1. cost of goods sold is reported as a(n)

a. long-term asset

b. current asset

c. expense

d. current liability

2. wholesales offer trade discounts to

a. small stores

b. government agencies

c. all business may get a trade discount

d. none of these

3. Physical inventory on hand has a balance of $18,500, Inventory records indicated a balance of $19,000. The Entry to record an adjustment to inventory shrinkage include

a. debit to inventory

b. debit costs of goods sold

c. debit of sales

d. none of these

4. In a perpetual inventory system

a. each purchase and sale of inventory is recorded in the inventory account

b. the inventory records cannot be computerized

c. a count must be made in order to know the inventory amount

d. the amount of inventory for sale and the amount sold are not listed in the inventory account

5. The differnece between the income statements of a servie company and a retail company is that the retail company's income statement include

a. cost of goods sold

b. operating expenses

c. net income

d. revenues

6. Which inventory cost method offers income tax saving during periods of rising prices?

a. FIFO inventory cost method

b. specific identification inventory cost method

c. LIFO inventory cost method

d. weighted average inventory cost method