True-Pake F 1. FOB shipping point means the seller incurs the shipping costs. A company is more likely to know the amount of inventory on hand at any time if it uses 2. the perpetual system than if it uses the periodic system. ue less cost of goods sold equals gross profit. of F 3. Net sales revenue T sales discounts and sales returns/allowances equals net sales. 5. A reduction given by the seller for sales discount by the seller. reduction given by the seller for prompt payment of a credit sale is recorded as a F T Multiple Choice 6. A company that returns goods that previously were purchased on credit A. A/P xX Purchases XX B. Sales A/R xX C. Cash A/P Xx D. A/P Inventory E. Inventory xx A/P xx 7. When a perpetual inventory system is used A. a purchases account is used to collect information on current period purchases. B. inventory is updated with each transaction. C. a physical inventory needs to be taken at the end of the period to establish ending inventory D. an up-to-date inventory balance is not known during the period. 8. With freight terms of FOB shipping point, a freight invoice would be recorded by the buyer by debiting what account? A. Freight-out expense B. Inventory C. The buyer would not be responsible for the freight costs. 9. With freight terms of FOB destination, a freight invoice would be recorded by the seller by debiting what account? A. Freight-out expense. B. Inventory C. The seller would not be responsible for the freight costs