Multiple choice

1.-Merchandise inventory: 

A)-Is a long-term asset. 

B)-Is a current asset. 

C)-Includes supplies. 

D)-Is classified with investments on the balance sheet. 

E)-Must be sold within one month. 

2.-The current period's ending inventory is: 

A)-The next period's beginning inventory. 

B)-The current period's cost of goods sold. 

C)-The prior period's beginning inventory. 

D)-The current period's net purchases. 

E)-The current period's beginning inventory. 

3.-The credit terms 2/10, n/30 are interpreted as: 

A)-2% cash discount if the amount is paid within 10 days, with the balance due in 30 days. 

B)-10% cash discount if the amount is paid within 2 days, with balance due in 30 days. 

C)-30% discount if paid within 2 days. 

D)-30% discount if paid within 10 days. 

E)-2% discount if paid within 30 days. 

4.-Merchandise inventory includes: 

A)-All goods owned by a company and held for sale. 

B)-All goods in transit. 

C)-All goods on consignment. 

D)-Only damaged goods. 

E)-All of the above.