Question 1

Which of the following terms best describes "Cost of goods available for sale"?

Accepted Answer

A) Cost of goods available for sale is an expense account. 
B) Cost of goods available for sale is added to beginning inventory to determine cost of purchases during the period. 
C) Cost of goods available for sale is subtracted from net sales to arrive at the gross margin 
D) Cost of goods available for sale is allocated into cost of goods on hand and cost of goods sold at the end of the fiscal year 
A) Cost of goods available for sale is an expense account. 
B) Cost of goods available for sale is added to beginning inventory to determine cost of purchases during the period. 
C) Cost of goods available for sale is subtracted from net sales to arrive at the gross margin 
D) Cost of goods available for sale is allocated into cost of goods on hand and cost of goods sold at the end of the fiscal year

Question 2

Accountants should be aware that LIFO liquidations can potentially result in which of the following?

Accepted Answer

A) If older less costly layers are liquidated, a correspondingly lower cost of goods sold will result. 
B) If older less costly layers are liquidated, a correspondingly higher gross profit will result. 
C) If older less costly layers are liquidated, the company may be faced with higher taxes for those deferred in previous periods. 
D) All of these could result. 
A) If older less costly layers are liquidated, a correspondingly lower cost of goods sold will result. 
B) If older less costly layers are liquidated, a correspondingly higher gross profit will result. 
C) If older less costly layers are liquidated, the company may be faced with higher taxes for those deferred in previous periods. 
D) All of these could result.

Question 3

Based upon the following data, determine the cost of merchandise sold for April.

Accepted Answer

The answer of Based upon the following data, determine the...

Question 4

Which one of the following statements regarding changing inventory methods is true?

Accepted Answer

A) A change in inventory methods can be justified if the change is made to better match profits with revenue. 
B) Changing inventory methods affects consistency. 
C) One place that the reader of an annual report would be able to identify that a company changed inventory methods is the statement of stockholders' equity. 
D) Tax advantages are valid justification for changing inventory methods. 
A) A change in inventory methods can be justified if the change is made to better match profits with revenue. 
B) Changing inventory methods affects consistency. 
C) One place that the reader of an annual report would be able to identify that a company changed inventory methods is the statement of stockholders' equity. 
D) Tax advantages are valid justification for changing inventory methods.

Question 5

Gross margin as a percentage of sales is a common analytical tool for service companies.

Accepted Answer

A) True 
 B)False

Question 6

Ending inventory is equal to the cost of items on hand plus

Accepted Answer

A) merchandise in transit sold to customers FOB shipping point. 
B) merchandise in transit sold to customers FOB destination. 
C) the cost of all inventory purchased during the period. 
D) merchandise purchased in transit with terms FOB destination. 
A) merchandise in transit sold to customers FOB shipping point. 
B) merchandise in transit sold to customers FOB destination. 
C) the cost of all inventory purchased during the period. 
D) merchandise purchased in transit with terms FOB destination.

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.
If Park uses the periodic inventory system, the effect of recording the payment on June 13, 2015, will include

Accepted Answer

A) a decrease to Purchases for $15,000. 
B) an increase to Inventory for $14,850. 
C) a decrease to Cash for $15,000. 
D) a decrease to Accounts Payable for $15,000. 
A) a decrease to Purchases for $15,000. 
B) an increase to Inventory for $14,850. 
C) a decrease to Cash for $15,000. 
D) a decrease to Accounts Payable for $15,000.

Question 8

At the year end inventory count, if goods in transit are shipped FOB shipping point, they should be included in the inventory count of

Accepted Answer

A) The seller 
B) The buyer 
C) Both the seller and the buyer 
D) Neither the seller no the buyer 
A) The seller 
B) The buyer 
C) Both the seller and the buyer 
D) Neither the seller no the buyer

Question 9

What effects on a retail store's accounting equation occur when merchandise returned by customers is recorded?

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 10

Klein's Shoe Company uses a perpetual inventory system.The beginning balance in its inventory account is $1,500 and the ending balance is $1,000.Cost of goods sold is $6,500.What was the amount of inventory purchased during the year?

Accepted Answer

A) $ 500 
B) $6,000 
C) $7,000 
D) $7,500 
A) $ 500 
B) $6,000 
C) $7,000 
D) $7,500

Question 11

Under FIFO, the units in the ending inventory represent the oldest purchases).

Accepted Answer

A) True 
 B)False

Question 12

Which inventory costing method results in the highest inventory balance during a period of rising prices?

Accepted Answer

A) Weighted average cost 
B) FIFO 
C) LIFO 
D) Both FIFO and LIFO result in the same inventory balance 
A) Weighted average cost 
B) FIFO 
C) LIFO 
D) Both FIFO and LIFO result in the same inventory balance

Question 13

Givens Corp.
Givens Corp.is a merchandising company that uses the periodic inventory system.Selected account balances are listed below:  
-Refer to information for Givens Corp.
Calculate the cost of goods sold for Givens Corp.

Accepted Answer

A) $275,000 
B) $259,000 
C) $241,000 
D) $211,000 
A) $275,000 
B) $259,000 
C) $241,000 
D) $211,000

Question 14

The gross profit ratio is calculated as gross profit divided by net income.

Accepted Answer

A) True 
 B)False

Question 15

During the current period, Audix Corp.sold products to customers for a total of $76,000.Due to defective products, customers were given $2,800 in refunds for products that were returned and another $3,500 in reductions to their account balances.Discounts in the amount of $5,500 were given for early payment of account balances.
REQUIRED:
Prepare the Net Sales section of Audix's income statement.

Accepted Answer

The answer of During the current period, Audix Corp.sold products...

Question 16

If ending inventory is overstated, then net income is overstated as well.

Accepted Answer

A) True 
 B)False

Question 17

If a change in accounts payable was added back to net income on the statement of cash flows prepared using the indirect method, then the amount owed to suppliers during the period had decreased.

Accepted Answer

A) True 
 B)False

Question 18

Sales Returns and Allowances is a contra-asset account.

Accepted Answer

A) True 
 B)False

Question 19

Summer, Inc.has been in business for 20 years.During that time the company has consistently used the LIFO inventory costing method.Because of inflation, prices for merchandise have increased consistently over the 20 years.The company has maintained the same inventory quantities over the 20-year period.Which one of the following statements is true?

Accepted Answer

A) Summer, Inc.'s total net income for the past 20 years is greater than it would have reported using another inventory method. 
B) Summer, Inc.will have paid more income taxes over the past 20 years than it would have if it had used the FIFO method. 
C) Summer will have to continue using the LIFO method indefinitely because of generally accepted accounting principles and federal income tax rules. 
D) The ending inventory figure reported on the balance sheet may be significantly lower than its current value. 
A) Summer, Inc.'s total net income for the past 20 years is greater than it would have reported using another inventory method. 
B) Summer, Inc.will have paid more income taxes over the past 20 years than it would have if it had used the FIFO method. 
C) Summer will have to continue using the LIFO method indefinitely because of generally accepted accounting principles and federal income tax rules. 
D) The ending inventory figure reported on the balance sheet may be significantly lower than its current value.

Question 20

Floors, Inc.offers terms of 2/10, n/30 to credit customers.Tile Magic Corp.purchased 100 tile cutters with a list price of $20 each on August 5, 2015, on account.
Tile Magic Corp.paid the invoice on August 31, 2015.How much sales discount will Floors recognize?

Accepted Answer

A) $ -0- 
B) $ 40 
C) $ 200 
D) $ 236 
A) $ -0- 
B) $ 40 
C) $ 200 
D) $ 236

Which of the following terms best describes "Cost of goods available for sale"?

Accountants should be aware that LIFO liquidations can potentially result in which of the following?

Based upon the following data, determine the cost of merchandise sold for April.

Which one of the following statements regarding changing inventory methods is true?

Gross margin as a percentage of sales is a common analytical tool for service companies.

Ending inventory is equal to the cost of items on hand plus

At the year end inventory count, if goods in transit are shipped FOB shipping point, they should be included in the inventory count of

What effects on a retail store's accounting equation occur when merchandise returned by customers is recorded?

Klein's Shoe Company uses a perpetual inventory system.The beginning balance in its inventory account is $1,500 and the ending balance is $1,000.Cost of goods sold is $6,500.What was the amount of inventory purchased during the year?

Under FIFO, the units in the ending inventory represent the oldest purchases).

Which inventory costing method results in the highest inventory balance during a period of rising prices?

Givens Corp. Givens Corp.is a merchandising company that uses the periodic inventory system.Selected account balances are listed below: -Refer to information for Givens Corp. Calculate the cost of goods sold for Givens Corp.

The gross profit ratio is calculated as gross profit divided by net income.

If ending inventory is overstated, then net income is overstated as well.

If a change in accounts payable was added back to net income on the statement of cash flows prepared using the indirect method, then the amount owed to suppliers during the period had decreased.

Sales Returns and Allowances is a contra-asset account.

Floors, Inc.offers terms of 2/10, n/30 to credit customers.Tile Magic Corp.purchased 100 tile cutters with a list price of $20 each on August 5, 2015, on account. Tile Magic Corp.paid the invoice on August 31, 2015.How much sales discount will Floors recognize?

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

Which of the following terms best describes "Cost of goods available for sale"?

Accountants should be aware that LIFO liquidations can potentially result in which of the following?

Based upon the following data, determine the cost of merchandise sold for April.

Which one of the following statements regarding changing inventory methods is true?

Gross margin as a percentage of sales is a common analytical tool for service companies.

Ending inventory is equal to the cost of items on hand plus

At the year end inventory count, if goods in transit are shipped FOB shipping point, they should be included in the inventory count of

What effects on a retail store's accounting equation occur when merchandise returned by customers is recorded?

Klein's Shoe Company uses a perpetual inventory system.The beginning balance in its inventory account is $1,500 and the ending balance is $1,000.Cost of goods sold is $6,500.What was the amount of inventory purchased during the year?

Under FIFO, the units in the ending inventory represent the oldest purchases).

Which inventory costing method results in the highest inventory balance during a period of rising prices?

Givens Corp. Givens Corp.is a merchandising company that uses the periodic inventory system.Selected account balances are listed below: -Refer to information for Givens Corp. Calculate the cost of goods sold for Givens Corp.

The gross profit ratio is calculated as gross profit divided by net income.

If ending inventory is overstated, then net income is overstated as well.

If a change in accounts payable was added back to net income on the statement of cash flows prepared using the indirect method, then the amount owed to suppliers during the period had decreased.

Sales Returns and Allowances is a contra-asset account.

Floors, Inc.offers terms of 2/10, n/30 to credit customers.Tile Magic Corp.purchased 100 tile cutters with a list price of $20 each on August 5, 2015, on account. Tile Magic Corp.paid the invoice on August 31, 2015.How much sales discount will Floors recognize?

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