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Accounting Chapter 10.2: Freight-in and Inventory

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Accounting Chapter 10.2: Freight-in and Inventory

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Questions and Answers

What is the primary function of a point-of-sale terminal in a perpetual inventory system?

To record the cost of goods sold

To process accounts receivable

To connect to the store's main computer for inventory tracking (correct)

To generate sales invoices

How does the perpetual inventory system record the cost of inventory when an item is sold?

By debiting the Sales account and crediting the Accounts Receivable account

By debiting the Accounts Receivable account and crediting the Sales account

By debiting the COGS account and crediting the Merchandise Inventory account (correct)

By debiting the Merchandise Inventory account and crediting the COGS account

What is the purpose of a sales invoice in a perpetual inventory system?

To record the cost of goods sold

To record the receipt of cash

To provide terms and conditions of sale to the customer (correct)

To track inventory levels

How does the perpetual inventory system account for sales returns?

By debiting the Sales account and crediting the Accounts Receivable account Signup and view all the answers

What is the difference between periodic and perpetual inventory systems?

Periodic inventory systems are used for tracking inventory levels at specific intervals, while perpetual inventory systems are used for tracking inventory levels in real-time Signup and view all the answers

What is the effect of freight-in on the perpetual inventory system?

It increases the merchandise inventory account Signup and view all the answers

What is the purpose of a delivery out in a perpetual inventory system?

To record the shipment of an item to a customer Signup and view all the answers

How does the perpetual inventory system account for purchase returns?

By debiting the Accounts Payable account and crediting the Merchandise Inventory account Signup and view all the answers

What is the purpose of a credit invoice in a perpetual inventory system?

To provide credit to a customer for a returned item Signup and view all the answers

How does the perpetual inventory system record the cost of goods sold when an item is returned?

By debiting the COGS account and crediting the Merchandise Inventory account Signup and view all the answers