Merchandising

What is a perpetual inventory system?

• A perpetual inventory system is a method that only updates records at the end of the month.
• A perpetual inventory system is a technique used for forecasting future sales.
• A perpetual inventory system is a manual process that requires physical counts of inventory.
• A perpetual inventory system is a method of tracking inventory that updates records in real-time with each transaction.

How does a perpetual inventory system differ from a periodic inventory system?

• A perpetual inventory system updates inventory records continuously, while a periodic system updates them at specific intervals.

• A perpetual inventory system requires physical counts, while a periodic system does not.

• A perpetual inventory system is used only for large businesses, while a periodic system is for small businesses.

• A perpetual inventory system is less accurate than a periodic system.

Which of the following is a benefit of using a perpetual inventory system?

• It reduces the need for real-time data.

• It eliminates the need for inventory management software.

• It provides accurate inventory levels at any given time.

• It requires less initial setup compared to other systems.

What type of balance sheet account is "Sales Returns and Allowances"

• Asset account
• Liability account
• Contra [revenue] account

• Equity account

When giving someone store credit, how would you journal this?

• Debit Sales Returns and Allowance, Credit Inventory

• Debit Sales Returns and Allowance, Credit AP

• Debit Cash, Credit Store Credit

• Debit Store Credit Account, Credit Inventory Account

What is the primary purpose of a contra revenue account like "Sales Returns and Allowances"?

• To increase total sales revenue

• To offset sales revenue and reflect returns or allowances

• To record additional sales

• To track inventory levels

Which of the following transactions would require a journal entry in a perpetual inventory system?

• Monthly inventory count

• Sale of merchandise

• Annual financial audit

• Employee salary payment

How does a store credit affect the financial statements of a business?

• Increases cash flow

• Decreases liabilities

• Increases accounts receivable

• Increases liabilities

When purchasing an asset on account, what are my debits and credits

• Debit Accounts Receivable, Credit Inventory
• Debit Purchases, Credit Accounts Payable

• Debit Accounts Payable, Credit Sales Revenue

• Debit Cash, Credit Inventory

What is the impact of a perpetual inventory system on financial reporting?

• It simplifies the financial reporting process by reducing the need for detailed records.

• It provides more accurate and timely financial information by continuously updating inventory records.

• It complicates financial reporting due to frequent updates.

• It has no impact on financial reporting.