1 The account Cost of Goods Sold is classified as A. a current asset on the balance sheet B. a long term asset on the balance sheet C. an expense on the income statement D. a revenue on the income statement When a sale of merchandise takes place on account using the perpetual inventory method, the company should 2. A. debit Inventory and credit Cost of Merchandise Inventory Sold B. debit Cost of Merchandise Sold and credit Inventory C. debit Accounts Receivable and credit Sales; debit Cost of Merchandise Sold and credit Merchandise Inventory debit Accounts Receivable and credit merchandise inventory; debit COGS and credit Sales D. 3. Which of the following accounts has a normal debit balance? A. Net Income B. Sales C. Cost of Goods Sold D. Retained Earnings 4. The goods are shipped FOB shipping point and the seller pays the transportation costs in cash. The following entry would be made by the buyer to record the shipping costs on account A. B. C. D. debit Accounts Receivable and credit Cash debit Transportation expense and credit Cash debit Inventory and credit Accounts Payable debit Cash and credit Transportation Expense 5. An element of internal control is A. journals B. subsidiary journals C. risk assessment D. controlling accounts 6. Receipts from cash sales of $4,500 were recorded incorrectly in the company books as $5,400. This item would be included on the bank reconciliation as: A. addition to the balance on company's books B. addition to the balance per bank statement C. deduction from the balance on the company's books D. deduction from the balance per bank statement