Part 1: Choose the correct answer for the following questions.

1. Which of the following is a key distinguishing characteristic of a sales agency compared to a sales branch?
a) The agency sells goods on consignment for a principal.
b) The agency has the authority to set prices and terms.
c) The agency maintains its own inventory of goods.
d) All of the above.

2. When a sales agency sells consigned goods, the principal's inventory account is:
a) Debited when the goods are sold.
b) Credited when the goods are sold.
c) Not affected when the goods are sold.
d) Adjusted based on the agency's commission.

3. Which of the following accounts would a sales agency use to record the value of consigned goods in its possession?
a) Inventory
b) Consigned Goods Received
c) Consigned Goods on Hand
d) Agency Merchandise

4. How does a sales agency typically record the commission it earns on the sale of consigned goods?
a) Debit Commission Revenue, Credit Accounts Payable
b) Debit Accounts Receivable, Credit Commission Revenue
c) Debit Commission Expense, Credit Cash
d) Debit Commission Receivable, Credit Sales Revenue