Question 1

Under the direct write-off method no attempt is made to match bad debt expense to sales revenues in the same accounting period.

Accepted Answer

A) True 
 B)False

Question 2

Echo Sound Company just began business and made the following four inventory purchases in June: $$\begin{array} { r r r r } 
\text { June } & 1 & 150 \text { units } & \$ 1,040 \
\text { June } & 10 & 200 \text { units } & 1,560 \
\text { June } & 15 & 200 \text { units } & 1,680 \
\text { June } & 28 & 150 \text { units } & 1,320 \
& & & \$ 5,600 \
\hline
\end{array}$$ A physical count of merchandise inventory on June 30 reveals that there are 210 units on hand.The inventory method which results in the highest gross profit for June is

Accepted Answer

A) the FIFO method. 
B) the LIFO method. 
C) the average cost method. 
D) not determinable. 
A) the FIFO method. 
B) the LIFO method. 
C) the average cost method. 
D) not determinable.

Question 3

Dobler Company uses a periodic inventory system.Details for the inventory account for the month of January 2022 are as follows: $$\begin{array} { l l r r } 
& \underline { \text { Units } } & \underline{\text { Per unit price }} & \underline { \text { Total } } \
\text { Balance, } 1 / 1 / 2022 & 300 & \$ 5.00 & \$ 1,500 \
\text { Purchase, } 1 / 15 / 2022 & 150 & 5.30 & 795 \
\text { Purchase, } 1 / 28 / 2022 & 150 & 5.50 & 825
\end{array}$$ An end of the month (1/31/2022) inventory showed that 240 units were on hand.If the company uses FIFO what is the value of the ending inventory?

Accepted Answer

A) $1320 
B) $1200 
C) $1302 
D) $1818 
A) $1320 
B) $1200 
C) $1302 
D) $1818

Question 4

An assumption about cost flow is used

Accepted Answer

A) because it is required by the income tax regulation. 
B) even when there is no change in the purchase price of inventory. 
C) only when the flow of goods cannot be determined. 
D) because prices usually change and tracking which units have been sold is difficult. 
A) because it is required by the income tax regulation. 
B) even when there is no change in the purchase price of inventory. 
C) only when the flow of goods cannot be determined. 
D) because prices usually change and tracking which units have been sold is difficult.

Question 5

Noise Makers Inc.has the following inventory data: $$\begin{array} { r l r r } 
\text { July } 1 & \text { Beginning inventory } & 30 \text { units at } \$ 19 & \$ 570 \
7 & \text { Purchases } & 105 \text { units at } \$ 20 & 2,100 \
22 & \text { Purchases } & 15 \text { units at } \$ 22 &330\
&&&\$3,000
\end{array}$$ A physical count of merchandise inventory on July 31 reveals that there are 48 units on hand.Using the average cost method the value of ending inventory is

Accepted Answer

A) $930. 
B) $960. 
C) $976. 
D) $990. 
A) $930. 
B) $960. 
C) $976. 
D) $990.

Question 6

If a company has no beginning inventory and the unit cost of inventory items does not change during the year the value assigned to the ending inventory will be the same under LIFO and average cost flow assumptions.

Accepted Answer

A) True 
 B)False

Question 7

If the unit price of inventory is increasing during a period a company using the LIFO inventory method will show lower gross profit for the period than if it had used the FIFO inventory method.

Accepted Answer

A) True 
 B)False

Question 8

In periods of falling prices LIFO will result in a higher ending inventory valuation than FIFO.

Accepted Answer

A) True 
 B)False

Question 9

If the ownership of merchandise passes to the buyer when the seller ships the merchandise the terms are stated as FOB destination.

Accepted Answer

A) True 
 B)False

Question 10

Days in inventory is calculated by dividing 365 days by

Accepted Answer

A) average inventory. 
B) beginning inventory. 
C) ending inventory. 
D) the inventory turnover. 
A) average inventory. 
B) beginning inventory. 
C) ending inventory. 
D) the inventory turnover.

Question 11

Which of the following terms best describes the assumption made in applying the four inventory methods?

Accepted Answer

A) Goods flow 
B) Cost flow 
C) Asset flow 
D) Physical flow 
A) Goods flow 
B) Cost flow 
C) Asset flow 
D) Physical flow

Question 12

Two companies report the same cost of goods available for sale but each employs a different inventory costing method.If the price of goods has increased during the period then the company using

Accepted Answer

A) LIFO will have the highest ending inventory. 
B) FIFO will have the highest cost of goods sold. 
C) FIFO will have the highest ending inventory. 
D) LIFO will have the lowest cost of goods sold. 
A) LIFO will have the highest ending inventory. 
B) FIFO will have the highest cost of goods sold. 
C) FIFO will have the highest ending inventory. 
D) LIFO will have the lowest cost of goods sold.

Question 13

Advances to employees are referred to as accounts receivable.

Accepted Answer

A) True 
 B)False

Question 14

The average-cost inventory method relies on a simple average calculation.

Accepted Answer

A) True 
 B)False

Question 15

Hogan Industries had the following inventory transactions occur during 2022: $$\begin{array} { r l l c } 
& & \text { Units } & \text { Cost/unit } \
\text { Feb. 1, 2022 } & \text { Purchase } & 108 & \$ 45 \
\text { Mar. 14,2022 } & \text { Purchase } & 186 & \$ 47 \
\text { May 1, } 2022 & \text { Purchase } & 132 & \$ 49
\end{array}$$ The company sold 306 units at $63 each and has a tax rate of 30%.Assuming that a periodic inventory system is used and operating expenses of $1800 what is the company's after-tax income using LIFO? (rounded to whole dollars)

Accepted Answer

A) $2832 
B) $3288 
C) $2302 
D) $1982 
A) $2832 
B) $3288 
C) $2302 
D) $1982

Question 16

Serene Stereos has the following inventory data: $$\begin{array} { r l r } 
\text { Nov. } 1 & \text { Inventory } & 30 \text { units } @ \$ 6.00 \text { each } \
8 & \text { Purchase } & 120 \text { units } @ \$ 6.45 \text { each } \
17 & \text { Purchase } & 60 \text { units } @ \$ 6.30 \text { each } \
25 & \text { Purchase } & 90 \text { units } @ \$ 6.60 \text { each }
\end{array}$$ A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand.Cost of goods sold under FIFO is

Accepted Answer

A) $657 
B) $1269 
C) $632 
D) $1295 
A) $657 
B) $1269 
C) $632 
D) $1295

Question 17

In periods of falling prices FIFO will result in a larger net income than the LIFO method.

Accepted Answer

A) True 
 B)False

Question 18

The percentage of receivables basis of estimating uncollectible accounts ignores the existing balance in the allowance account when the bad debt adjustment is recorded.

Accepted Answer

A) True 
 B)False

Question 19

The following information is related to December 31 2021 balances. $\begin{array}{lr}
\text { Accounts receivable } & \$ 1,400,000 \
\text { Allowance for doubtful accounts } & 120,000 \
\text { Cash realizable value } & 1,280,000
\end{array}$ During 2022 sales on account were $390000 and collections on account were $230000.Also during 2022 the company wrote off $22000 in uncollectible accounts.An analysis of outstanding receivable accounts at year end indicated that bad debts should be estimated at $144000.Bad debt expense for 2022 is:

Accepted Answer

A) $46000. 
B) $24000. 
C) $144000. 
D) $ 2000. 
A) $46000. 
B) $24000. 
C) $144000. 
D) $ 2000.

Question 20

Under the allowance method the cash realizable value of receivables is the same both before and after an account has been written off.

Accepted Answer

A) True 
 B)False

Under the direct write-off method no attempt is made to match bad debt expense to sales revenues in the same accounting period.

An assumption about cost flow is used

If a company has no beginning inventory and the unit cost of inventory items does not change during the year the value assigned to the ending inventory will be the same under LIFO and average cost flow assumptions.

If the unit price of inventory is increasing during a period a company using the LIFO inventory method will show lower gross profit for the period than if it had used the FIFO inventory method.

In periods of falling prices LIFO will result in a higher ending inventory valuation than FIFO.

If the ownership of merchandise passes to the buyer when the seller ships the merchandise the terms are stated as FOB destination.

Days in inventory is calculated by dividing 365 days by

Which of the following terms best describes the assumption made in applying the four inventory methods?

Two companies report the same cost of goods available for sale but each employs a different inventory costing method.If the price of goods has increased during the period then the company using

Advances to employees are referred to as accounts receivable.

The average-cost inventory method relies on a simple average calculation.

In periods of falling prices FIFO will result in a larger net income than the LIFO method.

The percentage of receivables basis of estimating uncollectible accounts ignores the existing balance in the allowance account when the bad debt adjustment is recorded.

Under the allowance method the cash realizable value of receivables is the same both before and after an account has been written off.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Fraud, Internal Control, and Cash

Reporting and Analyzing Liabilities and Stockholders Equity

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters

Exam 6: Reporting and Analyzing Long-Lived Assets

Under the direct write-off method no attempt is made to match bad debt expense to sales revenues in the same accounting period.

An assumption about cost flow is used

If a company has no beginning inventory and the unit cost of inventory items does not change during the year the value assigned to the ending inventory will be the same under LIFO and average cost flow assumptions.

If the unit price of inventory is increasing during a period a company using the LIFO inventory method will show lower gross profit for the period than if it had used the FIFO inventory method.

In periods of falling prices LIFO will result in a higher ending inventory valuation than FIFO.

If the ownership of merchandise passes to the buyer when the seller ships the merchandise the terms are stated as FOB destination.

Days in inventory is calculated by dividing 365 days by

Which of the following terms best describes the assumption made in applying the four inventory methods?

Two companies report the same cost of goods available for sale but each employs a different inventory costing method.If the price of goods has increased during the period then the company using

Advances to employees are referred to as accounts receivable.

The average-cost inventory method relies on a simple average calculation.

In periods of falling prices FIFO will result in a larger net income than the LIFO method.

The percentage of receivables basis of estimating uncollectible accounts ignores the existing balance in the allowance account when the bad debt adjustment is recorded.

Under the allowance method the cash realizable value of receivables is the same both before and after an account has been written off.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Fraud, Internal Control, and Cash

Reporting and Analyzing Liabilities and Stockholders Equity

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters