Question 1

A mark-up of 35% on cost is equivalent to what percentage of gross profit on selling price?

Accepted Answer

A) 60% 
B) 26% 
C) 29% 
D) 40% 
A) 60% 
B) 26% 
C) 29% 
D) 40%

Question 2

In 2010, Garrison Corporation reported net income of $70,000.A recount of the company's inventories revealed that 2010 ending inventory was overstated by $10,000.What is Garrison's corrected net income?

Accepted Answer

A) $60,000 
B) $80,000 
C) $70,000 
D) $75,000 
A) $60,000 
B) $80,000 
C) $70,000 
D) $75,000

Question 3

Wendling Company's net sales and gross profit were $1,341,000 and $471,000 respectively.Assuming the cost of goods available were $1,084,00, what was the cost of Wendling's ending inventory?

Accepted Answer

A) $471,000 
B) $214,000 
C) $247,000 
D) $870,000 
A) $471,000 
B) $214,000 
C) $247,000 
D) $870,000

Question 4

The use of a Purchase Discounts account implies that the recorded cost of a purchased inventory item is its

Accepted Answer

A) invoice price. 
B) invoice price plus any purchase discount lost. 
C) invoice price less the purchase discount taken. 
D) invoice price less the purchase discount allowable whether taken or not. 
A) invoice price. 
B) invoice price plus any purchase discount lost. 
C) invoice price less the purchase discount taken. 
D) invoice price less the purchase discount allowable whether taken or not.

Question 5

Use the following information for questions
Chi Co.records purchases at net amounts.On May 5 Chi purchased merchandise on account,
$8,000, terms 2/10, n/30.Pye returned $500 of the May 5 purchase and received credit on account.At May 31 the balance had not been paid.
-By how much should the account payable be adjusted on May 31?

Accepted Answer

A) $0. 
B) $170. 
C) $160. 
D) $150. 
A) $0. 
B) $170. 
C) $160. 
D) $150.

Question 6

Which of the following does not correctly describe the concept of net realizable value (NRV)?

Accepted Answer

A) Estimates of NRV are based on the best evidence available at and shortly after the balance sheet date. 
B) NRV generally does not change over time 
C) NRV generally changes over time 
D) A new estimate of NRV is required at each balance sheet date. 
A) Estimates of NRV are based on the best evidence available at and shortly after the balance sheet date. 
B) NRV generally does not change over time 
C) NRV generally changes over time 
D) A new estimate of NRV is required at each balance sheet date.

Question 7

The 2010 financial statements of Hurley Company reported a beginning inventory of $130,000, an ending inventory of $140,000, and cost of goods sold of $650,000 for the year.Hurley's inventory turnover ratio for 2010 is

Accepted Answer

A) 2.9 times. 
B) 3.4 times. 
C) 4.8 times. 
D) 4.0 times. 
A) 2.9 times. 
B) 3.4 times. 
C) 4.8 times. 
D) 4.0 times.

Question 8

Which of the following should usually be considered when calculating the cost of ending inventory?

Accepted Answer

A) Inventory that is subject to special sales agreements. 
B) The ownership for inventory in transit at the balance sheet date. 
C) Discounts and vendor rebates. 
D) All of these 
A) Inventory that is subject to special sales agreements. 
B) The ownership for inventory in transit at the balance sheet date. 
C) Discounts and vendor rebates. 
D) All of these

Question 9

Peskari Company's cost of goods sold and ending inventory were $100,000 and $150,000 respectively.Assuming Peskari had neither purchases nor returns, what was the cost of its beginning inventory?

Accepted Answer

A) $50,000 
B) $150,000 
C) $250,000 
D) undeterminable 
A) $50,000 
B) $150,000 
C) $250,000 
D) undeterminable

Question 10

In 2010, Frobisher Corporation reported net income of $245,000.You have been made aware that the company's beginning inventory was overstated by $12,000 and ending inventory was understated by $11,000.What is Frobisher's corrected net income for 2010?

Accepted Answer

A) $244,000 
B) $268,000 
C) $246,000 
D) $222,000 
A) $244,000 
B) $268,000 
C) $246,000 
D) $222,000

Question 11

An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the ending inventory valuation is

Accepted Answer

A) FIFO. 
B) moving average. 
C) base stock. 
D) weighted-average. 
A) FIFO. 
B) moving average. 
C) base stock. 
D) weighted-average.

Question 12

At the end of its accounting year, Getz Corporation's physical inventory count indicated that 543,345 units of inventory, costing $1.50 each were on hand.The company's perpetual inventory system reported a balance of $817,135. The year end adjusting entry is:

Accepted Answer

A) Debit inventory and credit "inventory over and short" $2,117.50 
B) Debit "inventory over and short" and credit inventory $2,117.50 
C) Debit inventory and credit "inventory over and short" $273,790 
D) Debit "inventory over and short" and credit inventory $273,790 
A) Debit inventory and credit "inventory over and short" $2,117.50 
B) Debit "inventory over and short" and credit inventory $2,117.50 
C) Debit inventory and credit "inventory over and short" $273,790 
D) Debit "inventory over and short" and credit inventory $273,790

Question 13

Chin Co.uses the retail inventory method to estimate its inventory for interim statement purposes.Data relating to the calculation of the inventory at July 31, 2010, are as follows:   Under the lower of average cost and market method, Eaton's estimated inventory at July 31, 2010 is

Accepted Answer

A) $170,000 
B) $136,000 
C) $133,000 
D) $119,000 
A) $170,000 
B) $136,000 
C) $133,000 
D) $119,000

Question 14

Biehl Co.recorded the following data pertaining to raw material X during January 2010:   The moving-average unit cost of X inventory at January 31, 2010 is

Accepted Answer

A) $4.70. 
B) $4.50. 
C) $4.43 
D) $4.35 
A) $4.70. 
B) $4.50. 
C) $4.43 
D) $4.35

Question 15

Goods in transit which are shipped f.o.b.shipping point should be

Accepted Answer

A) included in the inventory of the seller. 
B) included in the inventory of the buyer. 
C) included in the inventory of the shipping company. 
D) none of these. 
A) included in the inventory of the seller. 
B) included in the inventory of the buyer. 
C) included in the inventory of the shipping company. 
D) none of these.

Question 16

To produce an inventory valuation which approximates the lower of average cost and market using the conventional retail inventory method, the calculation of the ratio of cost to retail should

Accepted Answer

A) include mark-ups but not markdowns. 
B) include mark-ups and markdowns. 
C) ignore both mark-ups and markdowns. 
D) include markdowns but not mark-ups. 
A) include mark-ups but not markdowns. 
B) include mark-ups and markdowns. 
C) ignore both mark-ups and markdowns. 
D) include markdowns but not mark-ups.

Question 17

Which of the following is correct for the use of the average cost method with a perpetual system?

Accepted Answer

A) A weighted-average cost is calculated at year end. 
B) A new unit cost is calculated each time a sale is made. 
C) A new unit cost is calculated each time a purchase is made. 
D) All of these. 
A) A weighted-average cost is calculated at year end. 
B) A new unit cost is calculated each time a sale is made. 
C) A new unit cost is calculated each time a purchase is made. 
D) All of these.

Question 18

Goods in transit which are shipped f.o.b.destination should be

Accepted Answer

A) included in the inventory of the seller. 
B) included in the inventory of the buyer. 
C) included in the inventory of the shipping company. 
D) none of these. 
A) included in the inventory of the seller. 
B) included in the inventory of the buyer. 
C) included in the inventory of the shipping company. 
D) none of these.

Question 19

Which statement is not true about the gross profit method of inventory valuation?

Accepted Answer

A) It may be used to estimate inventories for interim statements. 
B) It may be used to estimate inventories for annual statements. 
C) It may be used by auditors. 
D) None of these. 
A) It may be used to estimate inventories for interim statements. 
B) It may be used to estimate inventories for annual statements. 
C) It may be used by auditors. 
D) None of these.

Question 20

The following information was derived from the 2010 accounting records of Beck Co.:

Accepted Answer

A) $539,000. 
B) $534,000. 
C) $500,000. 
D) $470,000. 
A) $539,000. 
B) $534,000. 
C) $500,000. 
D) $470,000.

A mark-up of 35% on cost is equivalent to what percentage of gross profit on selling price?

In 2010, Garrison Corporation reported net income of $70,000.A recount of the company's inventories revealed that 2010 ending inventory was overstated by $10,000.What is Garrison's corrected net income?

Wendling Company's net sales and gross profit were $1,341,000 and $471,000 respectively.Assuming the cost of goods available were $1,084,00, what was the cost of Wendling's ending inventory?

The use of a Purchase Discounts account implies that the recorded cost of a purchased inventory item is its

Which of the following does not correctly describe the concept of net realizable value (NRV)?

The 2010 financial statements of Hurley Company reported a beginning inventory of $130,000, an ending inventory of $140,000, and cost of goods sold of $650,000 for the year.Hurley's inventory turnover ratio for 2010 is

Which of the following should usually be considered when calculating the cost of ending inventory?

Peskari Company's cost of goods sold and ending inventory were $100,000 and $150,000 respectively.Assuming Peskari had neither purchases nor returns, what was the cost of its beginning inventory?

In 2010, Frobisher Corporation reported net income of $245,000.You have been made aware that the company's beginning inventory was overstated by $12,000 and ending inventory was understated by $11,000.What is Frobisher's corrected net income for 2010?

An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the ending inventory valuation is

At the end of its accounting year, Getz Corporation's physical inventory count indicated that 543,345 units of inventory, costing $1.50 each were on hand.The company's perpetual inventory system reported a balance of $817,135. The year end adjusting entry is:

Chin Co.uses the retail inventory method to estimate its inventory for interim statement purposes.Data relating to the calculation of the inventory at July 31, 2010, are as follows: Under the lower of average cost and market method, Eaton's estimated inventory at July 31, 2010 is

Biehl Co.recorded the following data pertaining to raw material X during January 2010: The moving-average unit cost of X inventory at January 31, 2010 is

Goods in transit which are shipped f.o.b.shipping point should be

To produce an inventory valuation which approximates the lower of average cost and market using the conventional retail inventory method, the calculation of the ratio of cost to retail should

Which of the following is correct for the use of the average cost method with a perpetual system?

Goods in transit which are shipped f.o.b.destination should be

Which statement is not true about the gross profit method of inventory valuation?

The following information was derived from the 2010 accounting records of Beck Co.:

The Canadian Financial Reporting Environment

Conceptual Framework Underlying Financial Reporting

The Accounting Information System

Reporting Financial Performance

Financial Position and Cash Flows

Revenue Recognition

Cash and Receivables

Investments

Property, Plant, and Equipment: Accounting Model Basics

Depreciation, Impairment, and Disposition

Intangible Assets and Goodwill

Filters

Exam 8: Inventory

A mark-up of 35% on cost is equivalent to what percentage of gross profit on selling price?

In 2010, Garrison Corporation reported net income of $70,000.A recount of the company's inventories revealed that 2010 ending inventory was overstated by $10,000.What is Garrison's corrected net income?

Wendling Company's net sales and gross profit were $1,341,000 and $471,000 respectively.Assuming the cost of goods available were $1,084,00, what was the cost of Wendling's ending inventory?

The use of a Purchase Discounts account implies that the recorded cost of a purchased inventory item is its

Which of the following does not correctly describe the concept of net realizable value (NRV)?

The 2010 financial statements of Hurley Company reported a beginning inventory of $130,000, an ending inventory of $140,000, and cost of goods sold of $650,000 for the year.Hurley's inventory turnover ratio for 2010 is

Which of the following should usually be considered when calculating the cost of ending inventory?

Peskari Company's cost of goods sold and ending inventory were $100,000 and $150,000 respectively.Assuming Peskari had neither purchases nor returns, what was the cost of its beginning inventory?

In 2010, Frobisher Corporation reported net income of $245,000.You have been made aware that the company's beginning inventory was overstated by $12,000 and ending inventory was understated by $11,000.What is Frobisher's corrected net income for 2010?

An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the ending inventory valuation is

At the end of its accounting year, Getz Corporation's physical inventory count indicated that 543,345 units of inventory, costing $1.50 each were on hand.The company's perpetual inventory system reported a balance of $817,135. The year end adjusting entry is:

Chin Co.uses the retail inventory method to estimate its inventory for interim statement purposes.Data relating to the calculation of the inventory at July 31, 2010, are as follows: Under the lower of average cost and market method, Eaton's estimated inventory at July 31, 2010 is

Biehl Co.recorded the following data pertaining to raw material X during January 2010: The moving-average unit cost of X inventory at January 31, 2010 is

Goods in transit which are shipped f.o.b.shipping point should be

To produce an inventory valuation which approximates the lower of average cost and market using the conventional retail inventory method, the calculation of the ratio of cost to retail should

Which of the following is correct for the use of the average cost method with a perpetual system?

Goods in transit which are shipped f.o.b.destination should be

Which statement is not true about the gross profit method of inventory valuation?

The following information was derived from the 2010 accounting records of Beck Co.:

The Canadian Financial Reporting Environment

Conceptual Framework Underlying Financial Reporting

The Accounting Information System

Reporting Financial Performance

Financial Position and Cash Flows

Revenue Recognition

Cash and Receivables

Investments

Property, Plant, and Equipment: Accounting Model Basics

Depreciation, Impairment, and Disposition

Intangible Assets and Goodwill

Filters