Question 1

Errors in the ending inventory balance only affect the current period's records and financial statements.

Accepted Answer

A) True 
 B)False

Question 2

The journal entry necessary at the end of the period to adjust cost of goods sold for the ending inventory still on hand will include which of the following?

Accepted Answer

A)  Debit Inventory, $6,250. 
B)  Credit Cost of goods sold, $11,250. 
C)  Credit Purchases, $10,200 
D)  Credit Inventory, $5,000. 
A)  Debit Inventory, $6,250. 
B)  Credit Cost of goods sold, $11,250. 
C)  Credit Purchases, $10,200 
D)  Credit Inventory, $5,000.

Question 3

In a period of rising prices, the inventory costing method that will tend to smooth out erratic changes in costs is

Accepted Answer

A)  FIFO. 
B)  LIFO. 
C)  Weighted average. 
D)  Specific identification. 
A)  FIFO. 
B)  LIFO. 
C)  Weighted average. 
D)  Specific identification.

Question 4

Which of the following accounts would normally have a credit balance?

Accepted Answer

A)  Inventory 
B)  Cost of goods sold 
C)  Sales 
D)  Sales returns & allowances 
A)  Inventory 
B)  Cost of goods sold 
C)  Sales 
D)  Sales returns & allowances

Question 5

The process of buying and selling inventory is known as inventory:

Accepted Answer

A)  circulation. 
B)  cost management. 
C)  turnover. 
D)  asset allocation. 
A)  circulation. 
B)  cost management. 
C)  turnover. 
D)  asset allocation.

Question 6

If the company uses the LIFO costing method, what is the cost of its ending inventory?

Accepted Answer

A)  $1,365. 
B)  $1,494. 
C)  $1,620. 
D)  $2,835. 
A)  $1,365. 
B)  $1,494. 
C)  $1,620. 
D)  $2,835.

Question 7

What is the journal entry to be recorded by

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
E)  Flynn Company on November 8?
  
A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
E)  Flynn Company on November 8?

Question 8

On July 1,B. Darin Company sold merchandise costing $4,500 to S. Dee Company for $6,000, terms 2/10, n/30. Both companies use a periodic inventory system. What is the journal entry that S. Dee Company will make on July 1?

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D

Question 9

Which of the following statements regarding inventory measures is not true?

Accepted Answer

A)  If the inventory turnover ratio increases, the days to sell measure decreases. 
B)  The days to sell measure can help managers make pricing and ordering decisions for inventory. 
C)  A higher inventory turnover ratio indicates that inventory is moving more quickly from purchase to sale. 
D)  It is rare for a company with a lower gross profit percentage to have a faster inventory turnover. 
A)  If the inventory turnover ratio increases, the days to sell measure decreases. 
B)  The days to sell measure can help managers make pricing and ordering decisions for inventory. 
C)  A higher inventory turnover ratio indicates that inventory is moving more quickly from purchase to sale. 
D)  It is rare for a company with a lower gross profit percentage to have a faster inventory turnover.

Question 10

In applying the lower of cost or market method to inventory, market is defined as

Accepted Answer

A)  historical cost. 
B)  current replacement cost. 
C)  current sales price. 
D)  weighted-average cost. 
A)  historical cost. 
B)  current replacement cost. 
C)  current sales price. 
D)  weighted-average cost.

Question 11

Which of the following statements is true?

Accepted Answer

A)  The sales revenue is $2,500. 
B)  The gross profit is $2,500. 
C)  The cost of goods sold is $2,500. 
D)  The net income is $2,500. 
A)  The sales revenue is $2,500. 
B)  The gross profit is $2,500. 
C)  The cost of goods sold is $2,500. 
D)  The net income is $2,500.

Question 12

Meanmocha Hardware has a periodic inventory system and uses the weighted average method. The company began the month of November with 150 large brass switch plates on hand at a cost of $4.00 each. These switch plates sell for $7.00 each. The following schedule sets forth the purchases of switch plates during November:   If Meanmocha sells 570 switch plates for $7.00 each during November, what is the company's gross profit for November (rounded to the nearest dollar)?

Accepted Answer

A)  $1,046. 
B)  $1,482. 
C)  $1,516. 
D)  $1,528. 
A)  $1,046. 
B)  $1,482. 
C)  $1,516. 
D)  $1,528.

Question 13

The Acme Corporation buys 300 units of merchandise in January at $5 each. In February, Acme buys 500 units at $4 each and in March it buys 200 units at $6 each. Acme sells 150 units during this quarter. What is the cost of goods sold under the FIFO method?

Accepted Answer

A)  $600 
B)  $934 
C)  $750 
D)  $900 
A)  $600 
B)  $934 
C)  $750 
D)  $900

Question 14

Which of the following statements is true?

Accepted Answer

A)  When unit costs are steadily rising or falling, the weighted average cost method yields a cost of goods sold between that of FIFO and LIFO. 
B)  FIFO will lead to the highest net income if unit costs are falling. 
C)  LIFO will always yield a smaller net income than FIFO. 
D)  Specific identification is the most practical, but least accurate, measure of cost and net income. 
A)  When unit costs are steadily rising or falling, the weighted average cost method yields a cost of goods sold between that of FIFO and LIFO. 
B)  FIFO will lead to the highest net income if unit costs are falling. 
C)  LIFO will always yield a smaller net income than FIFO. 
D)  Specific identification is the most practical, but least accurate, measure of cost and net income.

Question 15

The cost assigned to cost of goods sold and to inventory under the FIFO method will be the same whether the perpetual or the periodic inventory system is used.

Accepted Answer

A) True 
 B)False

Question 16

Merchandisers have inventories of finished goods only; manufacturers have inventories of raw materials only.

Accepted Answer

A) True 
 B)False

Question 17

What is the inventory turnover for 2010?

Accepted Answer

A)  3.87 
B)  4 
C)  4.14 
D)  2 
A)  3.87 
B)  4 
C)  4.14 
D)  2

Question 18

The net sales of a company is $300,000. The cost of goods available for sale is $280,000 and the gross profit percentage is 35%. What is the amount of ending inventory?

Accepted Answer

A)  $105,000 
B)  $195,000 
C)  $85,000 
D)  $70,000 
A)  $105,000 
B)  $195,000 
C)  $85,000 
D)  $70,000

Errors in the ending inventory balance only affect the current period's records and financial statements.

The journal entry necessary at the end of the period to adjust cost of goods sold for the ending inventory still on hand will include which of the following?

In a period of rising prices, the inventory costing method that will tend to smooth out erratic changes in costs is

Which of the following accounts would normally have a credit balance?

The process of buying and selling inventory is known as inventory:

If the company uses the LIFO costing method, what is the cost of its ending inventory?

What is the journal entry to be recorded by

On July 1,B. Darin Company sold merchandise costing $4,500 to S. Dee Company for $6,000, terms 2/10, n/30. Both companies use a periodic inventory system. What is the journal entry that S. Dee Company will make on July 1?

Which of the following statements regarding inventory measures is not true?

In applying the lower of cost or market method to inventory, market is defined as

Which of the following statements is true?

The Acme Corporation buys 300 units of merchandise in January at $5 each. In February, Acme buys 500 units at $4 each and in March it buys 200 units at $6 each. Acme sells 150 units during this quarter. What is the cost of goods sold under the FIFO method?

Which of the following statements is true?

The cost assigned to cost of goods sold and to inventory under the FIFO method will be the same whether the perpetual or the periodic inventory system is used.

Merchandisers have inventories of finished goods only; manufacturers have inventories of raw materials only.

What is the inventory turnover for 2010?

The net sales of a company is $300,000. The cost of goods available for sale is $280,000 and the gross profit percentage is 35%. What is the amount of ending inventory?

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control and Financial Reporting for Cash and Merchandise Sales

Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

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Exam 7: Reporting and Interpreting Inventories and Cost of Goods Sold

Errors in the ending inventory balance only affect the current period's records and financial statements.

The journal entry necessary at the end of the period to adjust cost of goods sold for the ending inventory still on hand will include which of the following?

In a period of rising prices, the inventory costing method that will tend to smooth out erratic changes in costs is

Which of the following accounts would normally have a credit balance?

The process of buying and selling inventory is known as inventory:

If the company uses the LIFO costing method, what is the cost of its ending inventory?

What is the journal entry to be recorded by

On July 1,B. Darin Company sold merchandise costing $4,500 to S. Dee Company for $6,000, terms 2/10, n/30. Both companies use a periodic inventory system. What is the journal entry that S. Dee Company will make on July 1?

Which of the following statements regarding inventory measures is not true?

In applying the lower of cost or market method to inventory, market is defined as

Which of the following statements is true?

The Acme Corporation buys 300 units of merchandise in January at $5 each. In February, Acme buys 500 units at $4 each and in March it buys 200 units at $6 each. Acme sells 150 units during this quarter. What is the cost of goods sold under the FIFO method?

Which of the following statements is true?

The cost assigned to cost of goods sold and to inventory under the FIFO method will be the same whether the perpetual or the periodic inventory system is used.

Merchandisers have inventories of finished goods only; manufacturers have inventories of raw materials only.

What is the inventory turnover for 2010?

The net sales of a company is $300,000. The cost of goods available for sale is $280,000 and the gross profit percentage is 35%. What is the amount of ending inventory?

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control and Financial Reporting for Cash and Merchandise Sales

Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters