Question 1

Ownership of goods passes from the seller to the buyer after the buyer has paid for the goods.

Accepted Answer

A) True 
 B)False

Question 2

The specific identification method of costing inventories is often used for goods that are interchangeable.

Accepted Answer

A) True 
 B)False

Question 3

Astro Corporation uses the periodic inventory system. Information related to Astro's inventory at October 31 is given below:
   Requirements:
1. Show calculations to determine the ending inventory using the FIFO cost formula if 400 units remain on hand at October 31
2. Show calculations to determine the ending inventory using the average cost formula if 400 units remain on hand at October 31.

Accepted Answer

1. 400 units in ending inventory.
Under

Question 4

Wilburn Company reported the following data at year-end: Sales, $100,000; Beginning inventory, $8,000; Ending inventory, $6,000; Cost of goods sold, $60,000; and Gross margin, $40,000. What was the amount of merchandise purchases for the year?

Accepted Answer

A)  $58,000 
B)  $40,000 
C)  $46,000 
D)  $68,000 
A)  $58,000 
B)  $40,000 
C)  $46,000 
D)  $68,000

Question 5

The inventory turnover ratio is calculated by dividing cost of goods sold by

Accepted Answer

A)  beginning inventory. 
B)  365 days. 
C)  ending inventory. 
D)  average inventory. 
A)  beginning inventory. 
B)  365 days. 
C)  ending inventory. 
D)  average inventory.

Question 6

On February 20, 20A, Ross Sound Company purchased $10,000 of stereo equipment for resale on credit, subject to the terms 3/15, n/30. The company records all purchases using the gross method. The periodic inventory system is used. If the company paid for these goods on March 20, the entry made to record the payment should include which of the following?

Accepted Answer

A)  A $9,700 debit to Purchases. 
B)  A $300 debit to Purchases discounts. 
C)  A $10,000 debit to Trade payables. 
D)  An $8,500 credit to Cash. 
A)  A $9,700 debit to Purchases. 
B)  A $300 debit to Purchases discounts. 
C)  A $10,000 debit to Trade payables. 
D)  An $8,500 credit to Cash.

Question 7

On March 15, 20A, Jack Company purchased $5,000 of merchandise on credit subject to terms 2/10, n/20. Jack records its purchases using the gross amount. The periodic inventory system is used. If Jack pays for these goods on March 30, the entry made to record the payment should include which of the following?

Accepted Answer

A)  Credit of $4,900 to cash. 
B)  Credit of $100 to Purchase discounts. 
C)  Debit of $4,900 to Trade payables. 
D)  Debit of $5,000 to Trade payables. 
A)  Credit of $4,900 to cash. 
B)  Credit of $100 to Purchase discounts. 
C)  Debit of $4,900 to Trade payables. 
D)  Debit of $5,000 to Trade payables.

Question 8

An understatement of the beginning inventory results in

Accepted Answer

A)  an understatement of earnings. 
B)  no effect on the period's earnings. 
C)  an overstatement of earnings. 
D)  a need to adjust purchases. 
A)  an understatement of earnings. 
B)  no effect on the period's earnings. 
C)  an overstatement of earnings. 
D)  a need to adjust purchases.

Question 9

In order to determine cost of goods sold in a periodic inventory system we

Accepted Answer

A)  subtract ending inventory from beginning inventory. 
B)  add purchases to beginning inventory. 
C)  subtract purchases from ending inventory. 
D)  subtract ending inventory from beginning inventory plus purchases. 
A)  subtract ending inventory from beginning inventory. 
B)  add purchases to beginning inventory. 
C)  subtract purchases from ending inventory. 
D)  subtract ending inventory from beginning inventory plus purchases.

Question 10

Telly Company reported profit in 20A of $22,000 and in 20B of $32,000. Later it was discovered tha the 20A ending inventory was overstated by $5,000. Compute the amount of profit (disregard incom tax) for 20A and 20B.
20A $________ 20B $________

Accepted Answer

20A-$22,000 - $5,000

Question 11

At the end of 20A, a $2,500 understatement was discovered in the amount of the 20A ending inventory as reflected in the perpetual inventory records. What were the 20A effects of the $2,500 inventory error (before correction)?

Accepted Answer

A)  Cost of goods sold was understated by $2,500 and pretax profit was understated by $2,500. 
B)  Cost of goods sold was overstated by $2,500 and pretax profit was overstated by $2,500. 
C)  Assets (inventory) were understated by $2,500 and pretax profit was overstated by $2,500. 
D)  Assets (inventory) were understated by $2,500 and pretax profit was understated by $2,500. 
A)  Cost of goods sold was understated by $2,500 and pretax profit was understated by $2,500. 
B)  Cost of goods sold was overstated by $2,500 and pretax profit was overstated by $2,500. 
C)  Assets (inventory) were understated by $2,500 and pretax profit was overstated by $2,500. 
D)  Assets (inventory) were understated by $2,500 and pretax profit was understated by $2,500.

Question 12

Seinerfeld Company had its merchandise inventory warehouse destroyed by a fire. Thankfully, the owner had the accounting records at home to prepare financial statements after counting the inventory earlier in the day. The company used the periodic inventory system. In the shock of being notified of the fire, the owner spilled his dinner on the statement of earnings he had just completed. However, the following information was readable: Sales, $200,000; Beginning Inventory, $20,000; Purchases, $130,000; Total Operating Expenses (not including taxes), $40,000; and Profit Before Taxes, $20,000. There were no sales returns, purchases returns, sales discounts nor purchases discounts. Compute the amount of the ending inventory on hand before the fire.

Accepted Answer

A)  $10,000 
B)  $30,000 
C)  $-0- 
D)  $20,000 
A)  $10,000 
B)  $30,000 
C)  $-0- 
D)  $20,000

Question 13

In 20B, Landings Inc. provided the following items in their footnotes. Its cost of goods available for sale was $6.2 billion under FIFO costing and its ending inventory value under FIFO costing was $2.1 billion. Its opening inventory was $2.5 billion. What was its purchases?

Accepted Answer

A)  $3.7 billion 
B)  $8.3 billion 
C)  $4.6 billion 
D)  $4.1 billion 
A)  $3.7 billion 
B)  $8.3 billion 
C)  $4.6 billion 
D)  $4.1 billion

Question 14

The appearance of a purchases account in a trial balance usually indicates that the company is using a periodic inventory system.

Accepted Answer

A) True 
 B)False

Question 15

Approximating the physical flow of inventory is not important when selecting an inventory cost formula.

Accepted Answer

A) True 
 B)False

Question 16

If ABC's statement of earnings showed cost of goods sold at $78,000, purchases of $80,000, freight-in at $300, purchases returns of $500 and end-of-the period inventory at
$11,900, its beginning-of-the-period-inventory must have been:

Accepted Answer

A)  $9,200 
B)  $9,900 
C)  $10,100 
D)  $10,400 
A)  $9,200 
B)  $9,900 
C)  $10,100 
D)  $10,400

Question 17

Walker Corporation uses the periodic inventory method and had the following inventory information available:
   A physical count of inventory on December 31 revealed that there were 50 units on hand. Requirements:
Answer the following independent questions and show calculations supporting your answers.
1. Assume that the company uses FIFO. The value of the ending inventory at December 31 is
$________.
2. Assume that the company uses average cost. The value of the ending inventory on December 31 is
$________.
3. Assume that the company uses average cost. The value of cost of goods sold on December 31 is $
4. Assume that the company uses FIFO. The value of the cost of goods sold on December 31 is
$________.

Accepted Answer

The answer of Walker Corporation uses the periodic inventory method...

Question 18

The lower of cost and net realizable value basis of valuing inventories ensures that inventories are

Accepted Answer

A)  not over-valued. 
B)  not under-valued. 
C)  valued at their selling price. 
D)  valued at their current cost. 
A)  not over-valued. 
B)  not under-valued. 
C)  valued at their selling price. 
D)  valued at their current cost.

Question 19

Taste Best Company uses the periodic inventory system. It has compiled the following information i
order to prepare the financial statements at the end of 20B:

Accepted Answer

A. $70,000 + $730,000 = $800,0

Question 20

When a perpetual inventory system is used, the purchases returns and allowances account will not be part of the general ledger accounts.

Accepted Answer

A) True 
 B)False

Ownership of goods passes from the seller to the buyer after the buyer has paid for the goods.

The specific identification method of costing inventories is often used for goods that are interchangeable.

Wilburn Company reported the following data at year-end: Sales, $100,000; Beginning inventory, $8,000; Ending inventory, $6,000; Cost of goods sold, $60,000; and Gross margin, $40,000. What was the amount of merchandise purchases for the year?

The inventory turnover ratio is calculated by dividing cost of goods sold by

An understatement of the beginning inventory results in

In order to determine cost of goods sold in a periodic inventory system we

Telly Company reported profit in 20A of $22,000 and in 20B of $32,000. Later it was discovered tha the 20A ending inventory was overstated by $5,000. Compute the amount of profit (disregard incom tax) for 20A and 20B. 20A $ 20B $

At the end of 20A, a $2,500 understatement was discovered in the amount of the 20A ending inventory as reflected in the perpetual inventory records. What were the 20A effects of the $2,500 inventory error (before correction)?

In 20B, Landings Inc. provided the following items in their footnotes. Its cost of goods available for sale was $6.2 billion under FIFO costing and its ending inventory value under FIFO costing was $2.1 billion. Its opening inventory was $2.5 billion. What was its purchases?

The appearance of a purchases account in a trial balance usually indicates that the company is using a periodic inventory system.

Approximating the physical flow of inventory is not important when selecting an inventory cost formula.

If ABC's statement of earnings showed cost of goods sold at $78,000, purchases of $80,000, freight-in at $300, purchases returns of $500 and end-of-the period inventory at $11,900, its beginning-of-the-period-inventory must have been:

The lower of cost and net realizable value basis of valuing inventories ensures that inventories are

Taste Best Company uses the periodic inventory system. It has compiled the following information i order to prepare the financial statements at the end of 20B:

When a perpetual inventory system is used, the purchases returns and allowances account will not be part of the general ledger accounts.

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments, Financial Statements, and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, Receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

Filters

Exam 8: Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural Resources

Ownership of goods passes from the seller to the buyer after the buyer has paid for the goods.

The specific identification method of costing inventories is often used for goods that are interchangeable.

Wilburn Company reported the following data at year-end: Sales, $100,000; Beginning inventory, $8,000; Ending inventory, $6,000; Cost of goods sold, $60,000; and Gross margin, $40,000. What was the amount of merchandise purchases for the year?

The inventory turnover ratio is calculated by dividing cost of goods sold by

An understatement of the beginning inventory results in

In order to determine cost of goods sold in a periodic inventory system we

Telly Company reported profit in 20A of $22,000 and in 20B of $32,000. Later it was discovered tha the 20A ending inventory was overstated by $5,000. Compute the amount of profit (disregard incom tax) for 20A and 20B. 20A $________ 20B $________

At the end of 20A, a $2,500 understatement was discovered in the amount of the 20A ending inventory as reflected in the perpetual inventory records. What were the 20A effects of the $2,500 inventory error (before correction)?

In 20B, Landings Inc. provided the following items in their footnotes. Its cost of goods available for sale was $6.2 billion under FIFO costing and its ending inventory value under FIFO costing was $2.1 billion. Its opening inventory was $2.5 billion. What was its purchases?

The appearance of a purchases account in a trial balance usually indicates that the company is using a periodic inventory system.

Approximating the physical flow of inventory is not important when selecting an inventory cost formula.

If ABC's statement of earnings showed cost of goods sold at $78,000, purchases of $80,000, freight-in at $300, purchases returns of $500 and end-of-the period inventory at $11,900, its beginning-of-the-period-inventory must have been:

The lower of cost and net realizable value basis of valuing inventories ensures that inventories are

Taste Best Company uses the periodic inventory system. It has compiled the following information i order to prepare the financial statements at the end of 20B:

When a perpetual inventory system is used, the purchases returns and allowances account will not be part of the general ledger accounts.

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments, Financial Statements, and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, Receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

Filters

Telly Company reported profit in 20A of $22,000 and in 20B of $32,000. Later it was discovered tha the 20A ending inventory was overstated by $5,000. Compute the amount of profit (disregard incom tax) for 20A and 20B. 20A $ 20B $