MERCHA

Question 1

The buyer shoulders the shipping cost

Answer 1

FOB SHIPPING POINT

Question 2

FOB

Answer 2

Free on board

Question 3

The sellers shoulder the shipping cost

Answer 3

FOB Destination

Question 4

When goods are sold on account, a period time is called?

Answer 4

Credit period

Question 5

The credit period is usually described as the _____ or _______.

Answer 5

Net credit period or net terms

Question 6

‘In/ 10 eom

Answer 6

The invoice is due ten days after the end of the month

Question 7

Some business give discounts for prompt payment

Answer 7

Cash discounts

Question 8

The period is covered by the discount

Answer 8

Discount period

Question 9

T or F: It is usually regrettable for the buyer to take a discount offered even if it would mean borrowing the money to make the payment.

Answer 9

F: Worthwhile

Question 10

T or F: Trade discounts encourage the buyers to purchase products because of markdowns from the list price

Answer 10

True

Question 11

T or F: There is trade discount account and there is special accounting entry for this discount.

Answer 11

False: No

Question 12

T or F: Trade discount may be stated in series

Answer 12

True

Question 13

T or F: Payment by either party will not dictate who should ultimately shoulder the cost

Answer 13

True

Question 14

The shipping cost borne by the buyer using the periodic inventory system are ____ to ______ account.

Answer 14

Debited to Transportation In.

Question 15

Is the key factor in determining cost of sales.

Answer 15

Merchandise inventory

Question 16

Under the ___________, the inventory account is continuously updated.

Answer 16

Perpetual Inventory System

Question 17

T or F: The period inventory system is more advisable for firm’s that sell low-volume, High-priced goods such as motor vehicles, jewelry, and furnitures.

Answer 17

Perpetual Inventory System

Question 18

Consist of total sales for cash and on credit during accounting period.

Answer 18

Gross sales

Question 19

As an ______, the sales account is credited whenever sales on account are cash sales are made.

Answer 19

Income Account