True or False
1. ____ If the market value of a company’s inventory increases, the company should record a gain.
Don't use plagiarized sources. Get Your Custom Essay on
The Purchases Account
Just from $13/Page
2. ____ A company should include costs of transporting an item to its store when determining the cost of the item.
3. ____ A company that uses a perpetual inventory system should still perform a physical inventory count.
4. ____ In a perpetual system, but not a periodic system, cost of goods sold is determined and recorded at the time of sale.
5. ____ If inventory is shipped FOB shipping point, the buyer takes title as soon as the inventory leaves the seller’s warehouse.
6. ____ Companies infrequently take advantage of purchase discounts because they amount to so little savings.
7. ____ Periodic inventory systems are, in general, less expensive to operate than perpetual systems.
8. ____ In a periodic system, cost of goods sold is the difference between what a company has available for sale (beginning inventory and purchases) and what they didn’t sell (ending inventory).
9. ____ Companies only follow the “lower-of-cost-or-market” guideline if they use a periodic inventory system.
10. ____ The “purchases” account is not used in a perpetual inventory system.