ACC101 Exam Final STUDY GUIDE TRUE EALSE 1. The merchandise invenry account alwa

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ACC101 Exam Final STUDY GUIDE TRUE EALSE 1. The merchandise invenry account alwarys reflects the current inventory on hand 2. Merchandise Investory has a normal debit balance 7. Gross sales less sales retums and allowances is called net sales. s. Net sales plus cost oferchandise sold is called gross profit. 9. Gross margin and gross profit mean the same thing 11. The "FIFO" and "LIFO invenory costing methods are baced on assumed cost flows thar ane net equired so reflect the actual physical movement of merchandiss within the company 12 Under the perpetual system of accounting for invemory, the merchandise inventory account i debited for the cost of all merchandi bought 13. The specific identification method of invernory is generally practical only for businesses in which sales volume is relatively low and inventory unit valos is relatively high 15. A method of assigning merchandise cost that requires that each item sold and each item remaining in inventory be separately idenified with respect to its purchase cost is called last-in, first-out. the first merchandise sold is called the first-in, firs-out method. 17. A method of allocating merchandise cost that is based on the average cost of identical units is known used method of alleeating merchandise cost that ssumes the first merchandise bought is es weighted average cost or average cost 18. Perpetual inventories eliminate the need for taking periodie physical imventories 19. The natural business year is a fiscal year that starts and ends at the time the stock of merchandise is mormally at its lowest level. 21. A method of allocating merchandise costs that assumes the sales in the peried were made from the most recently purchased merchandise and the carliest merchandise bought remain in invemory is called first in, first-out method 22. When a continuous record is kept of the quantitics and costs of merchandise on hand, the inventory system is known as perpetua 23. ln the perpctual system, no year-end adjusting entry is necessary, as long as the physical inventory agrees with the amount reported in the merchandise invenstory accoum. 25. If a difference is found between the physical count and the amount in the perpetual inventory records, the records must be corrected by an appropristse adjusting entry

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Answer 1 The merchandise inventory account always reflects the current inventory on hand. F 2 Merchandise Inventory has a normal debit balance. T 7 Gross sales less sales returns and allowances is called net sales T 8 Net sales plus cost of merchandise sold is called gross profit. F 9 Gross margin and gross profit mean the same thing F

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