Question 1

The entry to record a credit purchase when the periodic inventory method is employed will include a:

Accepted Answer

A)  debit to inventory. 
B)  credit to purchases. 
C)  debit to purchases. 
D)  debit to cost of goods sold. 
A)  debit to inventory. 
B)  credit to purchases. 
C)  debit to purchases. 
D)  debit to cost of goods sold.

Question 2

Raw materials of inventory were purchased on credit for $200 000 on 10 June. The company uses the perpetual method. This transaction will:

Accepted Answer

A)  increase assets, liabilities and shareholders' equity. 
B)  increase assets and liabilities but reduce shareholders' equity. 
C)  increase liabilities but have no effect on assets or shareholders' equity. 
D)  increase assets and increase liabilities. 
A)  increase assets, liabilities and shareholders' equity. 
B)  increase assets and liabilities but reduce shareholders' equity. 
C)  increase liabilities but have no effect on assets or shareholders' equity. 
D)  increase assets and increase liabilities.

Question 3

Inventory with a value of $300 000 was written down to $250 000 in June 2016 because of falling prices in the industry. This transaction will:

Accepted Answer

A)  decrease assets, profit and shareholders' equity. 
B)  decrease assets and profit, but not shareholders' equity. 
C)  decrease assets and shareholders' equity but not profit. 
D)  decrease assets and decrease shareholders' equity. 
A)  decrease assets, profit and shareholders' equity. 
B)  decrease assets and profit, but not shareholders' equity. 
C)  decrease assets and shareholders' equity but not profit. 
D)  decrease assets and decrease shareholders' equity.

Question 4

It is necessary to use a purchases account with:

Accepted Answer

A)  only the periodic count method. 
B)  only the perpetual accounting control method. 
C)  both the periodic count and the perpetual accounting control methods. 
D)  either method, if the system designer has included it in the chart of accounts. 
A)  only the periodic count method. 
B)  only the perpetual accounting control method. 
C)  both the periodic count and the perpetual accounting control methods. 
D)  either method, if the system designer has included it in the chart of accounts.

Question 5

The perpetual accounting control method has which of the following advantages over the periodic inventory method?

Accepted Answer

A)  A physical count is not required. 
B)  Stock shortages are eliminated. 
C)  Cost of operation is lower. 
D)  Details of the number of items on hand is available. 
A)  A physical count is not required. 
B)  Stock shortages are eliminated. 
C)  Cost of operation is lower. 
D)  Details of the number of items on hand is available.

Question 6

The entry to record a credit purchase when the perpetual method is employed is:

Accepted Answer

A)  Dr Purchases
Cr Accounts payable 
B)  Dr Purchases
Cr Inventory 
C)  Dr Inventory
Cr Accounts payable 
D)  Dr Cost of goods sold
Cr Accounts payable 
A)  Dr Purchases
Cr Accounts payable 
B)  Dr Purchases
Cr Inventory 
C)  Dr Inventory
Cr Accounts payable 
D)  Dr Cost of goods sold
Cr Accounts payable

Question 7

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016. The following purchases and sales were made during September:
 
What was the value of cost of goods sold of Algo, using the FIFO assumption?

Accepted Answer

A)  $2640 
B)  $2700 
C)  $2720 
D)  $2400 
A)  $2640 
B)  $2700 
C)  $2720 
D)  $2400

Question 8

During year ended 30 June 2016, Rugger Ltd had net sales of $256 000. Inventory at 1 July 2015 was $25 000, and at 30 June 2016 it was $18 000. Purchases were $115 000. What was the gross profit for year ended 30 June 2016?

Accepted Answer

A)  $12 000 
B)  $134 000 
C)  $141 000 
D)  None of the answers provided 
A)  $12 000 
B)  $134 000 
C)  $141 000 
D)  None of the answers provided

Question 9

A company purchases and sells Roofoo. It began last year with five units of Roofoo on hand at a cost of $10 each, and during the year its purchases and sales were as follows:
 
What was the value of cost of goods sold of Roofoo, using the annual weighted average in a periodic inventory system? Answer to the nearest dollars.

Accepted Answer

A)  $131 
B)  $133 
C)  $140 
D)  $170 
A)  $131 
B)  $133 
C)  $140 
D)  $170

Question 10

Which of the following statements about the use of the LIFO method in Australia is true?

Accepted Answer

A)  The LIFO method is not allowed to be used for either financial reporting or tax purposes. 
B)  The LIFO method may be used for both financial reporting and tax purposes. 
C)  The LIFO method may be used for financial reporting but not for tax purposes. 
D)  The LIFO method can only be used if approval is received from the Australian Taxation Office. 
A)  The LIFO method is not allowed to be used for either financial reporting or tax purposes. 
B)  The LIFO method may be used for both financial reporting and tax purposes. 
C)  The LIFO method may be used for financial reporting but not for tax purposes. 
D)  The LIFO method can only be used if approval is received from the Australian Taxation Office.

Question 11

In a period of rising purchase prices, which cost flow assumption provides the highest net profit?

Accepted Answer

A)  FIFO 
B)  Moving weighted average 
C)  LIFO 
D)  All three give the same net profit 
A)  FIFO 
B)  Moving weighted average 
C)  LIFO 
D)  All three give the same net profit

Question 12

In times of inflation, which cost flow assumption provides the highest inventory asset?

Accepted Answer

A)  FIFO 
B)  Moving weighted average 
C)  LIFO 
D)  It depends on the rate of inflation 
A)  FIFO 
B)  Moving weighted average 
C)  LIFO 
D)  It depends on the rate of inflation

Question 13

Which, if any, of the following cost flow assumptions is NOT affected by whether a periodic or perpetual control system is used?

Accepted Answer

A)  LIFO 
B)  FIFO 
C)  Weighted average cost 
D)  Moving weighted average cost 
A)  LIFO 
B)  FIFO 
C)  Weighted average cost 
D)  Moving weighted average cost

Question 14

Which of the following is NOT an advantage of the perpetual inventory system over the periodic inventory system?

Accepted Answer

A)  The perpetual inventory system discloses inventory shortages. 
B)  The perpetual inventory system is less costly to maintain. 
C)  The perpetual inventory system provides a continuous record of cost of goods sold. 
D)  The perpetual inventory system provides better control of the asset inventory. 
A)  The perpetual inventory system discloses inventory shortages. 
B)  The perpetual inventory system is less costly to maintain. 
C)  The perpetual inventory system provides a continuous record of cost of goods sold. 
D)  The perpetual inventory system provides better control of the asset inventory.

Question 15

Which of the following entries records a credit sale under the perpetual inventory system?

Accepted Answer

A)  Dr Cost of goods sold 
B)  Dr Sales 
C)  Dr Inventory 
D)  Dr Accounts receivable 
A)  Dr Cost of goods sold 
B)  Dr Sales 
C)  Dr Inventory 
D)  Dr Accounts receivable

Question 16

A company purchases and sells Roofoo. It began last year with five units of Roofoo on hand at a cost of $10 each, and during the year its purchases and sales were as follows:
 
What was the value of ending inventory of Roofoo, using the LIFO assumption in a periodic inventory system?

Accepted Answer

A)  $30. 
B)  $36.43. 
C)  $45. 
D)  $109.26. 
A)  $30. 
B)  $36.43. 
C)  $45. 
D)  $109.26.

Question 17

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016. The following purchases and sales were made during September:
 
What was the value of cost of goods sold of Algo, using the LIFO assumption in a perpetual inventory system?

Accepted Answer

A)  $2600 
B)  $2700 
C)  $2720 
D)  $1400 
A)  $2600 
B)  $2700 
C)  $2720 
D)  $1400

Question 18

The journal entries to record a credit sale under the perpetual inventory system will include a:

Accepted Answer

A)  debit to purchases. 
B)  credit to inventory. 
C)  debit to sales. 
D)  debit to inventory. 
A)  debit to purchases. 
B)  credit to inventory. 
C)  debit to sales. 
D)  debit to inventory.

Question 19

A company purchases and sells Roofoo. It began last year with five units of Roofoo on hand at a cost of $10 each, and during the year its purchases and sales were as follows:
 
What was the value of the ending inventory of Roofoo, using the moving weighted average assumption and a perpetual inventory system?

Accepted Answer

A)  $45 
B)  $39 
C)  $36.43 
D)  $15 
A)  $45 
B)  $39 
C)  $36.43 
D)  $15

Question 20

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016. The following purchases and sales were made during September:
 
What was the value of cost of goods sold of Algo, using the moving weighted average assumption and a perpetual inventory system?

Accepted Answer

A)  $2640 
B)  $2700 
C)  $2720 
D)  $3180 
A)  $2640 
B)  $2700 
C)  $2720 
D)  $3180

The entry to record a credit purchase when the periodic inventory method is employed will include a:

Raw materials of inventory were purchased on credit for $200 000 on 10 June. The company uses the perpetual method. This transaction will:

Inventory with a value of $300 000 was written down to $250 000 in June 2016 because of falling prices in the industry. This transaction will:

It is necessary to use a purchases account with:

The perpetual accounting control method has which of the following advantages over the periodic inventory method?

The entry to record a credit purchase when the perpetual method is employed is:

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016. The following purchases and sales were made during September: What was the value of cost of goods sold of Algo, using the FIFO assumption?

During year ended 30 June 2016, Rugger Ltd had net sales of $256 000. Inventory at 1 July 2015 was $25 000, and at 30 June 2016 it was $18 000. Purchases were $115 000. What was the gross profit for year ended 30 June 2016?

Which of the following statements about the use of the LIFO method in Australia is true?

In a period of rising purchase prices, which cost flow assumption provides the highest net profit?

In times of inflation, which cost flow assumption provides the highest inventory asset?

Which, if any, of the following cost flow assumptions is NOT affected by whether a periodic or perpetual control system is used?

Which of the following is NOT an advantage of the perpetual inventory system over the periodic inventory system?

Which of the following entries records a credit sale under the perpetual inventory system?

A company purchases and sells Roofoo. It began last year with five units of Roofoo on hand at a cost of $10 each, and during the year its purchases and sales were as follows: What was the value of ending inventory of Roofoo, using the LIFO assumption in a periodic inventory system?

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016. The following purchases and sales were made during September: What was the value of cost of goods sold of Algo, using the LIFO assumption in a perpetual inventory system?

The journal entries to record a credit sale under the perpetual inventory system will include a:

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016. The following purchases and sales were made during September: What was the value of cost of goods sold of Algo, using the moving weighted average assumption and a perpetual inventory system?

Introduction to Financial Accounting

Measuring and Evaluating Financial Position and Financial Performance

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Financial Reporting Principles, Accounting Standards and Auditing

Internal Control and Cash

Accounts Receivable and Further Record-Keeping

Noncurrent Assets

Liabilities

Completing the Balance Sheet

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Sustainability Reporting

Filters

Exam 9: Inventory

The entry to record a credit purchase when the periodic inventory method is employed will include a:

Raw materials of inventory were purchased on credit for $200 000 on 10 June. The company uses the perpetual method. This transaction will:

Inventory with a value of $300 000 was written down to $250 000 in June 2016 because of falling prices in the industry. This transaction will:

It is necessary to use a purchases account with:

The perpetual accounting control method has which of the following advantages over the periodic inventory method?

The entry to record a credit purchase when the perpetual method is employed is:

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016. The following purchases and sales were made during September: What was the value of cost of goods sold of Algo, using the FIFO assumption?

During year ended 30 June 2016, Rugger Ltd had net sales of $256 000. Inventory at 1 July 2015 was $25 000, and at 30 June 2016 it was $18 000. Purchases were $115 000. What was the gross profit for year ended 30 June 2016?

Which of the following statements about the use of the LIFO method in Australia is true?

In a period of rising purchase prices, which cost flow assumption provides the highest net profit?

In times of inflation, which cost flow assumption provides the highest inventory asset?

Which, if any, of the following cost flow assumptions is NOT affected by whether a periodic or perpetual control system is used?

Which of the following is NOT an advantage of the perpetual inventory system over the periodic inventory system?

Which of the following entries records a credit sale under the perpetual inventory system?

A company purchases and sells Roofoo. It began last year with five units of Roofoo on hand at a cost of $10 each, and during the year its purchases and sales were as follows: What was the value of ending inventory of Roofoo, using the LIFO assumption in a periodic inventory system?

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016. The following purchases and sales were made during September: What was the value of cost of goods sold of Algo, using the LIFO assumption in a perpetual inventory system?

The journal entries to record a credit sale under the perpetual inventory system will include a:

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016. The following purchases and sales were made during September: What was the value of cost of goods sold of Algo, using the moving weighted average assumption and a perpetual inventory system?

Introduction to Financial Accounting

Measuring and Evaluating Financial Position and Financial Performance

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Financial Reporting Principles, Accounting Standards and Auditing

Internal Control and Cash

Accounts Receivable and Further Record-Keeping

Noncurrent Assets

Liabilities

Completing the Balance Sheet

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Sustainability Reporting

Filters