A's beginning inventory was ₽10. If the net purchases during the period were ₽100, the total goods available for sale must be ₽110. _______________

• TRUE

• FALSE

Entity A's total goods available for sale during the period. Was ₽110. If the ending inventory is ₽20, cost of goods sold must be ₽130. _______________

• TRUE

• FALSE

One day, you decided to become a businessman. You bought 10 bananas from Mrs. Monkey for ₽1 apiece. You marked up the bananas to sell for ₽5 apiece. At the end of the day, you have 2 bananas left. Your gross profit must be ₽42. _______________

• TRUE

• FALSE

Mr. Rabbit consigned 10 carrots to you. You sold 6 carrots to Mrs. Panda; you ate 2 carrots, and 1 carrot ran away. When you check your pocket, you find no more carrots. You have an overage of 1 carrot. (Overage is the term applied to the amount a physical inventory exceeds the book inventory, Collins Dictionary)

• TRUE

• FALSE