Section III (15 marks): State whether each of the following statements is True or False 1. The steps in the accounting cycle are different for a merchandising company than for a service company. 2. Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs. 3. A periodic inventory system requires a detailed inventory record of inventory items. 4. Freight terms of FOB Destination means that the seller pays the freight costs. 5. Freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller. 6. Sales revenues are earned during the period cash is collected from the buyer. 7. The Sales Returns and Allowances account and the Sales Discount account are both classified as expense accounts. 8. To grant a customer a sales return, the seller credits Sales Returns and Allowances. 9. A company's unadjusted balance in Merchandise Inventory will usually not agree with the actual amount of inventory on hand at year-end. 10. A multiple-step income statement provides users with more information about a company's income performance. 11. Merchandise inventory is classified as a current asset in a classified balance sheet. 12. Gain on sale of equipment and interest expense are reported under other revenues and gains in a multiple-step income statement. 13. Purchase Returns and Allowances and Purchase Discounts are subtracted from Purchases to produce net purchases. 14. Freight-in is an account that is subtracted from the Purchases account to arrive at cost of goods purchased. 15. A merchandising company using a perpetual inventory system will usually need to make an adjusting entry to ensure that the recorded inventory agrees with physical inventory count.