5. The accountant erroneously recorded a charge sale as a cash sale. Which of the following is wrong assuming the company uses the periodic inventory system.

a.The profit is not affected

b.The cash is overstated

c. Net working capital is not affected

d. Current asset is overstated.

6.The basic difference between the financial statements of a merchandising entity and a service business include the cost of good sold section of the income statement and the

a.Profit figure

b.Other income section of the statement of comprehensive income

c.Equity section of the statement of financial position

d.Inclusion of merchandise inventoryon the statement of financial position

7.Assuming the accountant failed to record a purchase that was made last year. What are the effects of the omission on the amount of purchases, cost of sales and gross profit for the period.

a.Understated, understated, understated respectively

b.Understated, overstated, understated respectively

c.Understated, understated, overstated respectively

d.Overstated, understated, understated respectively

8.Statement 1 -Sales return and allowances account has a credit balance

Statement 2 -Net sales is not an account name

Statement 3 -Sales discount is a contra revenue account

a.True ,true, false

b.False, true, true

c. False, false, true

d. True, false, false