Question 25 A freight arrangement where the seller pays the cost of transportation but incurred by the buyer. FOB Destination, Freight Prepaid FOB Shipping Point, Freight Collect FOB Destination, Freight Collect FOB Shipping Point, Freight Prepaid Question 26 The cost of goods sold will be equal to the total cost of purchases when, beginning inventory is zero ending inventory is zero net purchases are equal to net sales Dbeginning inventory is equal to ending inventory Question 27 Statement I. Revenues from sale of merchandise should be recorded at invoice price less trade discounts. Statement II. Purchases account increases the inventory in a perpetual inventory system. Both Statements are TRUE Both Statements are FALSE Only Statement I is TRUE Only Statement II is TRUE 1 Point 1 Point 1 Point Question 28 1 Point LEE Fruits uses the NET method in accounting for cash discounts. On Mar. 10, 2020, purchased P30,000 worth of merchandise; terms of 1/5, n/eam, F.O.B. shipping point. On Mar. 12, Lee paid P3,600 freight on the shipment. On Mar. 15, Lee returned 14,000 of merchandise for credit. The amount due was settled on Mar. 19. A PO BP300 (C) P40 (D) P260 Question 29 1 Point Statement L Trade Discounts may be recorded as purchase or sales discount either through the net method or the gross method. Statement. As a buyer, trade discount is reflected in the books as a purchase discount. A Only Statement is TRUE B Only Statement is TRUE BOTH statements are TRUE (D) BOTH statements are FALSE Question 30 1 Point Drag Den Co. purchased inventory from Drag Race Incorporated. The shipping costs were P400.00 and the terms of the shipment were FOB Destination, prepaid. Drag Den Co. would have the following entry regarding the shipping charges: (A) NO ENTRY BDR: Freight-Out P400; CR: Cash P400 DR: Freight-In P400; CR: Cash P400 DR: Mdse. Inventory P400; CR: Cash P-400