Five true/false questions:

1. An item for which a company has expended resources should be classified as an asset until it has been consumed. After that it has to be recorded as an expense.

2. If goods are delivered FOB destination, the seller is responsible for the freight costs which are called transportation-out.

3. The Return-on-Sales Ratio is computed as a companys Gross Income divided by Net Sales.

4. To record the bank service charge, the following journal entry has to be made: Bank Service Charge Expense is debited, Cash is credited.

5. An asset exchange transaction cannot be an adjusting entry because adjusting entries always involve revenue or expense accounts.