Question : 11) Under the perpetual inventory system, in addition to making : 1177190

11) Under the perpetual inventory system, in addition to making the entry to record a return of goods from a customer, a company would:

A) debit Merchandise Inventory and credit Cost of Goods Sold.

B) debit Cost of Goods Sold and credit Merchandise Inventory.

C) debit Sales and credit Cost of Goods Sold.

D) debit Purchases and credit Cost of Goods Sold.

12) A credit customer purchased $450 worth of items. Two days later, the customer returned $300 worth of those items. The entry to record this under the perpetual inventory method would include:

A) a debit to Sales Returns and Allowances $300; credit Accounts Receivable $300.

B) a debit to Merchandise Inventory for our cost.

C) a credit to Cost of Goods Sold for our cost.

D) All of the above.

13) The perpetual inventory system is a system which:

A) updates inventory continuously.

B) uses either FIFO, LIFO, weighted-average, or specific invoice method.

C) never needs a physical inventory taken.

D) both A and B.

14) The company returned $200 of damaged merchandise. The entry to record this under the periodic inventory method is:

A) debit Merchandise Inventory $200; credit Accounts Payable $200.

B) debit Cost of Goods Sold $200; credit Accounts Payable $200.

C) debit Accounts Payable $200; credit Purchases Returns and Allowances $200.

D) debit Accounts Payable $200; credit Merchandise Inventory $200.

15) A customer returned merchandise that had been paid for within a discount period for credit. The entry was recorded with a debit to Sales Returns and Allowances and a credit to Accounts Receivable for the net amount. This error would cause:

A) the period end assets to be understated.

B) the period end liabilities to be understated.

C) the period’s net income to be understated.

D) None of these are correct.

16) The freight paid on goods purchased F.O.B. shipping point was debited to the Freight Expense account. This error would cause:

A) the period end assets to be understated.

B) the period end liabilities to be understated.

C) the period’s net income to be overstated.

D) None of these are correct.

17) The return of merchandise was recorded as a debit to Accounts Payable and a credit to Purchases. This error would cause:

A) the period end assets to be understated.

B) the period end liabilities to be understated.

C) the period’s net income to be understated.

D) None of these are correct.

18) The freight paid on goods purchased F.O.B. shipping point was debited to the Purchases account. This error would cause:

A) the period end expenses to be understated.

B) the period end expenses to be overstated.

C) the period’s net income to be understated.

D) None of these are correct.

19) Office Supplies bought on account were returned for credit and recorded with a debit to Accounts Payable and a credit to Merchandise Inventory. This error would cause:

A) the period end Cost of Goods Sold to be understated.

B) the period end Cost of Goods Sold to be overstated.

C) the period’s net income to be understated.

D) None of these are correct.

20) The journal entry to record a customer’s return of an item for a cash refund would:

A) be the same under both the periodic and perpetual system.

B) only include one entry under the perpetual system.

C) include two entries under the perpetual system.

D) include none of the above.