Accounting Class Quiz No. 5 (1S Points) TRUE/FALSE Instructions: Indicate whether each of the following statements is true or by placing a check mark in the appropriate column. 1. The two main systems for accounting for merchandise 2. In a perpetual inventory system, purchases of merchan- True False held for sale are called periodic and perpetual dise are recorded in the purchases account 3. In a periodic inventory system, no attempt is made to rec- le. ord the cost of merchandise sold at the date of the sa A discount offered the purchaser of goods as a means of encouraging payment before the end of the credit period is known as a bank discount 4. Credit terms of "2/10, n/30" mean that the buyer may deduct 2% of the amountof the invoice if payment is made within 10 days of the invoice date. 5. 6. If the seller is to absorb the cost of delivering the goods, the terms are stated FOB (free on board) shipping point. _ 7. The liability for the sales tax is incurred at the time the 8. The purchases returns and allowances are credited to 9. The chart of accounts for a merchandising business will The accounting cycle for a merchandising business is seller receives payment from the buyer differ from that of a service business. 10. significantly different from that of a service business. 11. The physical inventory taken at the end of the period is normally larger than the amount of the balance of the mer- chandise inventory account.. 12. Any merchandise inventory shrinkage is normally debited to the merchandise inventory account.. Expenses incurred directly and entirely in connection with the sale of merchandise are called administrative 13. expenses Revenue from sources such as income from interest, rent, dividends, and gains resulting from the sale of fixed assets is classified as income from operations. 14