Which of the following statements regarding freight costs is true? Oa. FOB destination means that transportation charges are paid by the buyer. Ob. Under FOB shipping point, the buyer owns the inventory as soon as it is shipped and should count it in inventory. c. When the terms are FOB shipping point, the freight-in account is not used in recording the purchase. Od. Under FOB destination, the buyer owns the inventory as soon as it is shipped and should count it in inventory.

Which of the following statements regarding freight costs is true? Oa. FOB destination means that transportation charges are paid by the buyer. Ob. Under FOB shipping point, the buyer owns the inventory as soon as it is shipped and should count it in inventory. c. When the terms are FOB shipping point, the freight-in account is not used in recording the purchase. Od. Under FOB destination, the buyer owns the inventory as soon as it is shipped and should count it in inventory.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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When identical units of an item are purchased at different costs a. an inventory cost flow method must be used under a periodic inventory system only. b. an inventory cost flow method is not used under either a perpetual or a periodic inventory system. can inventory cost flow method must be used under both a perpetual and a periodic inventory system. d. an inventory cost flow method must be used under a perpetual inventory system only.
In deciding whether to accept a special order, freight charges paid by the buyer are relevant. a) True b) False
Which of the following is a difference between the periodic inventory system and the perpetual inventory system? a. The Merchandise Inventory account is used under the perpetual inventory system but not under the periodic inventory system. Ob. The Purchases account is used under the periodic inventory system but not under the perpetual inventory system. c. The Merchandise Inventory account is used under the periodic inventory system but not under the perpetual inventory system. Od. The Purchases account is used under the perpetual inventory system but not under the periodic inventory system.
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The journal entry to record the payment of freight cost under the perpetual inventory system is as follows: Debit Merchandise Inventory and Credit Accounts Payable. True or False
Which of the following costs will not affect cost of goods sold? Multiple Choice Inventory inspection costs. Inventory preparation costs. Inventory-related selling costs. O Freight charges incurred to bring inventory to the warehouse.
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Freight on Board (FOB) shipping point requires that the seller pays the shipping cost.. True or False
Inventory cost flow assumptions address accounting issues except when a.identical units of merchandise are acquired at different unit costs during the period. b.an item is sold and it is necessary to determine its cost. c.both of these choices address inventory accounting issues. d.neither of these choices addresses inventory accounting issues.
Who is responsible for the freight cost when the terms are FOB destination? Please explain with full explanation. a. the seller b. the buyer c. the customer d. either the buyer or the seller
If a purchaser using a perpetual system agrees to freight terms of FOB shipping point, then the carrier will bear the freight cost. ● Inventory account will be increased. O O O seller will bear the freight cost. Inventory account will not be affected.