Question 1

Moving average is the name given to the use of an average cost method used with a periodic inventory system.

Accepted Answer

A) True 
 B)False

Question 2

Asago Co.sold merchandise to Health Co.on account, $18,000, terms 2/15, net 45.The cost of the merchandise sold is $15,500.Asago Co.issued a credit memo for $1,750 for merchandise returned that originally cost $1,400.The Health Co.paid the invoice within the discount period.What is amount of net sales from the above transactions?

Accepted Answer

A) $16,250 
B) $14,100 
C) $15,925 
D) $13,818 
A) $16,250 
B) $14,100 
C) $15,925 
D) $13,818

Question 3

The ending inventory balance represents

Accepted Answer

A) Expired costs and is reported on the balance sheet as an asset. 
B) The cost of goods sold during the current period and is reported on the balance sheet as an asset. 
C) Expired costs and is reported on the income statement as an expense 
D) Unexpired costs and is reported on the balance sheet as an asset. 
A) Expired costs and is reported on the balance sheet as an asset. 
B) The cost of goods sold during the current period and is reported on the balance sheet as an asset. 
C) Expired costs and is reported on the income statement as an expense 
D) Unexpired costs and is reported on the balance sheet as an asset.

Question 4

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 the periodic inventory system.What effect does recording the purchase of merchandise on June 5, 2015 have on Park's accounting equation?

Accepted Answer

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

Question 5

For which type of inventory would a company most likely use the specific identification method?

Accepted Answer

A) Barbie dolls 
B) Cartons of milk 
C) Custom designed diamond rings 
D) Gasoline in storage tanks at a gasoline station 
A) Barbie dolls 
B) Cartons of milk 
C) Custom designed diamond rings 
D) Gasoline in storage tanks at a gasoline station

Question 6

In order to determine inventory for its balance sheet, it is best for a company to count the inventory at the end of its accounting period for

Accepted Answer

A) The periodic inventory system 
B) The perpetual inventory system 
C) Both the periodic and perpetual inventory systems 
D) Neither the periodic nor perpetual inventory systems 
A) The periodic inventory system 
B) The perpetual inventory system 
C) Both the periodic and perpetual inventory systems 
D) Neither the periodic nor perpetual inventory systems

Question 7

The method results in the best approximation of replacement cost of goods sold on the income statement during periods of rising prices.

Accepted Answer

The answer of The method results in the best approximation...

Question 8

Hawk Store counted some of its inventory twice.As a result, its operating expenses will be

Accepted Answer

A) Correct only if Hawk Store calculates it cost of goods sold correctly 
B) Correct since operating expenses are not affected by inventory costs 
C) Overstated 
D) Understated 
A) Correct only if Hawk Store calculates it cost of goods sold correctly 
B) Correct since operating expenses are not affected by inventory costs 
C) Overstated 
D) Understated

Question 9

In order to evaluate a company's gross profit ratio,

Accepted Answer

A) the ratio should be compared with forecasted financial statements. 
B) the ratio should be compared with those of prior years. 
C) the ratio should be compared with other companies in the same industry. 
D) the ratio should be compared with those of both prior years and competitors. 
A) the ratio should be compared with forecasted financial statements. 
B) the ratio should be compared with those of prior years. 
C) the ratio should be compared with other companies in the same industry. 
D) the ratio should be compared with those of both prior years and competitors.

Question 10

The recognition of cost of goods sold expense in the same period that sales revenue is recognized from the sale of merchandise is a good example of the

Accepted Answer

A) matching principle 
B) full disclosure principle 
C) revenue realization principle 
D) historical cost principle 
A) matching principle 
B) full disclosure principle 
C) revenue realization principle 
D) historical cost principle

Question 11

Baker Corp.sold merchandise to a customer on credit.The invoice amount was $1,000; the invoice date was June 10; credit terms were 1/10, n/30.Which one of the following statements is true?

Accepted Answer

A) The customer can take a $10 discount if the invoice is paid on June 30. 
B) The customer should pay $1,000 if the invoice is paid on July 9. 
C) The customer must pay a $10 penalty if payment is made after July 9. 
D) The customer must pay $1,010 if payment is made after June 20. 
A) The customer can take a $10 discount if the invoice is paid on June 30. 
B) The customer should pay $1,000 if the invoice is paid on July 9. 
C) The customer must pay a $10 penalty if payment is made after July 9. 
D) The customer must pay $1,010 if payment is made after June 20.

Question 12

Under the method, an increase in inventory is shown as an adjustment to net income in the operating activities category of the cash flow statement.

Accepted Answer

The answer of Under the method, an increase in inventory...

Question 13

Which of the following statements is true when using the indirect method of preparing the operating activities section of the statement of cash flows?

Accepted Answer

A) Inventory decreases are subtracted from net income. 
B) Inventory increases are subtracted from net income. 
C) Inventory increases are added to net income. 
D) None of the above. 
A) Inventory decreases are subtracted from net income. 
B) Inventory increases are subtracted from net income. 
C) Inventory increases are added to net income. 
D) None of the above.

Question 14

Eversoll Inc.uses the periodic inventory system.   If Eversoll uses the weighted average cost inventory method, the amount assigned to the June 30th inventory would be

Accepted Answer

A) $1,359.90 
B) $1,486.50 
C) $1,549.00 
D) $1,591.50 
A) $1,359.90 
B) $1,486.50 
C) $1,549.00 
D) $1,591.50

Question 15

FIFO results in the least amount of income before taxes, assuming a period of rising prices.

Accepted Answer

A) True 
 B)False

Question 16

The method most nearly approximates replacement cost of inventory on the balance sheet.

Accepted Answer

The answer of The method most nearly approximates replacement cost...

Question 17

The inventory of an) consists of three distinct types of costs: direct materials, direct labor, and manufacturing overhead.

Accepted Answer

The answer of The inventory of an) consists of three...

Question 18

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

Accepted Answer

A) $289,000 
B) $141,000 
C) $131,000 
D) $116,000 
A) $289,000 
B) $141,000 
C) $131,000 
D) $116,000

Question 19

Changing inventory methods to take advantage of the tax breaks offered by LIFO is not a valid reason for a change in methods.

Accepted Answer

A) True 
 B)False

Question 20

If a company understates its ending inventory balance for 2015 by $15,500, what are the effects on its net income for 2015 and 2014?

Accepted Answer

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

Moving average is the name given to the use of an average cost method used with a periodic inventory system.

The ending inventory balance represents

For which type of inventory would a company most likely use the specific identification method?

In order to determine inventory for its balance sheet, it is best for a company to count the inventory at the end of its accounting period for

The method results in the best approximation of replacement cost of goods sold on the income statement during periods of rising prices.

Hawk Store counted some of its inventory twice.As a result, its operating expenses will be

In order to evaluate a company's gross profit ratio,

The recognition of cost of goods sold expense in the same period that sales revenue is recognized from the sale of merchandise is a good example of the

Baker Corp.sold merchandise to a customer on credit.The invoice amount was $1,000; the invoice date was June 10; credit terms were 1/10, n/30.Which one of the following statements is true?

Under the method, an increase in inventory is shown as an adjustment to net income in the operating activities category of the cash flow statement.

Which of the following statements is true when using the indirect method of preparing the operating activities section of the statement of cash flows?

Eversoll Inc.uses the periodic inventory system. If Eversoll uses the weighted average cost inventory method, the amount assigned to the June 30th inventory would be

FIFO results in the least amount of income before taxes, assuming a period of rising prices.

The method most nearly approximates replacement cost of inventory on the balance sheet.

The inventory of an) consists of three distinct types of costs: direct materials, direct labor, and manufacturing overhead.

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

Changing inventory methods to take advantage of the tax breaks offered by LIFO is not a valid reason for a change in methods.

If a company understates its ending inventory balance for 2015 by $15,500, what are the effects on its net income for 2015 and 2014?

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

Moving average is the name given to the use of an average cost method used with a periodic inventory system.

The ending inventory balance represents

For which type of inventory would a company most likely use the specific identification method?

In order to determine inventory for its balance sheet, it is best for a company to count the inventory at the end of its accounting period for

The method results in the best approximation of replacement cost of goods sold on the income statement during periods of rising prices.

Hawk Store counted some of its inventory twice.As a result, its operating expenses will be

In order to evaluate a company's gross profit ratio,

The recognition of cost of goods sold expense in the same period that sales revenue is recognized from the sale of merchandise is a good example of the

Baker Corp.sold merchandise to a customer on credit.The invoice amount was $1,000; the invoice date was June 10; credit terms were 1/10, n/30.Which one of the following statements is true?

Under the method, an increase in inventory is shown as an adjustment to net income in the operating activities category of the cash flow statement.

Which of the following statements is true when using the indirect method of preparing the operating activities section of the statement of cash flows?

Eversoll Inc.uses the periodic inventory system. If Eversoll uses the weighted average cost inventory method, the amount assigned to the June 30th inventory would be

FIFO results in the least amount of income before taxes, assuming a period of rising prices.

The method most nearly approximates replacement cost of inventory on the balance sheet.

The inventory of an) consists of three distinct types of costs: direct materials, direct labor, and manufacturing overhead.

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

Changing inventory methods to take advantage of the tax breaks offered by LIFO is not a valid reason for a change in methods.

If a company understates its ending inventory balance for 2015 by $15,500, what are the effects on its net income for 2015 and 2014?

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