1.A periodic inventory system:

A.

does not keep a running record of inventory on hand.

B.

is not expensive to maintain.

C.

is used for inexpensive goods.

2

D.

is all of the above.

2.Which of the following is NOT used to determine the cost of net purchases?

A.

freightminusout

B.

purchase discounts

C.

purchase returns

D.

freightminusin

3. When inventory is shipped from the seller to the buyer with shipping terms of FOB destination:

A.

title passes from the seller to the buyer when the goods leave the seller's shipping dock.

B.

the buyer will pay the transportation costs associated with the purchase.

C.

the seller has title to the goods while they are in transit.

D.

the goods will be included in the inventory of the buyer while in transit.

4. Using a perpetual inventory system, which journal entry(ies) is(are) prepared when two units of merchandise are sold on account?

A.

debit Accounts Receivable and credit Sales Revenue; debit Cost of Goods Sold and credit Inventory

B.

debit Accounts Receivable and credit Sales Revenue; debit Inventory and credit Cost of Goods Sold

C.

debit Cash and credit Sales Revenue; debit Cost of Goods Sold and credit Inventory

D.

debit Accounts Receivable and credit Sales Revenue only

5. A company purchased inventory for $700 per unit. The company later sold one unit of the inventory for cash of $2,400. Under the perpetual inventory system, which accounts will be debited to record the sale?

A.

Cash, $2,400; Inventory, $1,700

B.

Cash, $2,400; Inventory, $700

C.

Cash, $2,400; Cost of Goods Sold, $700

D.

Cash, $2,400; Cost of Goods Sold, $1,700

6. On July 1, Corrao Company purchased $1,600 of inventory on account with credit terms of 2/10, net 30. Corrao Company uses the perpetual inventory system. On July 5, Corrao Company paid the amount due. What journal entry did they prepare on July 5?

A.

debit Accounts Payable for $1,568 and credit Cash for $1,568

B.

debit Purchase Discount for $32, debit Accounts Payable for $1,536 and credit Cash for $1,568

C.

debit Accounts Receivable for $1,600 and credit Cash for $1,600

D.

debit Accounts Payable for $1,600, credit Inventory for $32 and credit Cash for $1,568