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Quiz 3 Question 1 Under the perpetual inventory system, when merchandise is sold, its cost is transferred from the Merchandise Inventory account to the Sales account. True False Question 2 Under the perpetual inventory system, the Cost of Goods Sold account is updated continually throughout the period. True False Question 3 Under the periodic inventory system, the amount of inventory on hand is accurate only on the balance sheet. True False Question 4 An advantage of using the perpetual inventory system is that it requires less record keeping than the periodic system. True False Question 5 The perpetual inventory system relies on a physical count of merchandise for its balance sheet amount. True False Question 6 Each of the following companies is a merchandising business EXCEPT a: a. Candy store b. Car wash c. Wholesale parts company d. Furniture store Question 7 The perpetual inventory system : a. reduces the amount of clerical work b. eliminates the need for a physical count of the inventory c. keeps a continuous record of the quantity of inventory items d. All answers are correct Question 8 The operating cycle for a merchandiser is: a. the period of time it takes to sell a unit of inventory b. the same for all companies c. most generally a year d. the time to buy, hold, sell, and collect payment for a sale Question 9 Gross margin is the difference between net sales and: a. net income b. cost of goods sold plus operating expenses c. operating expenses d. cost of goods sold Question 10 Which of the following is NOT considered an operating expense: a. general office expenses b. costs of goods sold c. freight-out expense d. advertising expense