Answer to Question #269729 in Accounting for Riley

Question

True or False

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.

Answer 1

Solution:

6. Companies infrequently take advantage of purchase discounts because they amount to so little savings – True.

7. Periodic inventory systems are, in general, less expensive to operate than perpetual systems – True.

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) – True.

9. Companies only follow the “lower-of-cost-or-market” guideline if they use a periodic inventory system – True.

10. The “purchases” account is not used in a perpetual inventory system – True.