Question 1

Items should be reported as part of the company's "inventory" at year end, if they are

Accepted Answer

A) Purchased from a creditor, available for sale, and paid for the following year. 
B) Held in anticipation of an increase in market value. 
C) Determined to be part of cost of goods sold. 
D) Sold during the period. 
A) Purchased from a creditor, available for sale, and paid for the following year. 
B) Held in anticipation of an increase in market value. 
C) Determined to be part of cost of goods sold. 
D) Sold during the period.

Question 2

If a company overstates its ending inventory balance for 2015 by $10,000, and understates its ending inventory balance for 2014 by $5,000 what are the effects on its net income for 2015 and 2014?

Accepted Answer

The answer of If a company overstates its ending inventory...

Question 3

Adam Inc.uses a perpetual inventory system.   If Adam uses the FIFO method, how much is cost of goods sold for the month of January?

Accepted Answer

A) $204 
B) $208 
C) $212 
D) $560 
A) $204 
B) $208 
C) $212 
D) $560

Question 4

Quan uses a periodic inventory system.At the end of April, Quan had 20 units on hand.   If Quan, Inc.uses the weighted average cost inventory method, how much is cost of goods sold for April?

Accepted Answer

A) $230 
B) $232 
C) $240 
D) $250 
A) $230 
B) $232 
C) $240 
D) $250

Question 5

Blenham, Inc.sells merchandise on credit.If a customer pays its balance due within the discount period, what is the effect of the payment on Blenham's accounting equation?

Accepted Answer

A) Assets and stockholders' equity decrease. 
B) Assets and stockholders' equity increase. 
C) Assets decrease and liabilities increase. 
D) Stockholders' equity decreases and liabilities increase. 
A) Assets and stockholders' equity decrease. 
B) Assets and stockholders' equity increase. 
C) Assets decrease and liabilities increase. 
D) Stockholders' equity decreases and liabilities increase.

Question 6

Chen's Department Store
Chen's Department Store is a merchandising company that uses the periodic inventory system.Selected account balances are listed below:  
-Refer to the account information for Chen's Department Store.
Calculate Chen's net sales.

Accepted Answer

A) $162,000 
B) $167,000 
C) $170,000 
D) $175,000 
A) $162,000 
B) $167,000 
C) $170,000 
D) $175,000

Question 7

Park, Inc.purchased merchandise from Jay Zee Music Company on June 5, 2015.The goods were shipped the same day.The merchandise's selling price was $15,000.The credit terms were 1/10, n/30.The shipping terms were FOB shipping point.Park received the merchandise on June 10, 2015.Park paid the amount due on June 13, 2015.
Park uses a perpetual inventory system.When will the cost of merchandise sold be recorded as an expense?

Accepted Answer

A) The date the merchandise was purchased 
B) The date the merchandise is sold 
C) The end of the accounting period 
D) Cannot be determined without further information 
A) The date the merchandise was purchased 
B) The date the merchandise is sold 
C) The end of the accounting period 
D) Cannot be determined without further information

Question 8

When a weighted average cost assumption is applied with a perpetual system, it is sometimes called a
__________________.

Accepted Answer

The answer of When a weighted average cost assumption is...

Question 9

Adam Inc.uses a perpetual inventory system.   If Adam uses the LIFO method, how much is cost of goods sold for the month of January?

Accepted Answer

A) $204 
B) $208 
C) $212 
D) $560 
A) $204 
B) $208 
C) $212 
D) $560

Question 10

Like sales revenue, cost of goods sold represents an inflow of assets.

Accepted Answer

A) True 
 B)False

Question 11

When merchandise is sold FOB shipping point, the buyer is responsible for the shipping costs.

Accepted Answer

A) True 
 B)False

Question 12

Which one of the following statements regarding the application of the lower of cost or market method is true?

Accepted Answer

A) Generally, market value is greater than replacement cost. 
B) When the lower of cost or market method is used, inventories are valued at selling price. 
C) The lower of cost or market method is most commonly applied on a total inventory basis because it is a more conservative approach. 
D) The lower of cost or market method is an exception to the historical cost principle. 
A) Generally, market value is greater than replacement cost. 
B) When the lower of cost or market method is used, inventories are valued at selling price. 
C) The lower of cost or market method is most commonly applied on a total inventory basis because it is a more conservative approach. 
D) The lower of cost or market method is an exception to the historical cost principle.

Question 13

Cost of goods available for sale is equal to beginning inventory less cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 14

The weighted average cost is calculated by adding up the units' costs from each purchase and then dividing by the number of purchases.

Accepted Answer

A) True 
 B)False

Question 15

The following is from Goldman Inc.'s 2015 income statement.   How much will Goldman report as cost of goods purchased in its 2015 income statement?

Accepted Answer

A) $184,600 
B) $193,000 
C) $201,400 
D) $211,100 
A) $184,600 
B) $193,000 
C) $201,400 
D) $211,100

Question 16

If cost of goods sold does not equal the cost of merchandise purchased during the period, an adjustment must be made to correct the error.

Accepted Answer

A) True 
 B)False

Question 17

The inventory method that assigns the most recent costs to ending inventory is LIFO.

Accepted Answer

A) True 
 B)False

Question 18

Park, Inc.purchased merchandise from Jay Zee Music Company on June 5, 2015.The goods were shipped the same day.The merchandise's selling price was $15,000.The credit terms were 1/10, n/30.The shipping terms were FOB shipping point.Park received the merchandise on June 10, 2015.Park paid the amount due on June 13, 2015.
When did title to the merchandise transfer from Jay Zee Music Company to Park?

Accepted Answer

A) June 5, 2015 
B) June 10, 2015 
C) June 13, 2015 
D) Cannot be determined from the information provided 
A) June 5, 2015 
B) June 10, 2015 
C) June 13, 2015 
D) Cannot be determined from the information provided

Question 19

When an inventory system updates the Inventory account at the time of each sale, this is known as:

Accepted Answer

A) a periodic system 
B) a contra-purchase system 
C) a perpetual system 
D) an accrual system 
A) a periodic system 
B) a contra-purchase system 
C) a perpetual system 
D) an accrual system

Question 20

Herndon Corp.purchased merchandise on account from Likert Corp.on November 18, 2014.On November 21, 2014, Herndon returned damaged merchandise to Likert and was granted an adjustment on its account.Herndon uses the periodic inventory system.What effect does the merchandise return have on Herndon's accounting equation?

Accepted Answer

A) Assets and stockholders' equity decrease. 
B) Assets and liabilities decrease. 
C) Liabilities decrease and stockholders' equity increases. 
D) Liabilities and stockholders' equity decrease. 
A) Assets and stockholders' equity decrease. 
B) Assets and liabilities decrease. 
C) Liabilities decrease and stockholders' equity increases. 
D) Liabilities and stockholders' equity decrease.

Items should be reported as part of the company's "inventory" at year end, if they are

If a company overstates its ending inventory balance for 2015 by $10,000, and understates its ending inventory balance for 2014 by $5,000 what are the effects on its net income for 2015 and 2014?

Adam Inc.uses a perpetual inventory system. If Adam uses the FIFO method, how much is cost of goods sold for the month of January?

Quan uses a periodic inventory system.At the end of April, Quan had 20 units on hand. If Quan, Inc.uses the weighted average cost inventory method, how much is cost of goods sold for April?

Blenham, Inc.sells merchandise on credit.If a customer pays its balance due within the discount period, what is the effect of the payment on Blenham's accounting equation?

Chen's Department Store Chen's Department Store is a merchandising company that uses the periodic inventory system.Selected account balances are listed below: -Refer to the account information for Chen's Department Store. Calculate Chen's net sales.

When a weighted average cost assumption is applied with a perpetual system, it is sometimes called a __________________.

Adam Inc.uses a perpetual inventory system. If Adam uses the LIFO method, how much is cost of goods sold for the month of January?

Like sales revenue, cost of goods sold represents an inflow of assets.

When merchandise is sold FOB shipping point, the buyer is responsible for the shipping costs.

Which one of the following statements regarding the application of the lower of cost or market method is true?

Cost of goods available for sale is equal to beginning inventory less cost of goods sold.

The weighted average cost is calculated by adding up the units' costs from each purchase and then dividing by the number of purchases.

The following is from Goldman Inc.'s 2015 income statement. How much will Goldman report as cost of goods purchased in its 2015 income statement?

If cost of goods sold does not equal the cost of merchandise purchased during the period, an adjustment must be made to correct the error.

The inventory method that assigns the most recent costs to ending inventory is LIFO.

When an inventory system updates the Inventory account at the time of each sale, this is known as:

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

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Exam 5: Inventories and Cost of Goods Sold

Items should be reported as part of the company's "inventory" at year end, if they are

If a company overstates its ending inventory balance for 2015 by $10,000, and understates its ending inventory balance for 2014 by $5,000 what are the effects on its net income for 2015 and 2014?

Adam Inc.uses a perpetual inventory system. If Adam uses the FIFO method, how much is cost of goods sold for the month of January?

Quan uses a periodic inventory system.At the end of April, Quan had 20 units on hand. If Quan, Inc.uses the weighted average cost inventory method, how much is cost of goods sold for April?

Blenham, Inc.sells merchandise on credit.If a customer pays its balance due within the discount period, what is the effect of the payment on Blenham's accounting equation?

Chen's Department Store Chen's Department Store is a merchandising company that uses the periodic inventory system.Selected account balances are listed below: -Refer to the account information for Chen's Department Store. Calculate Chen's net sales.

When a weighted average cost assumption is applied with a perpetual system, it is sometimes called a __________________.

Adam Inc.uses a perpetual inventory system. If Adam uses the LIFO method, how much is cost of goods sold for the month of January?

Like sales revenue, cost of goods sold represents an inflow of assets.

When merchandise is sold FOB shipping point, the buyer is responsible for the shipping costs.

Which one of the following statements regarding the application of the lower of cost or market method is true?

Cost of goods available for sale is equal to beginning inventory less cost of goods sold.

The weighted average cost is calculated by adding up the units' costs from each purchase and then dividing by the number of purchases.

The following is from Goldman Inc.'s 2015 income statement. How much will Goldman report as cost of goods purchased in its 2015 income statement?

If cost of goods sold does not equal the cost of merchandise purchased during the period, an adjustment must be made to correct the error.

The inventory method that assigns the most recent costs to ending inventory is LIFO.

When an inventory system updates the Inventory account at the time of each sale, this is known as:

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters