Under a Periodic Inventory System

question 31

Multiple Choice

Under a periodic inventory system,

• A)purchases of inventory are debited to the Purchases account.
• B)freight incurred on merchandise purchases by the buyer should be debited to the Inventory account.
• C)purchases of merchandise are usually credited to the Purchases account.
• D)freight incurred on merchandise sales by the seller should be debited to the Freight In account.

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Definitions:

Depreciable Real Property

Real estate eligible for depreciation for tax purposes, meaning its cost can be deducted over a period of time.

Straight-Line Method

A method of calculating the depreciation of an asset that evenly spreads out its cost over its useful life.

Entertainment Expenses

Costs for business-related entertainment that may be partially deductible under certain conditions.

Listed Property

Assets required to be reported for tax purposes because they have the potential for personal use, such as cars, computers, and real property.