Question 1

-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 2

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.

Question 3

The following data is available for one of the products sold by Wild Optics Company, which uses the periodic inventory system:
   At the end of December, Wild Optics had 25 units on hand. The 75 units sold created revenue of $13 each. Determine the amounts for the December 31 ending inventory, the cost of goods sold for December, and the gross margin for December for each of the inventory costing methods listed below.

Accepted Answer

The answer of The following data is available for one...

Question 4

According to the IRS's LIFO conformity rule, a company that chooses LIFO to report net income to its shareholders may not use LIFO in preparing its income tax return.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Cost of goods available for sale is equal to beginning inventory less cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 7

Quan uses a periodic inventory system. At the end of April, Quan had 20 units on hand.   If Quan uses the LIFO inventory method, how much is inventory on the balance sheet as of April 30?

Accepted Answer

A)  $40 
B)  $50 
C)  $58 
D)  $60 
A)  $40 
B)  $50 
C)  $58 
D)  $60

Question 8

If cost of goods sold under FIFO was $8,000 and was $10,000 under LIFO, assuming a tax rate of 40%, how much tax savings resulted from using LIFO?

Accepted Answer

A)  There would be no tax savings. 
B)  $800 
C)  $1,200 
D)  $2,000 
A)  There would be no tax savings. 
B)  $800 
C)  $1,200 
D)  $2,000

Question 9

Which one of the following is not a contra account?

Accepted Answer

A)  Purchase Returns and Allowances 
B)  Accumulated Depreciation 
C)  Transportation-in 
D)  Sales Discounts 
A)  Purchase Returns and Allowances 
B)  Accumulated Depreciation 
C)  Transportation-in 
D)  Sales Discounts

Question 10

Complete the following data taken from the condensed income statements for merchandising companies: Action, Break, & Connors.

Accepted Answer

@#IMG-DLM& OR rearranged in th

Question 11

Match the inventory-related accounts to costs that may be included in inventories for retailers and manufacturers.
-Costs to purchase goods ready to sell.

Accepted Answer

A) Merchandise Inventory 
B) Raw Materials 
C) Work in Process 
D) Finished Goods 
E) Cost of Goods Sold 
A) Merchandise Inventory 
B) Raw Materials 
C) Work in Process 
D) Finished Goods 
E) Cost of Goods Sold

Question 12

Several transactions of sales and purchase activities for Genoa Department Store are described below.
A Genoa purchases shoes from Nike on credit.
B Genoa returns defective shoes to Nike before payment is made to Nike for the shoes purchased in transaction A.
C Genoa pays for the shoes purchased from Nike.
D Genoa sells shoes to its customers for cash and on credit.
E Credit customers return shoes to Genoa for a refund.
F Credit customers pay their account balances to Genoa.
REQUIRED: For each transaction described above, describe the economic effects of the transaction on the company under a periodic inventory system.

Accepted Answer

A Liabilities increase and stockholders'

Question 13

In the following information from the 2015 annual reports of Focal Point Industries all figures have been rounded to millions of dollars.   REQUIRED:
1 Describe what costs are included in each of the three types of inventories listed above for Focal Point Industries.
2 Even though the footnote describing the inventory costing methods used by Focal Point Industries is not
provided above, what can you conclude about the inventory costing methods used by the company?

Accepted Answer

1 "Raw materials" consists of materials

Question 14

What is LIFO inventory liquidation? Why is it important to disclose the effects of a LIFO inventory liquidation

Accepted Answer

A LIFO liquidation means that some of th

Question 15

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 16

When inventory is sold by a wholesaler or retailer, it is recorded in a different account on the income statement than a manufacturer would use.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Refer to the information about Cooking Corner.
How much is cost of goods available for sale for 2014 assuming Cooking Corner takes advantage of one-half of the cash discounts?

Accepted Answer

$32,000 Beginning In

Question 19

Match the costs that might be included as part of the cost of inventory to the listed accounting treatment.
-Cost of insurance during transit to acquire inventory items

Accepted Answer

A) Add to inventory cost 
B) Subtract from inventory cost 
C) Not an inventory cost 
A) Add to inventory cost 
B) Subtract from inventory cost 
C) Not an inventory cost

Question 20

Finished goods are the equivalent of merchandise inventory for a retailer or wholesaler in that both represent the inventory of goods held for sale.

Accepted Answer

A) True 
 B)False

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

Which one of the following statements is false?

According to the IRS's LIFO conformity rule, a company that chooses LIFO to report net income to its shareholders may not use LIFO in preparing its income tax return.

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

Cost of goods available for sale is equal to beginning inventory less cost of goods sold.

Quan uses a periodic inventory system. At the end of April, Quan had 20 units on hand. If Quan uses the LIFO inventory method, how much is inventory on the balance sheet as of April 30?

If cost of goods sold under FIFO was $8,000 and was $10,000 under LIFO, assuming a tax rate of 40%, how much tax savings resulted from using LIFO?

Which one of the following is not a contra account?

Complete the following data taken from the condensed income statements for merchandising companies: Action, Break, & Connors.

Match the inventory-related accounts to costs that may be included in inventories for retailers and manufacturers. -Costs to purchase goods ready to sell.

What is LIFO inventory liquidation? Why is it important to disclose the effects of a LIFO inventory liquidation

Which one of the following statements is false?

When inventory is sold by a wholesaler or retailer, it is recorded in a different account on the income statement than a manufacturer would use.

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

Refer to the information about Cooking Corner. How much is cost of goods available for sale for 2014 assuming Cooking Corner takes advantage of one-half of the cash discounts?

Match the costs that might be included as part of the cost of inventory to the listed accounting treatment. -Cost of insurance during transit to acquire inventory items

Finished goods are the equivalent of merchandise inventory for a retailer or wholesaler in that both represent the inventory of goods held for sale.

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

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

Which one of the following statements is false?

According to the IRS's LIFO conformity rule, a company that chooses LIFO to report net income to its shareholders may not use LIFO in preparing its income tax return.

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

Cost of goods available for sale is equal to beginning inventory less cost of goods sold.

Quan uses a periodic inventory system. At the end of April, Quan had 20 units on hand. If Quan uses the LIFO inventory method, how much is inventory on the balance sheet as of April 30?

If cost of goods sold under FIFO was $8,000 and was $10,000 under LIFO, assuming a tax rate of 40%, how much tax savings resulted from using LIFO?

Which one of the following is not a contra account?

Complete the following data taken from the condensed income statements for merchandising companies: Action, Break, & Connors.

Match the inventory-related accounts to costs that may be included in inventories for retailers and manufacturers. -Costs to purchase goods ready to sell.

What is LIFO inventory liquidation? Why is it important to disclose the effects of a LIFO inventory liquidation

Which one of the following statements is false?

When inventory is sold by a wholesaler or retailer, it is recorded in a different account on the income statement than a manufacturer would use.

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

Refer to the information about Cooking Corner. How much is cost of goods available for sale for 2014 assuming Cooking Corner takes advantage of one-half of the cash discounts?

Match the costs that might be included as part of the cost of inventory to the listed accounting treatment. -Cost of insurance during transit to acquire inventory items

Finished goods are the equivalent of merchandise inventory for a retailer or wholesaler in that both represent the inventory of goods held for sale.

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