1.Accounting True or False Questions

2. Purchase discounts reduce sales.

3. Errors in the physical inventory count at the end of the accounting period affect both the income statement and balance sheet.

4.High inventory turnover will result in a high average days inventory on hand

5.Under a perpetual inventory system, you will still need to take a physical inventory from time to time to confirm accuracy of your perpetual records.

6.The sales discount account is a contra account to Sales

7.Interest expense is an example of an expense classified under "other expense".

8.Merchandise inventory is a significant current liability for most merchandising companies. 9.The method that requires a physical counting of the inventory is called the specific identification inventory method. 10.Under lower of cost or market, market refers to current replacement cost. 11.Under the perpetual inventory system a sales transaction requires two journal entries. 12.Merchandise sold FOB destination that is in transit at year-end is owned by the seller and should be included in the seller's ending inventory. 13.The specific identification method is most suitable to low volume and high priced units. 14.Overstating ending inventory will misstate the financial statements. 15.The sales discount account is a contra account to Accounts Receivable. 16.When merchandise is sold under the perpetual inventory system, sales must be recorded and the cost of merchandise sold must be recorded. 17.Conservative accountants would rather make a mistake where they report less income than make a mistake where they reported too much income. 18.Conservative accountants would rather make a mistake where they report less income than make a mistake where they reported too much income