Which of the Following Statements Is True Under the Periodic

question 33

Multiple Choice

Which of the following statements is true under the periodic inventory method?

• A) Freight-In is subtracted from purchases in order to derive net purchases
• B) Freight-In is added to purchases in order to derive net purchases
• C) Freight-In is used only with the perpetual inventory method, not with the periodic inventory method
• D) Freight-In is neither subtracted nor added to purchases in order to derive net purchases

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Definitions:

Normal Balance

The side of an account (debit or credit) that is expected to increase; for assets and expenses, it’s debit; for liabilities, equity, and revenue, it's credit.

Financial Statement

A financial statement is a formal record of the financial activities and position of a business, person, or other entity.

Permanent/Temporary

Categories representing either enduring, long-term attributes or conditions, or those that are short-lived and transient.

Post-closing Trial Balance

A list of all accounts and their balances after closing entries have been made, ensuring that debits equal credits.