Assume that a perpetual inventory system using the NET METHOD is in use. Which of the following statements regarding the journal entries prepared is correct? A)  When a customer returns inventory, the seller debits Customer Refunds Payable. B)  Shipping costs associated with sales with terms FOB, destination should be included in Cost of Merchandise Inventory. C)  When a company receives payment from a customer for a sale, Cash is debited and Accounts Payable is credited. D)  When a company sells merchandise with terms 2/10, n 30, the company will credit Merchandise Inventory for the amount of the discount of 2 percent of sales. Why is the answer A and not D?

Q: All descriptions reveal the characteristics of a periodic inventory system, EXCEPT: Merchandise…

A: The correct option is: Inventory record is always up-to-date

Q: Max Company has chosen to use an allowance account. When the cost of goods sold method is used with…

A: Full form of NRV is Net Realizable Value.

Q: The adjusting entry to set up the ending inventory will have: (A) a credit to Sales B a debit to…

A: Ending inventory is the worth of products still available for sale and held by a corporation at the…

Q: der the periodic inventory system, all increases and decreases in inventory, such as purchases,…

A: Solution: False.  Under periodic inventory system Daily inventory records are not maintained.

Q: When merchandise purchased on account is returned under the perpetual inventory system, the buyer…

A: The journal entries are prepared to keep the record of day to day transactions of the business.

Q: Under the perpetual inventory​ system, the journal entry to record the freight paid by the seller on…

A: Under perpetual inventory system, inventory account is used instead of purchases account. For every…

Q: Under the periodic inventory system, the journal entry to record the cost of merchandise sold at the…

A: Periodic inventory system: The method or system of recording the transactions related to inventory…

Q: Which of the following are characteristics of a perpetual inventory system? (a). Management knows…

A: There were two types of inventory systems to record and maintain inventory.   1. Periodic…

Q: the inventory system employing accounting records that continuously disclose the amount of inventory…

A: For the purpose of cost accounting in business, records are being kept for each and every category…

Q: Under the perpetual inventory system, increases and decreases in inventory are recorded through the…

A: Solution: Under perpetual inventory system, inventory records are updated with every purchase and…

Q: Which one of the following statements is true regarding the cost of sales, if the perpetual…

A: The perpetual inventory system is the company where the company counts and records the inventory on…

Q: When the perpetual inventory system is used, the inventory sold is debited to a. Cost of Merchandise…

A: Merchandise Inventory: Merchandise is the stock of goods bought by a wholesaler, or a retailer, or a…

Q: hich of the following accounts is unique to a merchandising entity that uses the periodic inventory…

A: The periodic inventory system does not record each transaction at the time they occurred. It…

Q: Using a perpetual inventory system, the purchase of inventory on account would be recorded as a.…

A: Under perpetual inventory system, when inventory are purchased on account, then purchases account is…

Q: Which of the following accounts would be included in the chart of accounts of a merchandising…

A: Periodic Inventory System: A periodic inventory system is a form of inventory valuation where the…

Q: e entry to record the return of $250 of inventory to a supplier under the perpetual inventory system…

A: Solution: The entry to record the return of $250 of inventory to a supplier under the perpetual…

Q: Which of the following is not a characteristic of a perpetual inventory system? O Cost of goods sold…

A: Here in this question we are required to answer which of the characteristics is not of perpetual…

Q: Which of the following needs an adjustment to the accounts receivable account of ABC Company? a.…

A: Accounts receivable are created by an organisation when it records sales on credit. The accounts…

Q: What is the method of accounting of inventory in which the cost of goods is recorded each time a…

A: The cost of goods included the cost of goods that are sold during the period.

Q: Listed below are several terms and phrases associated with inventory measurement. Pair each item…

A: FIFO : First-in-first-out LIFO : Last-in-first-out Gross method : The sales / purchases are recorded…

Q: Under the perpetual inventory system, in addition to making the entry to record a sale, a company…

A: Under perpetual inventory system, the decrease in inventory is also recorded every time of sale.

Q: A company using a perpetual inventory system that returns goods previously purchased on credit would…

A: What is perpetual inventory system? It is a system which record the changes in inventory(purchased…

Q: Amex Stores should include which of the following items in its inventory at the statement of…

A: solution concept we should always consider the following points while valuing the inventory goods…

Q: Under the perpetual inventory system, cost of goods sold is debited when inventory is sold and…

A: Solution: Under perpetual inventory system, inventory is updated with every purchase and sales. Cost…

Q: Which of the following accounts will not be found in the cost of merchandise sold section of the…

A: Income statement: The income statement is a financial statement that shows the net income earned or…

Q: Assuming a periodic inventory system is used, the journal entry to record the purchase of…

A: Let's understand some basics Merchandise is the term used to refer to any goods purchased for the…

Q: Which of the following is incorrect about the perpetual inventory method? a. purchases are…

A: Perpetual inventory method : Perpetual inventory method records real time transactions of inventory…

Q: ic inventory system wants to remove beginning estimated returns inventory, which of the following…

A: The right answer is option a.Estimated Returns Inventory

Q: Which of the following methods is appropriate for a business whose inventory consists of a…

A: Note: Since we are entitled to answer only one question, we’ll answer the first question. Please…

Q: Which term is applied to the excess of revenue from sales over the cost of merchandise sold? a.net…

A: Income statement: It refers to a financial statement that presents all the income earned by the…

Q: Typically, a significant current asset for a merchandiser is (merchandise inventory) . The…

A: Solution- 1-The safeguarding of merchandise inventory includes taking Physical inventory at least…

Q: a debit to Accounts Payable and a credit to Merchand

A: A perpetual inventory system is an inventory management approach that uses an inventory management…

Q: When the merchandise inventory account provides a running balance of the goods on hand, which…

A: The question is related to Inventory system. There are two methods of Inventory.Perpetual inventory…

Q: 31. Under a perpetual inventory system, a.a physical count is required to determine cost of…

A: Perpetual inventory system: The method or system of maintaining, recording, and adjusting the…

Q: In a retail business that uses a perpetual inventory system, scanning a bar code does not: O…

A: In a retail business that uses a perpetual inventory system, scanning a bar code does not: Option…

Q: A perpetual inventory system will always give updated balances for: Goods Available for Sale and…

A: Perpetual inventory system is a type of inventory system in which all transactions related to…

Q: Under periodic inventory system, freight-in on merchandise purchases should be charged to the *…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: 3.Which of the following transactions would not result in an adjustment to the inventory account…

A: Perpetual inventory system is the one in which the record relating to the inventory is to be…

Q: If each purchase and sale of merchandise is recorded in the inventory and the cost of merchandise…

A: Under periodic inventory, no cost of goods sold is entry is recorded for every sale transaction. At…

Q: 1. Before inventory purchases are recorded, the receiving report should be reconciled to what…

A: Inventory: Inventory refers to the raw materials, work in progress, and finished goods that are held…

Q: Which of the following accounts would be included in the chart of accounts of a merchandising…

A: Periodic inventory system: The method or system of recording the transactions related to inventory…

Q: The Cloud Company employs a perpetual inventory system and the McKenzie Corporation uses a periodic…

A: Perpetual and periodic inventory system: In merchandise business, there are two types of inventory…

Q: Match each definition with the term that best describes it. An income measure that includes gains…

A: Income statement: The income statement determines the net income of the business by subtracting the…

Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is