Question 1

The understatement of the ending inventory balance causes:

Accepted Answer

A) Cost of goods sold to be overstated and net income to be understated. 
B) Cost of goods sold to be overstated and net income to be overstated. 
C) Cost of goods sold to be understated and net income to be understated. 
D) Cost of goods sold to be understated and net income to be overstated. 
E) Cost of goods sold to be overstated and net income to be correct. 
A) Cost of goods sold to be overstated and net income to be understated. 
B) Cost of goods sold to be overstated and net income to be overstated. 
C) Cost of goods sold to be understated and net income to be understated. 
D) Cost of goods sold to be understated and net income to be overstated. 
E) Cost of goods sold to be overstated and net income to be correct.

Question 2

Hull Company reported the following income statement information for 2015:   The beginning inventory balance for Year 1 is correct.However,the ending inventory figure for Year 1 was overstated by $20,000.Given this information,the correct gross profit figure for 2015 would be:

Accepted Answer

A) $149,000. 
B) $169,000. 
C) $129,000. 
D) $142,000. 
E) $112,000. 
A) $149,000. 
B) $169,000. 
C) $129,000. 
D) $142,000. 
E) $112,000.

Question 3

On December 31,a company needed to estimate its ending inventory to prepare its annual financial statements.The following information is currently available: Inventory as of January 1: $120,500
Net sales for the year: $400,000
Net purchases for the year: $270,500
This company typically achieves a gross profit ratio of 15%.Ending Inventory under the gross profit method would be:

Accepted Answer

A) $102,425. 
B) $10,425. 
C) $9,000. 
D) $51,000. 
E) $51,425. 
A) $102,425. 
B) $10,425. 
C) $9,000. 
D) $51,000. 
E) $51,425.

Question 4

A company made the following merchandise purchases and sales during the month of May:   There was no beginning inventory.If the company uses the weighted average periodic method,what would be the cost of the ending inventory?

Accepted Answer

The answer of A company made the following merchandise purchases...

Question 5

Evaluate each inventory error separately and determine whether it overstates or understates cost of goods sold and net income.

Accepted Answer

The answer of Evaluate each inventory error separately and determine...

Question 6

_______________________ is the estimated sales price of damaged goods minus the cost of making the sale.

Accepted Answer

Net realiz

Question 7

Salmone Company reported the following purchases and sales of its only product.Salmone uses a perpetual inventory system.Determine the cost assigned to ending inventory using LIFO.

Accepted Answer

A) $2,260 
B) $3,180 
C) $1,860 
D) $3,580 
E) $2,100 
A) $2,260 
B) $3,180 
C) $1,860 
D) $3,580 
E) $2,100

Question 8

A company reported the following data related to its ending inventory:   Calculate the lower-of-cost-or-market on the inventory applied separately to each product.

Accepted Answer

The answer of A company reported the following data related...

Question 9

Perfection Company had cost of goods sold of $853,000,ending inventory of $70,500,and average inventory of $71,600.Its inventory turnover equals:

Accepted Answer

A) 11.9. 
B) 1.0. 
C) 6.0. 
D) 30.6. 
E) 12.0. 
A) 11.9. 
B) 1.0. 
C) 6.0. 
D) 30.6. 
E) 12.0.

Question 10

A company has beginning inventory of 10 units at a cost of $10 each on February 1.On February 3,it purchases 20 units at $12 each.12 units are sold on February 5.Using the FIFO periodic inventory method,what is the cost of the 12 units that are sold?

Accepted Answer

A) $120 
B) $124 
C) $128 
D) $130 
E) $140 
A) $120 
B) $124 
C) $128 
D) $130 
E) $140

Question 11

Some companies choose to avoid assigning incidental costs of acquiring merchandise to inventory by recording them as cost of goods sold when incurred.The principle that supports this is called:

Accepted Answer

A) The matching principle. 
B) The materiality constraint. 
C) The cost principle. 
D) The conservation constraint principle. 
E) The lower of cost or market principle. 
A) The matching principle. 
B) The materiality constraint. 
C) The cost principle. 
D) The conservation constraint principle. 
E) The lower of cost or market principle.

Question 12

Use the following information for Shafer Company to compute inventory turnover for 2015.

Accepted Answer

A) 9.98 
B) 5.08 
C) 4.99 
D) 8.30 
E) 8.44 
A) 9.98 
B) 5.08 
C) 4.99 
D) 8.30 
E) 8.44

Question 13

Interim financial statements:

Accepted Answer

A) Are required by the Congress. 
B) Are necessary to achieve full disclosure about a business's operations. 
C) Are statements prepared for periods of less than one year. 
D) Require the use of the perpetual method for inventories. 
E) Cannot be prepared if the company follows the conservatism principle. 
A) Are required by the Congress. 
B) Are necessary to achieve full disclosure about a business's operations. 
C) Are statements prepared for periods of less than one year. 
D) Require the use of the perpetual method for inventories. 
E) Cannot be prepared if the company follows the conservatism principle.

The understatement of the ending inventory balance causes:

Hull Company reported the following income statement information for 2015: The beginning inventory balance for Year 1 is correct.However,the ending inventory figure for Year 1 was overstated by $20,000.Given this information,the correct gross profit figure for 2015 would be:

A company made the following merchandise purchases and sales during the month of May: There was no beginning inventory.If the company uses the weighted average periodic method,what would be the cost of the ending inventory?

Evaluate each inventory error separately and determine whether it overstates or understates cost of goods sold and net income.

_______________________ is the estimated sales price of damaged goods minus the cost of making the sale.

Salmone Company reported the following purchases and sales of its only product.Salmone uses a perpetual inventory system.Determine the cost assigned to ending inventory using LIFO.

A company reported the following data related to its ending inventory: Calculate the lower-of-cost-or-market on the inventory applied separately to each product.

Perfection Company had cost of goods sold of $853,000,ending inventory of $70,500,and average inventory of $71,600.Its inventory turnover equals:

A company has beginning inventory of 10 units at a cost of $10 each on February 1.On February 3,it purchases 20 units at $12 each.12 units are sold on February 5.Using the FIFO periodic inventory method,what is the cost of the 12 units that are sold?

Some companies choose to avoid assigning incidental costs of acquiring merchandise to inventory by recording them as cost of goods sold when incurred.The principle that supports this is called:

Use the following information for Shafer Company to compute inventory turnover for 2015.

Interim financial statements:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Appendix B: Time Value of Money

Appendix C: Activity-Based Costing

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Exam 6: Inventories and Cost of Sales

The understatement of the ending inventory balance causes:

Hull Company reported the following income statement information for 2015: The beginning inventory balance for Year 1 is correct.However,the ending inventory figure for Year 1 was overstated by $20,000.Given this information,the correct gross profit figure for 2015 would be:

A company made the following merchandise purchases and sales during the month of May: There was no beginning inventory.If the company uses the weighted average periodic method,what would be the cost of the ending inventory?

Evaluate each inventory error separately and determine whether it overstates or understates cost of goods sold and net income.

_______________________ is the estimated sales price of damaged goods minus the cost of making the sale.

Salmone Company reported the following purchases and sales of its only product.Salmone uses a perpetual inventory system.Determine the cost assigned to ending inventory using LIFO.

A company reported the following data related to its ending inventory: Calculate the lower-of-cost-or-market on the inventory applied separately to each product.

Perfection Company had cost of goods sold of $853,000,ending inventory of $70,500,and average inventory of $71,600.Its inventory turnover equals:

A company has beginning inventory of 10 units at a cost of $10 each on February 1.On February 3,it purchases 20 units at $12 each.12 units are sold on February 5.Using the FIFO periodic inventory method,what is the cost of the 12 units that are sold?

Some companies choose to avoid assigning incidental costs of acquiring merchandise to inventory by recording them as cost of goods sold when incurred.The principle that supports this is called:

Use the following information for Shafer Company to compute inventory turnover for 2015.

Interim financial statements:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Appendix B: Time Value of Money

Appendix C: Activity-Based Costing

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