Task Team of FUNdaMENTAL aCCOUNtIng School of Business. Sun Yat-sen University C The freight company D. None of the above 17. Goods in transit between the buyer and the seller belong to A. The seller B. The buyer C. The freight company D. The answer depends upon whether the goods were shipped F.O.B. shipping point or F.O. B destination 18. In a periodic inventory system, the cost of goods sold is determined as follows A. Year-end inventory, plus purchases during the year, less the inventory at the beginning of the year B. Net sales, less the balance in the Gross Profit account C Cost of goods available for sale during the year, less the ending inventory D. a physical count is made of all items sold throughout the year, and a cost flow assumption is applied at year-end 19. If the inventory at the end of the current year is understated and the error is never caught, the effect is to A. Understate income this year and overstate income next year B Overstate income this year and understate income next year C Understate income this year with no effect on income next yo D. Overstate the cost of goods sold, but have no effect on net income. 20. Companies with periodic inventory systems often use techniques such as the goss profit method and the retail method to A. Prepare financial statements without taking a complete physical inventory B. Increase gross profit C. Value inventory at its sales price instead of its cost D. Reduce taxable income during a period of rising pricesTask Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Yat-sen University 4 C. The freight company. D. None of the above. 17. Goods in transit between the buyer and the seller belong to: A. The seller. B. The buyer. C. The freight company. D. The answer depends upon whether the goods were shipped F.O.B. shipping point or F.O.B. destination. 18. In a periodic inventory system, the cost of goods sold is determined as follows: A. Year-end inventory, plus purchases during the year, less the inventory at the beginning of the year. B. Net sales, less the balance in the Gross Profit account. C. Cost of goods available for sale during the year, less the ending inventory. D. A physical count is made of all items sold throughout the year, and a cost flow assumption is applied at year-end. 19. If the inventory at the end of the current year is understated and the error is never caught, the effect is to: A. Understate income this year and overstate income next year. B. Overstate income this year and understate income next year. C. Understate income this year with no effect on income next year. D. Overstate the cost of goods sold, but have no effect on net income. 20. Companies with periodic inventory systems often use techniques such as the gross profit method and the retail method to: A. Prepare financial statements without taking a complete physical inventory. B. Increase gross profit. C. Value inventory at its sales price instead of its cost. D. Reduce taxable income during a period of rising prices