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1. Which of the following is NOT an example of selling expenses? (Points : 2) A. Salespersons salaries B. Office salaries C. Depreciation of store equipment D. Advertising 2. In recording the cost of merchandise sold for cash using a perpetual inventory system the effect on the accounts is (Points : 2) A. increase Cost of Merchandise Sold; increase Sales. B. increase Cost of Merchandise Sold; decrease Merchandise Inventory. C. increase Merchandise Inventory; decrease Cost of Merchandise Sold. D. increase Accounts Receivable; decrease Merchandise Inventory. 3. Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as (Points : 2) A. selling expenses. B. general expenses. C. other expenses. D. administrative expenses. 4. When the perpetual inventory system is used the inventory sold is shown on the income statement as (Points : 2) A. cost of merchandise sold. B. purchases. C. purchases returns and allowances. D. net purchases.

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