Question

1. If Merchandise Inventory decreases from the beginning to the end of the fiscal period, the adjusting entry includes a debit to Income Summary. T/F

Answer 1

Answer:

The correct answer is False.

Explanation:

It does not include a debit in income, because these were already recognized at the time with each sale made. What must be adjusted is the cost incurred for maintaining the inventory or losses incurred due to obsolescence or damage to stored products.