Exam 5: Inventories and Cost of Goods Sold

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?

Eversoll Inc. uses the periodic inventory system. If the June 30th inventory included 45 units from the June 5th purchase and 45 units from the June 14th purchase, Eversoll's cost of goods sold for June under the specific identification method would be

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

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.

The buyer must include goods purchased FOB shipping point in its inventory account if the goods are still in transit.

Which one of the following statements is false regarding the gross profit ratio?

Like sales revenue, cost of goods sold represents an inflow of assets.

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

Sales revenue is an inflow of assets.

Which method assigns the cost of the most recent items purchased to cost of goods sold?

Under LIFO, the units in the ending inventory represent the most recent purchases.

A company using the periodic inventory system must total the selling prices of the units on hand at the end of the period to value the ending inventory.

Refer to the information for Carlton, Inc. How much is cost of goods sold for 2015?

Which one of the following ratios is a common analytical tool used by merchandise corporations, but not by service corporations?

The ending inventory balance represents

Refer to the information for Carlton, Inc. How much of every dollar is gross profit for 2015?

Refer to the financial statement information for Digital Forces. What portion of every dollar is available to cover operating costs and to contribute to profits for 2015?

Gently Used Cars is a dealer that uses the periodic inventory system. The data presented below is from the accounting records of Gently for the year ended December 31, 2014. Using the amounts provided above, calculate the cost of goods sold for 2014.

Identify which inventory costing method LIFO or FIFO achieves the effect listed in the following items: -Prices are declining; income taxes are higher with this method

Adam Inc. uses a perpetual inventory system. If Adam uses the FIFO method, how much is cost of goods sold for the month of January?