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Louisiana State University, Shreveport ACCT 701 Chapter 7 Self- Test Indicate whether each of the following statements is true or false

Accounting

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Louisiana State University, Shreveport

ACCT 701

Chapter 7 Self- Test Indicate whether each of the following statements is true or false.

1)To compute net sales, sales discounts are added to, and sales returns and allowances are deducted from, gross sales.

2. Under perpetual inventory procedure, the Merchandise Inventory account is debited for each purchase and credited for each sale.
3. Purchase discounts and purchase returns and allowances are recorded in contra accounts to the Purchases account.
4. In taking a physical inventory, consigned goods delivered to another party who attempts to

sell the goods are not included in the ending inventory of the company that sent the goods.

5. A classified income statement consists of only two categories of items, revenues and

expenses.