1When a company uses the perpetual inventory method, it should NOT be necessary to conduct a physical count of inventory.
2The entry to close Sales discounts and Sales returns and allowances results in a debit to Income summary.
3If a physical count of inventory indicates that the Inventory account is overstated, an additional adjusting entry is required.
4The entry to close Cost of goods sold results in a debit to Income summary.
5A company uses the perpetual inventory system. The inventory account balance is $50,000. An actual count of inventory reveals that actual inventory is $43,000. Which of the following would be included in the required adjusting entry?
A)A $43,000 credit to Inventory would be required.
B)A $50,000 debit to Cost of goods sold would be required.
C)A $7,000 credit to Cost of goods sold would be required.
D)A $7,000 credit to Inventory would be required.
6A company’s ledger shows Inventory balance of $20,000 and a physical count of the inventory shows $19,000. Which of the following entries is needed to record the shrinkage?
A)Cost of goods sold1,000
Shrinkage expense1,000
B)Inventory1,000
Cost of goods sold1,000
C)Cost of goods sold1,000
Inventory1,000
D)Cash1,000
Inventory1,000
7Which of the following accounts is used only at the close of the merchandising cycle?
A) Net sales revenue
B) Income summary
C) Cost of goods sold
D) Sales revenue
8The general ledger shows a balance of $65,300 in the Inventory account at the end of the period. A physical inventory shows a count of $67,900. The adjusting entry would be a:
A) debit to Cost of goods sold and a credit to Inventory.
B) debit to Cost of goods sold and a credit to Cash.
C) debit to Inventory and a credit to Cost of goods sold.
D) debit to Inventory and a credit to Cash.
9The general ledger shows a balance of $23,678 in the Inventory account at the end of the period. A physical inventory shows a count of $22,078. The adjusting entry would be a:
A) debit to Cost of goods sold and a credit to Cash.
B) debit to Inventory and a credit to Cash.
C) debit to Cost of goods sold and a credit to Inventory.
D) debit to Inventory and a credit to Cost of goods sold.
10The Income summary account has a $25,000 credit balance after the revenue and expense accounts have been closed. To which account is this balance closed?
A)Common stock
B)Sales revenue
C)Cost of goods sold
D)Retained earnings