Question 1

Changing inventory methods to take advantage of the tax breaks offered by LIFO is not a valid reason for a change in methods.

Accepted Answer

A) True 
 B)False

Question 2

When inventory is sold by a wholesaler or retailer, it is recorded in a different account on the income statement than a manufacturer would use.

Accepted Answer

A) True 
 B)False

Question 3

A LIFO liquidation occurs when a company sells fewer units than it buys during the period.

Accepted Answer

A) True 
 B)False

Question 4

The following information is reported in the operating activities section of Gateway's statement of cash flows for 2016: $\begin{array}{lr}
\text { Net income } & \$ 1,200,000 \
\text { Decrease in inventories } & 600,000 \
\text { Decrease in accounts payable } & 400,000
\end{array}$ ? Which one of the following conclusions can be assumed from the information provided?

Accepted Answer

A)  Gateway purchased more merchandise than it sold in 2016. 
B)  Cash payments for merchandise exceeded cost of goods sold by $200,000. 
C)  Gateway used the direct method to determine cash flows from operating activities. 
D)  Cash payments for merchandise purchases were less than the amount of merchandise purchased on credit during 2016. 
A)  Gateway purchased more merchandise than it sold in 2016. 
B)  Cash payments for merchandise exceeded cost of goods sold by $200,000. 
C)  Gateway used the direct method to determine cash flows from operating activities. 
D)  Cash payments for merchandise purchases were less than the amount of merchandise purchased on credit during 2016.

Question 5

Under the ____________________ inventory system, the inventory account is updated after each purchase or sale.

Accepted Answer

The answer of Under the ____________________ inventory system, the inventory...

Question 6

Purchase discounts decrease the total cost of merchandise acquired.

Accepted Answer

A) True 
 B)False

Question 7

Accountants define the market value of inventory as its ______________________________.

Accepted Answer

The answer of Accountants define the market value of inventory...

Question 8

The inventory turnover ratio is defined as cost of goods sold divided by average inventory.

Accepted Answer

A) True 
 B)False

Question 9

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. ​
If Park uses the periodic inventory system, the effect of recording the payment on June 13, 2016, will include

Accepted Answer

A)  a decrease to Accounts Payable for $15,000. 
B)  a decrease to Purchases for $15,000. 
C)  a decrease to Cash for $15,000. 
D)  an increase to Inventory for $14,850. 
A)  a decrease to Accounts Payable for $15,000. 
B)  a decrease to Purchases for $15,000. 
C)  a decrease to Cash for $15,000. 
D)  an increase to Inventory for $14,850.

Question 10

Whether LIFO costing is applied at the time each sale is made or only at the end of the period, both the periodic and perpetual systems will yield the same ending inventory under LIFO.

Accepted Answer

A) True 
 B)False

Question 11

For each of the following, calculate the cost of inventory reported on the balance sheet.
(a)
The total merchandise inventory counted at the end of the year was $73,000.Purchases for $5,000 are in transit under FOB shipping point terms.
(b)
The total merchandise inventory counted at the end of the year was $75,000.Purchases
for $5,000 are in transit under FOB destination terms.

Accepted Answer

(a)
$78,000 = $73,000 + 5,000

Question 12

In order to evaluate a company's gross profit ratio,

Accepted Answer

A)  the ratio should be compared with other companies in the same industry. 
B)  the ratio should be compared with those of both prior years and competitors. 
C)  the ratio should be compared with forecasted financial statements. 
D)  the ratio should be compared with those of prior years. 
A)  the ratio should be compared with other companies in the same industry. 
B)  the ratio should be compared with those of both prior years and competitors. 
C)  the ratio should be compared with forecasted financial statements. 
D)  the ratio should be compared with those of prior years.

Question 13

The ____________________ method results in the best approximation of replacement cost of goods sold on the income statement during periods of rising prices.

Accepted Answer

The answer of The ____________________ method results in the best...

Question 14

If the amount assigned to ending inventory is incorrect,

Accepted Answer

A)  The balance sheet is affected, but the income statement is not. 
B)  The income statement is affected, but the balance sheet is not. 
C)  The balance sheet is affected, but cost of goods sold is not. 
D)  Both the balance sheet and the income statement are affected. 
A)  The balance sheet is affected, but the income statement is not. 
B)  The income statement is affected, but the balance sheet is not. 
C)  The balance sheet is affected, but cost of goods sold is not. 
D)  Both the balance sheet and the income statement are affected.

Question 15

If ending inventory is overstated, then net income is overstated as well.

Accepted Answer

A) True 
 B)False

Question 16

The ending inventory balance represents

Accepted Answer

A)  The cost of goods sold during the current period and is reported on the balance sheet as an asset. 
B)  Unexpired costs and is reported on the balance sheet as an asset. 
C)  Expired costs and is reported on the income statement as an expense 
D)  Expired costs and is reported on the balance sheet as an asset. 
A)  The cost of goods sold during the current period and is reported on the balance sheet as an asset. 
B)  Unexpired costs and is reported on the balance sheet as an asset. 
C)  Expired costs and is reported on the income statement as an expense 
D)  Expired costs and is reported on the balance sheet as an asset.

Question 17

Grinn, Inc.offers terms of 2/10, n/30 to credit customers.Great Buy Corp.purchased 100 tile cutters with a list price of $20 each on March 5, 2016, on account.If Great Buy Corp.pays the amount of the invoice for its purchase on March 14, 2016, how much cash will Grinn receive from Great Buy Corp.? ​

Accepted Answer

A)  $1,764 
B)  $2,000 
C)  $1,800 
D)  $1,960 
A)  $1,764 
B)  $2,000 
C)  $1,800 
D)  $1,960

Question 18

At the year end inventory count, if goods in transit are shipped FOB shipping point, they should be included in the inventory count of

Accepted Answer

A)  The seller 
B)  The buyer 
C)  Both the seller and the buyer 
D)  Neither the seller no the buyer 
A)  The seller 
B)  The buyer 
C)  Both the seller and the buyer 
D)  Neither the seller no the buyer

Question 19

Federal income tax rules allow businesses to use different inventory costing methods for tax reporting and financial reporting with one exception.Which of the following situations is not allowed by federal income tax rules? $\begin{array}{lc}
\text { Inventory Method } & \text { Inventory Method } \
\text { for Tax Reporting } & \text { for Financial Reporting } \
\hline \text { a. FIFO } & \text { LIFO } \
\text { b. LIFO } & \text { FIFO } \
\text { c. Weighted Average } & \text { FIFO } \
\text { d. LIFO } & \text { LIFO }
\end{array}$

Accepted Answer

The answer of Federal income tax rules allow businesses to...

Question 20

The following is from Goldman Inc.'s 2016 income statement. $$\begin{array} { l r } 
\text { Purchases } & \$ 172,000 \
\text { Transportation-In } & 11,000 \
\text { Inventory, January 1,2016 } & 26,500 \
\text { Inventory, December 31,2016 } & 28,800 \
\text { Purchase Returns and Allowances } & 8,400
\end{array}$$ ? How much will Goldman report as cost of goods purchased in its 2016 income statement?

Accepted Answer

A)  $180,400 
B)  $174,600 
C)  $183,000 
D)  None of these choices 
A)  $180,400 
B)  $174,600 
C)  $183,000 
D)  None of these choices

Changing inventory methods to take advantage of the tax breaks offered by LIFO is not a valid reason for a change in methods.

When inventory is sold by a wholesaler or retailer, it is recorded in a different account on the income statement than a manufacturer would use.

A LIFO liquidation occurs when a company sells fewer units than it buys during the period.

The following information is reported in the operating activities section of Gateway's statement of cash flows for 2016: Net income \ 1,200,000 Decrease in inventories 600,000 Decrease in accounts payable 400,000 ? Which one of the following conclusions can be assumed from the information provided?

Under the ____________________ inventory system, the inventory account is updated after each purchase or sale.

Purchase discounts decrease the total cost of merchandise acquired.

Accountants define the market value of inventory as its ______________________________.

The inventory turnover ratio is defined as cost of goods sold divided by average inventory.

Whether LIFO costing is applied at the time each sale is made or only at the end of the period, both the periodic and perpetual systems will yield the same ending inventory under LIFO.

In order to evaluate a company's gross profit ratio,

The ____________________ method results in the best approximation of replacement cost of goods sold on the income statement during periods of rising prices.

If the amount assigned to ending inventory is incorrect,

If ending inventory is overstated, then net income is overstated as well.

The ending inventory balance represents

Grinn, Inc.offers terms of 2/10, n/30 to credit customers.Great Buy Corp.purchased 100 tile cutters with a list price of $20 each on March 5, 2016, on account.If Great Buy Corp.pays the amount of the invoice for its purchase on March 14, 2016, how much cash will Grinn receive from Great Buy Corp.?

At the year end inventory count, if goods in transit are shipped FOB shipping point, they should be included in the inventory count of

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 cost of goods purchased in its 2016 income statement?

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

Changing inventory methods to take advantage of the tax breaks offered by LIFO is not a valid reason for a change in methods.

When inventory is sold by a wholesaler or retailer, it is recorded in a different account on the income statement than a manufacturer would use.

A LIFO liquidation occurs when a company sells fewer units than it buys during the period.

The following information is reported in the operating activities section of Gateway's statement of cash flows for 2016: Net income \ 1,200,000 Decrease in inventories 600,000 Decrease in accounts payable 400,000 ? Which one of the following conclusions can be assumed from the information provided?

Under the ____________________ inventory system, the inventory account is updated after each purchase or sale.

Purchase discounts decrease the total cost of merchandise acquired.

Accountants define the market value of inventory as its ______________________________.

The inventory turnover ratio is defined as cost of goods sold divided by average inventory.

Whether LIFO costing is applied at the time each sale is made or only at the end of the period, both the periodic and perpetual systems will yield the same ending inventory under LIFO.

In order to evaluate a company's gross profit ratio,

The ____________________ method results in the best approximation of replacement cost of goods sold on the income statement during periods of rising prices.

If the amount assigned to ending inventory is incorrect,

If ending inventory is overstated, then net income is overstated as well.

The ending inventory balance represents

At the year end inventory count, if goods in transit are shipped FOB shipping point, they should be included in the inventory count of

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 cost of goods purchased in its 2016 income statement?

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