11 Accounting Unit 2 Topic 1

What are purchases in a trading business?

• Inventory purchased at cost price

• Inventory at selling price

Sales in a trading business are......

• Inventories at selling price

• Inventories at cost price

Subsidiary ledgers are included in the General Ledger

• True

• False

What is included in the General Ledger to represent a subsidiary ledger?

• A control account

• Accounts Receivable

• Accounts Payable

Subsidiary ledgers are often used for......

• Accounts Payable

• Accounts Receivable

• Inventories

• All of these

The main difference between a service business and a trading business is...

• A trading business buys stock and sells it for a profit.

• A trading business uses subsidiary ledgers.

Which account would a service business not have?

• Accounts Payable

• Accounts Receivable

• Inventory

• Cash at Bank

Why is the perpetual inventory system the best method for maintaining records for inventories?

• It is the preferred Australian accounting standard

• It provides greater control over the inventory assets

• It allows managers to reduce the number of inventory staff

What are the two inventory costing methods?

• Weighted Average

• Mid-point

• First-In First-Out

Which costing method assumes that the first items to enter a business are the first to leave?

• First-In First Out

• Weighted Average