Question 1

Shipping terms of mean that the buyer pays shipping costs.

Accepted Answer

The answer of Shipping terms of mean that the buyer...

Question 2

If a company overstates its ending inventory for the current year, what are the effects on cost of goods sold and net income for the current year?

Accepted Answer

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

Question 3

The amount recognized on the Income Statement as the cost of inventory will be recognized as an)
_________________________.

Accepted Answer

cost of go

Question 4

If a customer returns merchandise which has already been paid for, the retailer may give either a cash refund or a credit on account.

Accepted Answer

A) True 
 B)False

Question 5

Sales Discounts is classified as what type of account?

Accepted Answer

A) an expense 
B) a revenue 
C) a contra-asset 
D) a contra-revenue 
A) an expense 
B) a revenue 
C) a contra-asset 
D) a contra-revenue

Question 6

A LIFO reserve represents the amount by which cost of goods sold on a FIFO basis exceeds the cost of goods sold on a LIFO basis for the current year.

Accepted Answer

A) True 
 B)False

Question 7

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 cost of goods purchased

Accepted Answer

A) $ 84,000 
B) $ 90,000 
C) $ 103,000 
D) $ 117,000 
A) $ 84,000 
B) $ 90,000 
C) $ 103,000 
D) $ 117,000

Question 8

Cost of goods sold is equal to

Accepted Answer

A) the total amount of merchandise purchased during the year. 
B) the cost of merchandise purchased plus transportation-in costs less ending inventory. 
C) the cost of merchandise purchased plus transportation-in costs plus beginning inventory minus purchase returns and allowances and purchase discounts minus ending inventory. 
D) the cost of merchandise purchased plus transportation-in costs plus beginning inventory minus purchase returns and allowances and purchase discounts. 
A) the total amount of merchandise purchased during the year. 
B) the cost of merchandise purchased plus transportation-in costs less ending inventory. 
C) the cost of merchandise purchased plus transportation-in costs plus beginning inventory minus purchase returns and allowances and purchase discounts minus ending inventory. 
D) the cost of merchandise purchased plus transportation-in costs plus beginning inventory minus purchase returns and allowances and purchase discounts.

Question 9

Both U.S.GAAP and international financial reporting standards IFRS) require the use of the lower-of-cost-or-market rule to value inventories.

Accepted Answer

A) True 
 B)False

Question 10

Selected data for Sorenta, Inc.and New World Corp., two companies in the same industry, are presented below:   Based on this data, which statement below is true?

Accepted Answer

A) Sorenta, Inc.has a lower gross profit ratio than New World Corp. 
B) New World Corp has a higher net income than Sorenta, Inc. 
C) New World Corp sells its inventory faster than Sorenta, Inc. 
D) Sorenta, Inc.has lower storage costs and a lower investment in inventory than New World Corp. 
A) Sorenta, Inc.has a lower gross profit ratio than New World Corp. 
B) New World Corp has a higher net income than Sorenta, Inc. 
C) New World Corp sells its inventory faster than Sorenta, Inc. 
D) Sorenta, Inc.has lower storage costs and a lower investment in inventory than New World Corp.

Question 11

A departure from the cost basis of accounting may be necessary when the _________________________ of the inventory is less than its cost to the company.

Accepted Answer

The answer of A departure from the cost basis of...

Question 12

Texas Inc.sold merchandise to Fagin Corp.on December 28, 2014, with shipping terms of FOB destination.Fagin Corp.received the merchandise on January 3, 2015.Which one of the following statements is true?

Accepted Answer

A) Texas should record sales revenue on December 28, 2014. 
B) Fagin Corp.should pay the transportation costs. 
C) Fagin Corp.should include the merchandise in its inventory at December 31, 2014. 
D) Fagin Corp.should record a liability for the purchase on January 3, 2015. 
A) Texas should record sales revenue on December 28, 2014. 
B) Fagin Corp.should pay the transportation costs. 
C) Fagin Corp.should include the merchandise in its inventory at December 31, 2014. 
D) Fagin Corp.should record a liability for the purchase on January 3, 2015.

Question 13

Specific identification relies on matching unit costs with the actual units sold.

Accepted Answer

A) True 
 B)False

Question 14

Under the inventory system, the inventory account is updated after each purchase or sale.

Accepted Answer

The answer of Under the inventory system, the inventory account...

Question 15

Readers.com uses a perpetual inventory system.   If Readers.com uses the moving average method, how much is cost of goods sold for the units sold on February 15?

Accepted Answer

A) $245 
B) $255 
C) $260 
D) $270 
A) $245 
B) $255 
C) $260 
D) $270

Question 16

Sales returns and allowances is a contra account.

Accepted Answer

The answer of Sales returns and allowances is a contra...

Question 17

Wendt, Inc.counted its ending inventory as $178,000 at year-end, January 31, 2014.Upon review of the records, it was noted that the following items were in transit during the count:
A. $2,000 of goods shipped by a supplier to Wendt sent FOB destination on January 31 were received February 5, and were not counted by Wendt.
B. $5,000 of goods shipped by a supplier to Wendt sent FOB shipping point on January 30 were received February 2, and were not counted by Wendt.
C. $6,000 of goods shipped by Wendt to a customer FOB shipping point on January 31 were received by the customer February 3, and were counted by Wendt.
Determine the correct inventory balance at January 31.

Accepted Answer

A) $178,000 
B) $177,000 
C) $174,000 
D) $172,000 
A) $178,000 
B) $177,000 
C) $174,000 
D) $172,000

Question 18

Using the following information, what is the amount of cost of goods sold?

Accepted Answer

A) $26,900 
B) $20,530 
C) $28,130 
D) $30,210 
A) $26,900 
B) $20,530 
C) $28,130 
D) $30,210

Question 19

A major advantage of the weighted average method of inventory costing is that

Accepted Answer

A) Cost flows correspond with the physical flow of merchandise. 
B) It is relatively easy to apply. 
C) It matches current costs with revenues. 
D) Recent costs are assigned to the ending inventory balance. 
A) Cost flows correspond with the physical flow of merchandise. 
B) It is relatively easy to apply. 
C) It matches current costs with revenues. 
D) Recent costs are assigned to the ending inventory balance.

Question 20

Which one of the following is correct?

Accepted Answer

A) Inventory losses can be identified and controlled better under the perpetual system. 
B) Inventory can only be sold at the end of an accounting period under the periodic system. 
C) There is no difference in cost to implement a perpetual as compared to a periodic system. 
D) The perpetual system eliminates the need for an annual inventory count. 
A) Inventory losses can be identified and controlled better under the perpetual system. 
B) Inventory can only be sold at the end of an accounting period under the periodic system. 
C) There is no difference in cost to implement a perpetual as compared to a periodic system. 
D) The perpetual system eliminates the need for an annual inventory count.

Shipping terms of mean that the buyer pays shipping costs.

If a company overstates its ending inventory for the current year, what are the effects on cost of goods sold and net income for the current year?

The amount recognized on the Income Statement as the cost of inventory will be recognized as an) _________________________.

If a customer returns merchandise which has already been paid for, the retailer may give either a cash refund or a credit on account.

Sales Discounts is classified as what type of account?

A LIFO reserve represents the amount by which cost of goods sold on a FIFO basis exceeds the cost of goods sold on a LIFO basis for the current year.

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 cost of goods purchased

Cost of goods sold is equal to

Both U.S.GAAP and international financial reporting standards IFRS) require the use of the lower-of-cost-or-market rule to value inventories.

Selected data for Sorenta, Inc.and New World Corp., two companies in the same industry, are presented below: Based on this data, which statement below is true?

A departure from the cost basis of accounting may be necessary when the _________________________ of the inventory is less than its cost to the company.

Texas Inc.sold merchandise to Fagin Corp.on December 28, 2014, with shipping terms of FOB destination.Fagin Corp.received the merchandise on January 3, 2015.Which one of the following statements is true?

Specific identification relies on matching unit costs with the actual units sold.

Under the inventory system, the inventory account is updated after each purchase or sale.

Readers.com uses a perpetual inventory system. If Readers.com uses the moving average method, how much is cost of goods sold for the units sold on February 15?

Sales returns and allowances is a contra account.

Using the following information, what is the amount of cost of goods sold?

A major advantage of the weighted average method of inventory costing is that

Which one of the following is correct?

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

Exam 5: Inventories and Cost of Goods Sold

Shipping terms of mean that the buyer pays shipping costs.

If a company overstates its ending inventory for the current year, what are the effects on cost of goods sold and net income for the current year?

The amount recognized on the Income Statement as the cost of inventory will be recognized as an) _________________________.

If a customer returns merchandise which has already been paid for, the retailer may give either a cash refund or a credit on account.

Sales Discounts is classified as what type of account?

A LIFO reserve represents the amount by which cost of goods sold on a FIFO basis exceeds the cost of goods sold on a LIFO basis for the current year.

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 cost of goods purchased

Cost of goods sold is equal to

Both U.S.GAAP and international financial reporting standards IFRS) require the use of the lower-of-cost-or-market rule to value inventories.

Selected data for Sorenta, Inc.and New World Corp., two companies in the same industry, are presented below: Based on this data, which statement below is true?

A departure from the cost basis of accounting may be necessary when the _________________________ of the inventory is less than its cost to the company.

Texas Inc.sold merchandise to Fagin Corp.on December 28, 2014, with shipping terms of FOB destination.Fagin Corp.received the merchandise on January 3, 2015.Which one of the following statements is true?

Specific identification relies on matching unit costs with the actual units sold.

Under the inventory system, the inventory account is updated after each purchase or sale.

Readers.com uses a perpetual inventory system. If Readers.com uses the moving average method, how much is cost of goods sold for the units sold on February 15?

Sales returns and allowances is a contra account.

Using the following information, what is the amount of cost of goods sold?

A major advantage of the weighted average method of inventory costing is that

Which one of the following is correct?

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