Knowledge Check 01
Which of the following statements is not correct?
When a periodic system is in use, the Purchases account must be credited for its account balance to
close this account to the Income Summary account.
When a periodic Inventory system is in use, the Merchandise Inventory account is both debited and
creddited in the closing entry process.
When a periodic system is in use, the Purchases Returns and Allowances, the Purchases Discounts, and
the Transportation-In accounts must be debited to close their account balances to the Income Summary
account.
When a periodic system is in use, each Purchases, Purchases Return and Allowance, Purchases
Discount, and Transportation-In transaction is recorded in a separate temporary account.
