Instructions for True/False Questions

Indicate whether the following statement is true or false. For any false statement, provide a correct explanation. (Tell me what would make the statement true).

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1 _ Goods on consignment are goods shipped by their owner, called the consignee, to another party called the consignor.

2 _ If the seller is responsible for paying freight charges, then ownership of inventory passes when goods arrive at their destination.

3_ When prices are falling, LIFO will yield the higher net income than FIFO.

4 _ Keaton Company has inventory with a market value of $277,000 and a historical cost of $241,000. According to the lower of cost or market, the inventory should be written up to $277,000 to accurately reflect the inventorys current market value.

5_ A perpetual inventory system continually updates accounting records for inventory transactions.

6 _ A wholesaler is an intermediary that buys products from manufacturers or other wholesalers and sells them to consumers.

7 _ Purchase allowances refer to merchandise a buyer acquires but then returns to the seller.

8 _ If a company sells merchandise with credit terms 2/10, n/60, the credit period is 10 days and the discount period is 60 days.

9 _ A trade discount is a reduction in price below the list price,

10 _ Outstanding checks are checks the bank has paid and deducted from the customer's account during the month.