TRU OR FALSE

1.Inventory refers to the goods that a merchandising business has purchased with the main intention of reselling them.

2.The periodic inventory system is commonly used for inventories that are normally interchangeable, have relatively low value, and have a fast turnover rate.

3.Under the perpetual inventory system, increases and decreases in inventory are recorded through the purchases, freight-in, purchase returns, and purchase discounts accounts.

4.Under the perpetual inventory system, cost of goods sold is debited when inventory is sold and credited when there is a sales return.

5.Purchase returns and discounts are deducted from gross purchases when computing for net purchases.

6.Ending inventory is added to Total Goods Available for Sale when computing for Cost of Goods Sold.

7.Under the perpetual inventory system, the business does not maintain records that show the running balances of inventory on hand and cost of goods sold as at any given point of time.

8.Under periodic inventory system, all increases and decreases in inventory, such as purchases, freight-in, purchase returns, purchase discounts, cost of goods sold, and sales returns are recorded in the Inventory account.

9.Beginning inventory less Net purchases less Ending inventory equals Cost of goods sold.

10.No entry is made to recognize cost of goods sold when inventory is sold under periodic inventory system.