Exam 5: Inventories and Cost of Goods Sold

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. If Tile Magic Corp.pays the amount of the invoice for its purchase on August 14, 2015, how much cash will Floors receive from Tile Magic Corp.?

Under the method, the amount of cash paid to suppliers of inventory is shown as a deduction in the operating activities category of the cash flow statement.

Sales revenue is an inflow of assets.

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

All of the following statements regarding the gross profit ratio are true except:

A is an amount deducted by customers for payment within the discount period.

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

All of the following statements are true except:

A LIFO liquidation occurs when a company sells fewer units than it buys during the period.

The gross profit ratio is computed by dividing net sales by gross profit.

When the market value of inventory items has declined below its cost, which method would be the most appropriate in complying with GAAP?

A counterbalancing inventory error is one where the error on the balance sheet is offset by the same amount of error on the income statement.

Which one of the following types of inventory accounts would be used by a wholesaler or retailer?

When inventories are written down due to the application of the lower of cost or market LCM) rule, the account that is usually increased is

Which method of inventory costing is not acceptable for financial accounting purposes?

Cost of goods sold is equal to beginning inventory plus the net cost of purchases minus _________________________.

The three forms or states in the development of inventory for a manufacturer are direct materials, direct labor, and finished goods.

Which method assigns the cost of the most recent items purchased to ending inventory?

Many companies assign only the net invoice price for merchandise to inventory and cost of goods sold.All other costs, including transportation and other costs of bringing merchandise to the place of business, are charged to expense of the period in which they are incurred.Which accounting principle or concept is applied in this example?

When would LIFO liquidation occur?