Exam 5: Inventories and Cost of Goods Sold

Park, Inc.purchased merchandise from Jay Zee Music Company on June 5, 2016.The goods were shipped the same day.The merchandise's selling price was $15,000.The credit terms were 1/10, n/30.The shipping terms were FOB shipping point.Park received the merchandise on June 10, 2016.Park paid the amount due on June 13, 2016. ​ Park uses a perpetual inventory system.When will the cost of merchandise sold be recorded as an expense?

Match the terms with the descriptions related to merchandise sales and purchases. -Relies on a count of inventory on the last day of the year to determine amount on hand.

Items should be reported as part of the company's "inventory" at year end, if they are

Vern Corp.sold merchandise to a customer on credit.The invoice amount was $2,000; the invoice date was June 10; credit terms were 1/20, n/30.Which one of the following statements is true?

The inventory of a(n) ____________________ consists of three distinct types of costs: direct materials, direct labor, and manufacturing overhead.

Anthony's Shoe Company uses a perpetual inventory system.The beginning balance in its inventory account is $1,500 and the ending balance is $1,000.Cost of goods sold is $6,500.What was the amount of inventory purchased during the year?

For what reason might retailers like Target select an accounting period that ends on or near the end of January?

The following information was taken from the operating activity section of the 2016 statement of cash flows for Limited Corp: Additions to net income: Change in accounts payable \ 2,000 Deductions from net income: Change in inventories 8,000 ? Based on the information provided, which one of the following conclusions is correct?

Which one of the following is not a contra account?

The value assigned to an asset such as inventory on the balance sheet determines the amount eventually recognized as an expense on the income statement.

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

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.

The journal entry to write down inventory to its market value results in a loss on the income statement.

Match the terms with the descriptions related to merchandise sales and purchases. -The seller is responsible for the cost of delivering the merchandise to the buyer.

Roki Inc.uses the periodic inventory system. June 1 On hand, 50 units @ \1 5.00 each \ 750.00 5 Purchased 115 units @, \1 5.10 each 1,736.50 14 Purchased 75 units @ \1 5.20 each Total cost of goods available for sale 30 On hand, 90 units ? If the June 30th inventory included 45 units from the June 5th purchase and 45 units from the June 14th purchase, Roki's cost of goods sold for June under the specific identification method would be

Under the indirect method, a decrease in inventory is added to net income to determine cash flow from operating activities.

Maxim Company sells auto parts.The company employs a periodic inventory system.Identify all the effects on the accounting equation. -Sold merchandise on credit to customers.

Ending inventory valued under the FIFO method will be the same regardless of whether the periodic system or the perpetual system is used.

Caruso, Inc.has an inventory turnover rate of 8 times.If its cost of goods sold is $150,000, then

The excess of the value of a company's inventory stated at FIFO over the value stated at LIFO is called a(n) _________________________.