TRUE OR FALSE

1.) Freight out is recorded in both periodic and perpetual inventory systems.

2.) The merchandise inventory account balance of a periodic inventory system will always be equal to its beginning balance before any physical count is made during that same year.

3.) You have a business which takes pride in providing quick and exceptional delivery services. As its accountant, you refuse to use either periodic or perpetual inventory systems. Your refusal is accepted by the accounting standards.

4.) Terms were FOB Destination, freight collect. As the seller, you shall debit freight out and credit either accounts payable or cash.

5.) Gross profit is also known as gross income, and is computed by excluding taxes.

6.) Classification of taxes and licenses under operating expenses shall be determined as to where these said taxes and licenses are allocated to.

7.) In no case does a company generate taxes for a period wherein it generated a net loss.

8.) Freight in is classified as an inventoriable cost.

9.) An increase in sales returns and allowances may lead to a decrease in sales discounts.

10.) A perpetual inventory system need not apply adjusting entries to its inventories and cost of goods sold.