1. Under the perpetual inventory system, when a sale is made, both the sale and cost of merchandise sold are recorded.

True or False

2. A buyer who acquires merchandise under credit terms of 1/10, n/30 has 30 days after the invoice date to take advantage of the sales discount.

True or False

3. When merchandise is sold for $600 plus 6% sales tax, the Sales account should be credited for $636.

True or False

4. Most companies will not take a purchase discount, because 1% or 2% discounts are insignificant.

True or False

5. A business using the perpetual inventory system, with its detailed subsidiary records, does not need to take a physical inventory.

True or False

6. Title to merchandise shipped FOB shipping point passes to the buyer upon delivery of the merchandise to the buyer's place of business.

True or False

7. Because many companies use computerized accounting systems, periodic inventory is widely used.

True or False

8. Cost of merchandise sold is often the largest expense on a merchandising company income statement.

True or False

9. Other income and expenses are items that are not related to the primary operating activity.

True or False

10. Merchandise inventory is classified on the balance sheet as a

A. long-term liability

B. long-term asset

C. current liability

D. current asset

11. What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?

A. income from operations

B. net income

C. gross sales

D. gross profit