MULTIPLE CHOICE AND TRUE/FALSE QUESTIONS (100 POINTS) 1. T, . F. Failure to incl

Question

MULTIPLE CHOICE AND TRUE/FALSE QUESTIONS (100 POINTS) 1. T, . F. Failure to include an item of merchandise in ending inventory will result in overstated net income 2. T, 3. T, F. FO8 destination means that the selle 4. T, F. Sales discount is a contra account to Gross Sales 5. T, F. Goods available for sale minus the cost of goods equals ending inventory 6. T. F. The Purchases Returns and Allowances account is closed with a credit. 7. T, F. The Sales Returns and Allowances account normally has a credit balance. 8. T, F. A merchant treats Credit Card Purchase Discount Expense as a contra account to sales 9. If an item of merchandise is accidentally counted twice: F. An overstated beginning inventory will result in an overstated cost of goods sold. r must pay the transportation cost a. Net income will be understated b. Beginning inventory for the next period will be understated c. Goods available for sale will be overstated. d. Cost of goods sold will be understated. 10. Which of the following is irrelevant in computing cost of goods sold? a. Freight in b. Freight out c. Beginning inventory d. Ending inventory 11. Which of the following accounts would appear as operating expense in the merchandising company's income statement? a. Advertising expense b. Sales discount c. Freight in Purchases d. Purchases 12. On average, it takes Ledbetter Corporation 45 days to sell its inventory and 60 days to collect payment from customers. Ledbetter normally pays for inventory purchases within 30 days. Its financing period is: a. 75 days b. 135 days c. 15 days. d. 105 days. 13. Sept 1 Inventory was 10 units at $4 each 8 Purchases were 40 units at $4.40 each 17 Purchases were 20 units at $4.20 each 25 Purchases were 30 units at $4.80 A total of 70 units were sold during September.

Explanation / Answer

Solution.

Q1. Failure to include an iteam of merchendise in endning inventory will result in overstated net income.

This statement is FALSE. Because when merchendise not included in endning inventory than value of endning inventory will be understated due to this reseon gross profit in profit and loss account would be also understated

therefore net income will be also understated.

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