ACC 304 Course Great Wisdom / tutorialrank.com ACC 304 Course Great Wisdom / tutorialrank.com | Page 48

2. Both merchandising and manufacturing companies
normally have multiple inventory accounts.
3. When using a perpetual inventory system, freight
charges on goods purchased are debited to Freight-In.
4. If a supplier ships goods f.o.b. destination, title passes to
the buyer when the supplier delivers the goods to the common
carrier.
5. If ending inventory is understated, then net income is
understated.

6. If both purchases and ending inventory are overstated by
the same amount, net income is not affected.

7. Freight charges on goods purchased are considered a
period cost and therefore are not part of the cost of the
inventory.