Question 1

The cost of goods sold is

Accepted Answer

A) Purchases less beginning inventory plus ending inventory 
B) Reported on the balance sheet in the inventory account 
C) Goods available for sale less ending inventory 
D) Equal to the amount of inventory on hand at the end of the accounting period 
A) Purchases less beginning inventory plus ending inventory 
B) Reported on the balance sheet in the inventory account 
C) Goods available for sale less ending inventory 
D) Equal to the amount of inventory on hand at the end of the accounting period

Question 2

Cost of goods sold is the difference between costs available for sale and beginning inventory.

Accepted Answer

A) True 
 B)False

Question 3

A company began the year with $150,000 in inventory and ended the year with $170,000 in inventory.Cost of goods sold for the year amounted to $960,000.Assuming 360 days in a year, how long, on average, does it take the company to sell its inventory to the nearest day)?

Accepted Answer

A) 6 days 
B) 60 days 
C) 120 days 
D) 3 days 
A) 6 days 
B) 60 days 
C) 120 days 
D) 3 days

Question 4

Which inventory costing method results in the lowest income tax expense during a period of decreasing prices?

Accepted Answer

A) FIFO 
B) LIFO 
C) Specific Identification 
D) Weighted Average Cost 
A) FIFO 
B) LIFO 
C) Specific Identification 
D) Weighted Average Cost

Question 5

The following information was taken from the operating activity section of the 2014 statement of cash flows for Limited Corp:   Based on the information provided, which one of the following conclusions is correct?

Accepted Answer

A) Accounts payable decreased $2,000 in 2014. 
B) Inventories increased $8,000 in 2014. 
C) The direct method was used to prepare the operating section of the cash flow statement. 
D) Cash payments of merchandise exceeded cost of goods sold by $2,000. 
A) Accounts payable decreased $2,000 in 2014. 
B) Inventories increased $8,000 in 2014. 
C) The direct method was used to prepare the operating section of the cash flow statement. 
D) Cash payments of merchandise exceeded cost of goods sold by $2,000.

Question 6

The understatement of ending inventories in one period leads to an) of cost of goods sold expense in the same period.

Accepted Answer

The answer of The understatement of ending inventories in one...

Question 7

Which one of the following statements is false?

Accepted Answer

A) Differences in cash flows between LIFO and FIFO inventory methods are a direct result of the differences in the purchases 
B) Differences in cash flows between LIFO and FIFO inventory methods are caused by differences in taxes. 
C) The amount of cash to acquire inventory is the same for companies that use LIFO as for those companies that use FIFO. 
D) The primary determinant in selecting an inventory costing method should be the ability of the method to accurately reflect the net income of the period. 
A) Differences in cash flows between LIFO and FIFO inventory methods are a direct result of the differences in the purchases 
B) Differences in cash flows between LIFO and FIFO inventory methods are caused by differences in taxes. 
C) The amount of cash to acquire inventory is the same for companies that use LIFO as for those companies that use FIFO. 
D) The primary determinant in selecting an inventory costing method should be the ability of the method to accurately reflect the net income of the period.

Question 8

During a period of increasing cost prices, which inventory costing method will yield the lowest cost of goods sold?

Accepted Answer

A) Any method in which the company uses a periodic inventory system 
B) FIFO 
C) LIFO 
D) Weighted Average Cost 
A) Any method in which the company uses a periodic inventory system 
B) FIFO 
C) LIFO 
D) Weighted Average Cost

Question 9

Under the perpetual inventory system, each time goods are purchased, the inventory account is transferred to sales revenue.

Accepted Answer

A) True 
 B)False

Question 10

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 the gross profit.

Accepted Answer

A) $241,000 
B) $275,000 
C) $289,000 
D) $425,000 
A) $241,000 
B) $275,000 
C) $289,000 
D) $425,000

Question 11

In a periodic inventory system, the cost of purchases is recognized as

Accepted Answer

A) an integral part of the calculation of cost of goods sold. 
B) the only part of the calculation of cost of goods sold. 
C) an increase in the inventory account. 
D) an increase in an asset account. 
A) an integral part of the calculation of cost of goods sold. 
B) the only part of the calculation of cost of goods sold. 
C) an increase in the inventory account. 
D) an increase in an asset account.

Question 12

Many countries prohibit the use of LIFO for tax or financial reporting purposes.

Accepted Answer

A) True 
 B)False

Question 13

Federal income tax rules allow businesses to use different inventory costing methods for tax reporting and financial reporting with one exception.Which of the following situations is not allowed by federal income tax rules?

Accepted Answer

The answer of Federal income tax rules allow businesses to...

Question 14

Eversoll Inc.uses the periodic inventory system.   How many units did Eversoll, Inc.sell during June?

Accepted Answer

A) 50 
B) 90 
C) 100 
D) 150 
A) 50 
B) 90 
C) 100 
D) 150

Question 15

The following information is reported in the operating activities section of Gateway's statement of cash flows for 2014:   Which one of the following conclusions can be assumed from the information provided?

Accepted Answer

A) Gateway used the direct method to determine cash flows from operating activities. 
B) Gateway purchased more merchandise than it sold in 2014. 
C) Cash payments for merchandise purchases were less than the amount of merchandise purchased on credit during 2014. 
D) Cash payments for merchandise exceeded cost of goods sold by $200,000. 
A) Gateway used the direct method to determine cash flows from operating activities. 
B) Gateway purchased more merchandise than it sold in 2014. 
C) Cash payments for merchandise purchases were less than the amount of merchandise purchased on credit during 2014. 
D) Cash payments for merchandise exceeded cost of goods sold by $200,000.

Question 16

For what reason might retailers like Target select an accounting period that ends on or near the end of January?

Accepted Answer

A) The company originally started business operations on that date. 
B) Business activity has reached a slow period that is suited to the preparation of its financial statements at the end of the year. 
C) The company's CPAs are attempting to spread out the workload. 
D) The Internal Revenue Service requires merchandise companies to select such a date for their fiscal year. 
A) The company originally started business operations on that date. 
B) Business activity has reached a slow period that is suited to the preparation of its financial statements at the end of the year. 
C) The company's CPAs are attempting to spread out the workload. 
D) The Internal Revenue Service requires merchandise companies to select such a date for their fiscal year.

Question 17

The ratio of a company's cost of goods sold to its average inventory is called its
________________________________________.

Accepted Answer

inventory

Question 18

Under the indirect method, a decrease in inventory is added to net income to determine cash flow from operating activities.

Accepted Answer

A) True 
 B)False

Question 19

Slotkin Company buys designer clothing to sell in its retail stores.Since much of the merchandise comes from Dallas and Europe, Slotkin Company must pay freight charges to get the merchandise shipped in.Which statement is true?

Accepted Answer

A) Transportation-in, paid by Slotkin Company, is added to the inventory account under the periodic system. 
B) Transportation-in, paid by Slotkin Company, is subtracted from purchases under the periodic system. 
C) Freight charges are only paid by a buyer in a periodic system. 
D) Transportation-in is added to net purchases to determine cost of goods purchased in a periodic system. 
A) Transportation-in, paid by Slotkin Company, is added to the inventory account under the periodic system. 
B) Transportation-in, paid by Slotkin Company, is subtracted from purchases under the periodic system. 
C) Freight charges are only paid by a buyer in a periodic system. 
D) Transportation-in is added to net purchases to determine cost of goods purchased in a periodic system.

Question 20

Which one of the following statements is false?

Accepted Answer

A) The inventory account is updated after every sale and after every merchandise purchase under the perpetual inventory system. 
B) The inventory account is updated only at the end of the accounting period under the periodic inventory system. 
C) A cost of goods sold account is updated after each sale of merchandise under the periodic inventory system. 
D) A purchases account is used only under the periodic inventory system. 
A) The inventory account is updated after every sale and after every merchandise purchase under the perpetual inventory system. 
B) The inventory account is updated only at the end of the accounting period under the periodic inventory system. 
C) A cost of goods sold account is updated after each sale of merchandise under the periodic inventory system. 
D) A purchases account is used only under the periodic inventory system.

The cost of goods sold is

Cost of goods sold is the difference between costs available for sale and beginning inventory.

A company began the year with $150,000 in inventory and ended the year with $170,000 in inventory.Cost of goods sold for the year amounted to $960,000.Assuming 360 days in a year, how long, on average, does it take the company to sell its inventory to the nearest day)?

Which inventory costing method results in the lowest income tax expense during a period of decreasing prices?

The following information was taken from the operating activity section of the 2014 statement of cash flows for Limited Corp: Based on the information provided, which one of the following conclusions is correct?

The understatement of ending inventories in one period leads to an) of cost of goods sold expense in the same period.

Which one of the following statements is false?

During a period of increasing cost prices, which inventory costing method will yield the lowest cost of goods sold?

Under the perpetual inventory system, each time goods are purchased, the inventory account is transferred to sales revenue.

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 the gross profit.

In a periodic inventory system, the cost of purchases is recognized as

Many countries prohibit the use of LIFO for tax or financial reporting purposes.

Federal income tax rules allow businesses to use different inventory costing methods for tax reporting and financial reporting with one exception.Which of the following situations is not allowed by federal income tax rules?

Eversoll Inc.uses the periodic inventory system. How many units did Eversoll, Inc.sell during June?

The following information is reported in the operating activities section of Gateway's statement of cash flows for 2014: Which one of the following conclusions can be assumed from the information provided?

For what reason might retailers like Target select an accounting period that ends on or near the end of January?

The ratio of a company's cost of goods sold to its average inventory is called its ________________________________________.

Under the indirect method, a decrease in inventory is added to net income to determine cash flow from operating activities.

Slotkin Company buys designer clothing to sell in its retail stores.Since much of the merchandise comes from Dallas and Europe, Slotkin Company must pay freight charges to get the merchandise shipped in.Which statement is true?

Which one of the following statements is false?

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

The cost of goods sold is

Cost of goods sold is the difference between costs available for sale and beginning inventory.

A company began the year with $150,000 in inventory and ended the year with $170,000 in inventory.Cost of goods sold for the year amounted to $960,000.Assuming 360 days in a year, how long, on average, does it take the company to sell its inventory to the nearest day)?

Which inventory costing method results in the lowest income tax expense during a period of decreasing prices?

The following information was taken from the operating activity section of the 2014 statement of cash flows for Limited Corp: Based on the information provided, which one of the following conclusions is correct?

The understatement of ending inventories in one period leads to an) of cost of goods sold expense in the same period.

Which one of the following statements is false?

During a period of increasing cost prices, which inventory costing method will yield the lowest cost of goods sold?

Under the perpetual inventory system, each time goods are purchased, the inventory account is transferred to sales revenue.

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 the gross profit.

In a periodic inventory system, the cost of purchases is recognized as

Many countries prohibit the use of LIFO for tax or financial reporting purposes.

Federal income tax rules allow businesses to use different inventory costing methods for tax reporting and financial reporting with one exception.Which of the following situations is not allowed by federal income tax rules?

Eversoll Inc.uses the periodic inventory system. How many units did Eversoll, Inc.sell during June?

The following information is reported in the operating activities section of Gateway's statement of cash flows for 2014: Which one of the following conclusions can be assumed from the information provided?

For what reason might retailers like Target select an accounting period that ends on or near the end of January?

The ratio of a company's cost of goods sold to its average inventory is called its ________________________________________.

Under the indirect method, a decrease in inventory is added to net income to determine cash flow from operating activities.

Slotkin Company buys designer clothing to sell in its retail stores.Since much of the merchandise comes from Dallas and Europe, Slotkin Company must pay freight charges to get the merchandise shipped in.Which statement is true?

Which one of the following statements is false?

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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