Question 1

The cost of goods purchased is equal to net purchases plus ____________________.

Accepted Answer

freight-in

Question 2

Herndon Corp.purchased merchandise on account from Likert Corp.on November 18, 2016.On November 21, 2016, Herndon returned damaged merchandise to Likert and was granted an adjustment on its account.Herndon uses the periodic inventory system.What effect does the merchandise return have on Herndon's accounting equation?

Accepted Answer

A)  Assets and liabilities decrease. 
B)  Assets and stockholders' equity decrease. 
C)  Liabilities and stockholders' equity decrease. 
D)  Liabilities decrease and stockholders' equity increases. 
A)  Assets and liabilities decrease. 
B)  Assets and stockholders' equity decrease. 
C)  Liabilities and stockholders' equity decrease. 
D)  Liabilities decrease and stockholders' equity increases.

Question 3

Readers.com uses a perpetual inventory system. feb.
$\begin{array}{rlr}
1 & \text { On hand, } 30 \text { units at } \$ 5.00 \text { each } & \$ 150 \
8 & \text { Purchased } 40 \text { units at } \$ 5.35 \text { each } & 214 \
15 & \text { Sold } 50 \text { units } & \
22 & \text { Purchased } 40 \text { units at } \$ 5.20 \text { each } & 208\
28& \text { On hand, 60 units }
\end{array}$ If Readers.com uses the moving average method, how much is ending inventory on February 28?

Accepted Answer

A)  $312 
B)  $318 
C)  $300 
D)  $306 
A)  $312 
B)  $318 
C)  $300 
D)  $306

Question 4

Under the perpetual inventory system, each time goods are purchased, the inventory account is transferred to sales revenue.

Accepted Answer

A) True 
 B)False

Question 5

The Ramien Store held inventory items at the end of 2016.Which items should Ramien include as part of its total inventory cost?

Accepted Answer

A)  Freight incurred in shipping goods to customers. 
B)  Cost of storing inventory before it is sold. 
C)  Cost of salaries of clerks that sell the inventory items. 
D)  Annual income taxes paid for operations. 
A)  Freight incurred in shipping goods to customers. 
B)  Cost of storing inventory before it is sold. 
C)  Cost of salaries of clerks that sell the inventory items. 
D)  Annual income taxes paid for operations.

Question 6

The buyer must include goods purchased FOB shipping point in its inventory account if the goods are still in transit.

Accepted Answer

A) True 
 B)False

Question 7

When would LIFO liquidation occur?

Accepted Answer

A)  As a result of selling less units than are purchased during the period. 
B)  As a result of selling the same number of units that are purchased during the period. 
C)  As a result of selling more units than are purchased during the period. 
D)  Not enough information. 
A)  As a result of selling less units than are purchased during the period. 
B)  As a result of selling the same number of units that are purchased during the period. 
C)  As a result of selling more units than are purchased during the period. 
D)  Not enough information.

Question 8

Specific identification relies on matching unit costs with the actual units sold.

Accepted Answer

A) True 
 B)False

Question 9

Quan uses a periodic inventory system.At the end of April, Quan had 20 units on hand. April $\begin{array}{ll}
1&\text { On hand, } 10 \text { units } @ \$ 2 \text { each } & \$ 20 \
19&\text { Purchased } 90 \text { units } @ \$ 3 \text { each } & \$ 270 \
&\text { Goods available for sale } & \$ 290
\end{array}$ ? If Quan uses the LIFO inventory method, how much is inventory on the balance sheet as of April 30?

Accepted Answer

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

Question 10

Match the terms with the descriptions related to merchandise sales and purchases.
-Shipping costs paid to acquire merchandise.

Accepted Answer

A) Transportation-in 
B) Perpetual inventory system 
C) Net purchasesd. 
D) FOB Destination 
E) Cost of goods available for sale
F)Periodic inventory system
G)FOB Shipping point
H)Delivery expense 
A) Transportation-in 
B) Perpetual inventory system 
C) Net purchasesd. 
D) FOB Destination 
E) Cost of goods available for sale
F)Periodic inventory system
G)FOB Shipping point
H)Delivery expense

Question 11

On the income statement of a merchandising company, cost of goods is added to net sales to arrive at gross margin or gross profit.

Accepted Answer

A) True 
 B)False

Question 12

Which inventory costing method results in the highest inventory balance during a period of rising prices?

Accepted Answer

A)  LIFO 
B)  Weighted average cost 
C)  FIFO 
D)  Both FIFO and LIFO result in the same inventory balance 
A)  LIFO 
B)  Weighted average cost 
C)  FIFO 
D)  Both FIFO and LIFO result in the same inventory balance

Question 13

Accountants should be aware that LIFO liquidations can potentially result in which of the following?

Accepted Answer

A)  If older less costly layers are liquidated, a correspondingly lower cost of goods sold will result. 
B)  If older less costly layers are liquidated, the company may be faced with higher taxes for those deferred in previous periods. 
C)  If older less costly layers are liquidated, a correspondingly higher gross profit will result. 
D)  All of these could result. 
A)  If older less costly layers are liquidated, a correspondingly lower cost of goods sold will result. 
B)  If older less costly layers are liquidated, the company may be faced with higher taxes for those deferred in previous periods. 
C)  If older less costly layers are liquidated, a correspondingly higher gross profit will result. 
D)  All of these could result.

Question 14

Which inventory costing method results in the lowest income tax expense during a period of decreasing prices?

Accepted Answer

A)  Specific Identification 
B)  LIFO 
C)  FIFO 
D)  Weighted Average Cost 
A)  Specific Identification 
B)  LIFO 
C)  FIFO 
D)  Weighted Average Cost

Question 15

Takenson Corp.is a merchandising company that uses the periodic inventory system.Selected account balances are listed below: $$\begin{array} { l r } 
\text { Sales } & \$ 500,000 \
\text { Purchases } & 225,000 \
\text { Inventory (beginning) } & 16,000 \
\text { Inventory (ending) } & 30,000 \
\text { Operating Expenses } & 148,000 \
\text { Income Tax Expense } & 10,000 \
\text { Retained Earnings (beginning) } & 53,000 \
\text { Dividends } & 15,000
\end{array}$$
-Refer to the information for Takenson Corp. Calculate the gross profit.

Accepted Answer

A)  $241,000 
B)  $275,000 
C)  $425,000 
D)  $289,000 
A)  $241,000 
B)  $275,000 
C)  $425,000 
D)  $289,000

Question 16

If a company overstates its ending inventory balance for 2017 by $10,000, and understates its ending inventory balance for 2016 by $5,000 what are the effects on its net income for 2017 and 2016? ​ $\begin{array}{cc}
\text { Effect on } 2017 \text { Net Income } & \text { Effect on } 2016 \text { Net Income } \
\hline \text { a. Understated by } \$ 5,000 & \text { Overstated by } \$ 10,000 \
\text { b. Overstated by } \$ 15,000 & \text { Understated by } \$ 10,000 \
\text { c. Overstated by } \$ 15,000 & \text { Understated by } \$ 5,000 \
\text { d. Overstated by } \$ 10,000 & \text { Understated by } \$ 5,000
\end{array}$

Accepted Answer

The answer of If a company overstates its ending inventory...

Question 17

When merchandise is sold FOB shipping point, the buyer is responsible for the shipping costs.

Accepted Answer

A) True 
 B)False

Question 18

A company using the periodic inventory system must total the selling prices of the units on hand at the end of the period to value the ending inventory.

Accepted Answer

A) True 
 B)False

Question 19

The inventory turnover ratio is a measure of how many times during a period a company sells off its inventory.

Accepted Answer

A) True 
 B)False

Question 20

The cost of goods sold is

Accepted Answer

A)  Purchases less beginning inventory plus ending inventory 
B)  Equal to the amount of inventory on hand at the end of the accounting period 
C)  Goods available for sale less ending inventory 
D)  Reported on the balance sheet in the inventory account 
A)  Purchases less beginning inventory plus ending inventory 
B)  Equal to the amount of inventory on hand at the end of the accounting period 
C)  Goods available for sale less ending inventory 
D)  Reported on the balance sheet in the inventory account

The cost of goods purchased is equal to net purchases plus ____________________.

Under the perpetual inventory system, each time goods are purchased, the inventory account is transferred to sales revenue.

The Ramien Store held inventory items at the end of 2016.Which items should Ramien include as part of its total inventory cost?

The buyer must include goods purchased FOB shipping point in its inventory account if the goods are still in transit.

When would LIFO liquidation occur?

Specific identification relies on matching unit costs with the actual units sold.

Quan uses a periodic inventory system.At the end of April, Quan had 20 units on hand. April 1 On hand, 10 units @\ 2 each \ 20 19 Purchased 90 units @\ 3 each \ 270 Goods available for sale \ 290 ? If Quan uses the LIFO inventory method, how much is inventory on the balance sheet as of April 30?

Match the terms with the descriptions related to merchandise sales and purchases. -Shipping costs paid to acquire merchandise.

On the income statement of a merchandising company, cost of goods is added to net sales to arrive at gross margin or gross profit.

Which inventory costing method results in the highest inventory balance during a period of rising prices?

Accountants should be aware that LIFO liquidations can potentially result in which of the following?

Which inventory costing method results in the lowest income tax expense during a period of decreasing prices?

When merchandise is sold FOB shipping point, the buyer is responsible for the shipping costs.

A company using the periodic inventory system must total the selling prices of the units on hand at the end of the period to value the ending inventory.

The inventory turnover ratio is a measure of how many times during a period a company sells off its inventory.

The cost of goods sold is

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 True Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Exploring Accounting Standards and Differences around the World

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Exam 5: Inventories and Cost of Goods Sold

The cost of goods purchased is equal to net purchases plus ____________________.

Under the perpetual inventory system, each time goods are purchased, the inventory account is transferred to sales revenue.

The Ramien Store held inventory items at the end of 2016.Which items should Ramien include as part of its total inventory cost?

The buyer must include goods purchased FOB shipping point in its inventory account if the goods are still in transit.

When would LIFO liquidation occur?

Specific identification relies on matching unit costs with the actual units sold.

Quan uses a periodic inventory system.At the end of April, Quan had 20 units on hand. April 1 On hand, 10 units @\ 2 each \ 20 19 Purchased 90 units @\ 3 each \ 270 Goods available for sale \ 290 ? If Quan uses the LIFO inventory method, how much is inventory on the balance sheet as of April 30?

Match the terms with the descriptions related to merchandise sales and purchases. -Shipping costs paid to acquire merchandise.

On the income statement of a merchandising company, cost of goods is added to net sales to arrive at gross margin or gross profit.

Which inventory costing method results in the highest inventory balance during a period of rising prices?

Accountants should be aware that LIFO liquidations can potentially result in which of the following?

Which inventory costing method results in the lowest income tax expense during a period of decreasing prices?

When merchandise is sold FOB shipping point, the buyer is responsible for the shipping costs.

A company using the periodic inventory system must total the selling prices of the units on hand at the end of the period to value the ending inventory.

The inventory turnover ratio is a measure of how many times during a period a company sells off its inventory.

The cost of goods sold is

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 True Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Exploring Accounting Standards and Differences around the World

Filters