Exam 5: Inventories and Cost of Goods Sold

Which one of the following statements is false?

Which of the following would not be included in inventory costs?

If a company overstates its ending inventory for the current year, what are the effects on cost of goods sold and net income for the current year? Effect on Cost of Goods Sold Effect on Net Income a. Understated Overstated b. Overstated No effect c. Understated Understated d. Overstated Overstated

Match the costs that might be included as part of the cost of inventory to the listed accounting treatment. -Income taxes paid on profits earned from selling goods to customers

Using the following information, what is the amount of cost of goods sold? Furchases \ 32,000 Purchases discounts \ 960 Merchandise inventory September 1 5,700 Merchandise inventory September 30 6,370 Sales returns and allowances 910 Sales 63,000 Purchases returns and allowances 1,200 Freight In 1,040

Identify which inventory costing method (LIFO or FIFO) achieves the effect listed in the following items: -Prices are rising; cost of goods sold is lower with this method.

The following is from Goldman Inc.'s 2016 income statement. Purchases \ 172,000 Transportation-In 11,000 Inventory, January 1,2016 26,500 Inventory, December 31,2016 28,800 Purchase Returns and Allowances 8,400 ? How much will Goldman report as its cost of goods sold in its 2016 income statement?

A company using the periodic inventory system has the following account balances: Merchandise Inventory at the beginning of the year, $3,600; Freight-In, $650; Purchases, $10,700; Purchases Returns and Allowances, $1,950; Purchases Discounts, $330.The cost of merchandise purchased is equal to

Credit terms of n/30 mean that the net amount of the invoice, less any returns or allowances, is due within 30 days of the date of the invoice.

Match the terms with the descriptions related to merchandise sales and purchases. -The buyer must pay the shipping costs.

When a company using LIFO experiences a partial or complete liquidation of its older, lower-priced inventory, its gross margin will be ____________________ (higher, lower, or unchanged) for the period.

Under LIFO, the units in the ending inventory represent the most recent purchase(s).

Sales Returns and Allowances is a contra-asset account.

Under the periodic inventory system, a physical inventory must be taken at the end of the period to determine cost of goods sold.

If a customer returns merchandise which has already been paid for, the retailer may give either a cash refund or a credit on account.

Match the inventory-related accounts to costs that may be included in inventories for retailers and manufacturers. -Cost of materials which are not yet entered into the production process.

Which method assigns the cost of the most recent items purchased to ending inventory?

Travelli Co.sold merchandise to Trapani Co.on account, $17,000, terms 2/15, net 45.The cost of the merchandise sold is $15,400.Tavella Co.issued a credit memo for $1,750 for merchandise returned that originally cost $1,400.The Trapani Co.paid the invoice within the discount period.What is amount of net sales from the above transactions?

Based upon the following data, determine the cost of merchandise sold for April. Merchandise Inventory April 1 \ 85,560 Merchandise Invent ory April 30 96,330 Purchases 373,880 Purchases Returns \& Allowances 14,760 Purchases Discounts 10,900 Freight In 4,135

Takenson Corp.is a merchandising company that uses the periodic inventory system.Selected account balances are listed below: Sales \ 500,000 Purchases 225,000 Inventory (beginning) 16,000 Inventory (ending) 30,000 Operating Expenses 148,000 Income Tax Expense 10,000 Retained Earnings (beginning) 53,000 Dividends 15,000 -Refer to the information for Takenson Corp. Calculate net income.