Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Chapter 21, Problem 14.2MCQ
To determine
Identify the perpetual records of inventory.
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Which of the following is false regarding a perpetualinventory system?a. Physical counts are never needed because records aremaintained on a transaction-by-transaction basis.b. The Inventory records are updated with each inventorypurchase, sale, or return transaction.c. Cost of Goods Sold is increased as sales are recorded.d. A perpetual inventory system can be used to detectshrinkage
3.Which of the following transactions would not result in an adjustment to the inventory account under a perpetual inventory system?
A)The return of merchandise by a customer.
B)The sale of merchandise for cash.
C)The sale of merchandise on credit.
D)The receipt of payment from a customer within the discount period.
The use of "discount lost" account implies that the recorded cost of a purchased inventory item is its: [A]Invoice price[B]Invoice price plus the purchase discount lost [C]Invoice price less the purchase discount taken [D]Invoice price less the purchase discount allowable whether taken or not [E]None of the choices.
Chapter 21 Solutions
Auditing And Assurance Services
Ch. 21 - Prob. 1RQCh. 21 - Prob. 2RQCh. 21 - Prob. 3RQCh. 21 - Prob. 4RQCh. 21 - Prob. 5RQCh. 21 - Prob. 6RQCh. 21 - Prob. 7RQCh. 21 - Prob. 8RQCh. 21 - Prob. 9RQCh. 21 - Prob. 10RQ
Ch. 21 - Prob. 11RQCh. 21 - Each employee of the Gedding Manufacturing Co., a...Ch. 21 - Prob. 13.1MCQCh. 21 - Prob. 13.2MCQCh. 21 - Prob. 13.3MCQCh. 21 - Prob. 14.1MCQCh. 21 - Prob. 14.2MCQCh. 21 - Prob. 14.3MCQCh. 21 - Prob. 15.1MCQCh. 21 - Prob. 15.2MCQCh. 21 - Prob. 15.3MCQCh. 21 - Prob. 16DQPCh. 21 - Prob. 17DQPCh. 21 - Prob. 18DQPCh. 21 - Prob. 19DQPCh. 21 - Prob. 20DQPCh. 21 - Prob. 21DQPCh. 21 - Prob. 22DQPCh. 21 - Prob. 23DQPCh. 21 - Prob. 24DQPCh. 21 - Prob. 25DQPCh. 21 - Prob. 26DQPCh. 21 - Prob. 27DQPCh. 21 - Prob. 28DQPCh. 21 - Prob. 29DQPCh. 21 - Prob. 30C
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Which of the following is true about the Sales Returns and Allowances account? a. It is used to record the sale of merchandise. b. It is used to record the reduction of inventory. c. It is a contra account, deducted from sales. d. It is used to record discounts for prompt payment. e. None of the above.arrow_forwardUnder the perpetual inventory system, increases and decreases in inventory are recorded through the purchases, freight-in, purchase returns, and purchase discounts accounts. True Falsearrow_forwardThe uses of a Purchase Discounts Lost account implies that the recorded cost of a purchase inventory item is its A) invoice price B) invoice price plus the purchase discount lost. C) invoice price less the purchase discount taken D) invoice price less the purchase discount allowable whether taken or not.arrow_forward
- Under the perpetual inventory system, cost of goods sold is debited when inventory is sold and credited when there is a sales return. True Falsearrow_forwardUnder the periodic inventory system, the merchandise inventory account is not kept up to date for purchases and sales. As a result, the inventory shrinkage cannot be directly determined. True or Falsearrow_forwardPurchase returns and discounts are deducted from gross purchases when computing for net purchases. True Falsearrow_forward
- Which of the following transactions would not result in an adjustment to the inventory account under a perpetual inventory system? a.The sale of merchandise for cash b.The sale of merchandise on credit c.The receipt of payment from a customer within the discount period d.The return of merchandise by a customerarrow_forwardWhich of the following is not an advantage of a perpetual inventory system? a. assits in the prevention of stockouts b. requires less data processing effort than periodic system c. maintains up-to-date inventory and cost of goods sold balances d. provides evidence of inventory shrinkagearrow_forwardWhich of the following accounts does not belong in the purchases and disbursement cycle? Group of answer choices a.Prepayments b.Accounts payable c.Sales returns and allowances d.Fixed assetsarrow_forward
- Which one of the following statements is true regarding the cost of sales, if the perpetual inventory control system is in use? Select one: a. If goods are sold for cash or on credit, the cost of sales will decrease on the debit side. b. Under the perpetual inventory control system, there is no cost of sales. Therefore, the cost of sales is not affected. c. If goods are sold for cash or on credit, the cost of sales will increase on the debit side. d. If goods are sold for cash or on credit, the cost of sales will increase on the credit side.arrow_forward49. Which of the following is characteristic of a perpetual inventory system? * A. Inventory purchases are debited to a purchase discount. B. Inventory records are not kept for every item. C. Cost of goods sold is recorded with each sale. D. Cost of goods sold is determined as the amount of purchases less the change in inventory.arrow_forwardWhich of the following is not an advantage of a perpetual inventory system? a. Assists in the prevention of stockouts b. Requires less data processing effort than periodic systems c. Maintains up-to-date inventory and cost of goods sold balances d. Provides evidence of inventory shrinkagearrow_forward
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