True or False?
1. Merchandise inventory consists of products that a companyacquires to resell to customers.
2. A service company earns net income by buying and sellingmerchandise.
3. Gross profit is the same as gross margin.
4. Cost of goods sold is also called cost of sales.
5. A wholesaler is an intermediary that buys products from amanufacturers or other wholesalers and sells them to consumers.
6. Goods in transit are automatically included in a company'sinventory account.
7. If damaged & obsolete goods cannot be sold they are notincluded in inventory.
8. Goods on consignment are goods shipped by their owner, calledthe consignee, to a party called the consignor.
9. If obsolete or damaged goods can be sold, they will beincluded in inventory for realizable value.
10. If the seller is responsible for paying freight charges,then ownerships is passed when goods arrive at theirdestination.
11. A properly designed internal control system is a key part ofaccounting information systems design, analysis andperformances.
12. The use of internal controls provides guaranteed protectionagainst losses due to operating activities.
13. Internal control policies and procedures are the same forall companies
14. Maintaining adequate business records is an importantinternal control principle.
15. Proper internal control means that the responsibility for atask is clearly established and assigned to one person.
16. Accounts receivables occur from credit sales tocustomers
17. Credit sales are recorded by crediting an account receivablefor the specific customer who is making the purchase
18. As long as a company accurately records total credit salesinformation, it is not necessary to have separate accounts forspecific customers
19. If a customer owes interest on accounts receivable, theinterest revenue account is debited and account receivable iscredited
20. If a credit card sale is made, the seller can either debitcash or debit accounts receivable when the sale occurs.
