1. Under the perpetual inventory system, how are purchase returns and allowances recorded?

Inventory Accounts Payable

a) Debit Credit

b) Debit Debit

c) Credit Credit

d) Credit Debit

2. Under the perpetual inventory system, book inventory:

a) always equals physical inventory

b) always is less than physical inventory

c) always is more than physical inventory

d) can be equal to, less than, or more than physical inventory

3. If physical inventory is $16,000 and book inventory is $16,400 the adjusting entry is:

Inventory Cost of Goods Sold

a) 400 Debit 400 Credit

b) 400 Debit 400 Debit

c) 400 Credit 400 Debit

d) 400 Credit 400 Credit

4.Which of the following accounts is unique to a merchandising company?

a) cash

b) accounts receivable

c) inventory

d) accounts payable

5. Sales $50,000

Cost of Goods Sold $32,000

Operating Expenses $7,000

Other Revenues $2,000

Other Expenses $5,000

Gross margin is:

a) $18,000

b) $14,000

c) $11,000

d) $8,000