Question 1

Prepare the journal entries to record the cost of an item for $28 that sold for $40 cash under the perpetual
inventory method.

Accepted Answer

Debit Cost of Goods

Question 2

Compare the effects of the different costing methods on the financial statements
-The choice of inventory costing method does not have an effect on net income.

Accepted Answer

A) True 
 B)False

Question 3

Inventory turnover measures the number of times a company turns over its beginning inventory during a period.

Accepted Answer

A) True 
 B)False

Question 4

Compare the effects of the different costing methods on the financial statements
-In order to pay the least income tax possible in periods of rising inventory costs, which inventory costing method should the company use?

Accepted Answer

The answer of Compare the effects of the different costing...

Question 5

Which account would always be used for an inventory adjustment?

Accepted Answer

The answer of Which account would always be used for...

Question 6

If shrinkage is found for $500, what is the adjusting entry that would be required?

Accepted Answer

Debit Cost of Goods

Question 7

If cost of goods sold was understated in Period 1, then what is the effect of cost of goods sold and gross profit in Period 2?

Accepted Answer

Cost of goods sold i

Question 8

The first step in using the gross profit method to estimate ending inventory is to:

Accepted Answer

A)  calculate the cost of goods available for sale. 
B)  estimate the ending inventory. 
C)  estimate the beginning inventory. 
D)  estimate the cost of goods sold. 
E)  calculate net income. 
A)  calculate the cost of goods available for sale. 
B)  estimate the ending inventory. 
C)  estimate the beginning inventory. 
D)  estimate the cost of goods sold. 
E)  calculate net income.

Question 9

Assume that in Year 1, the ending merchandise inventory is overstated by $30,000. If this is
the only error in Years 1 and 2, fill in the items below, indicating which items will be understated, overstated, or correctly stated for Years 1 and 2.

Accepted Answer

Ending Inventory: Overstated,

Question 10

Armedio Enterprises lost its entire inventory in a hurricane that occurred on March 31, 2014.
Over the past five years, gross profit has averaged 30% of net sales. The company's records reveal the following data for the month of March:
Beginning Inventory $42,600, Net Purchases $259,900, Sales $430,500, and
Sales Returns and Allowances $12,300
Estimate the inventory for the end of March using the gross profit method.

Accepted Answer

$9,760
Calculation:
Goods avai

Question 11

What are the two things about inventory that must be disclosed in the notes of the financial statements?

Accepted Answer

The inventory costin

Question 12

Which of the following is an INCORRECT statement if ending inventory is overstated?

Accepted Answer

A)  Cost of goods sold is overstated. 
B)  Gross profit is overstated. 
C)  Net income is overstated. 
D)  Income tax is overstated. 
E)  Retained earnings is overstated. 
A)  Cost of goods sold is overstated. 
B)  Gross profit is overstated. 
C)  Net income is overstated. 
D)  Income tax is overstated. 
E)  Retained earnings is overstated.

Question 13

If Period 1 ending inventory is overstated, then what items are affected on the income statement? Indicate whether the item would be understated or overstated.

Accepted Answer

Cost of goods sold i

Question 14

The LEAST widely used of the inventory valuation methods is:

Accepted Answer

A)  FIFO. 
B)  perpetual system. 
C)  average cost. 
D)  specific-identification. 
E)  periodic system. 
A)  FIFO. 
B)  perpetual system. 
C)  average cost. 
D)  specific-identification. 
E)  periodic system.

Question 15

Goods available for sale are $40,000; beginning inventory is $16,000; ending inventory is $20,000; and cost of goods sold is $50,000. The inventory turnover is __________.

Accepted Answer

The answer of Goods available for sale are $40,000; beginning...

Question 16

Which of the following would probably NOT need to be disclosed in a footnote?

Accepted Answer

A)  A change of inventory methods 
B)  A material change in estimated shrinkage 
C)  A change in depreciation method 
D)  A 10% increase in sales 
E)  The accounting policy used 
A)  A change of inventory methods 
B)  A material change in estimated shrinkage 
C)  A change in depreciation method 
D)  A 10% increase in sales 
E)  The accounting policy used

Question 17

Compare the effects of the different costing methods on the financial statements
-________ helps investors compare a company's financial statements from one period to the next.

Accepted Answer

A)  Reliability 
B)  Consistency 
C)  Objectivity 
D)  Entity 
E)  Comparability 
A)  Reliability 
B)  Consistency 
C)  Objectivity 
D)  Entity 
E)  Comparability

Question 18

Journalize the following transactions using the perpetual inventory method.
June 11 Purchased $6,700 of merchandise on account, terms 4/10, n/45.
June 14 Returned $990 of merchandise that was damaged for credit.
June 18 Paid balance of account from purchase of June 11.

Accepted Answer

The answer of Journalize the following transactions using the perpetual...

Question 19

A company has $8,200 in net sales, $1,100 in gross profit, $2,500 in ending inventory, and $2,000 in beginning inventory. What is the company's cost of goods sold?

Accepted Answer

The answer of A company has $8,200 in net sales,...

Question 20

Which of the following would NOT cause an error in the physical inventory count on December 31?

Accepted Answer

A)  Counting inventory purchased that was shipped FOB destination on December 31 
B)  Double counting an aisle of product 
C)  Counting inventory purchased that was shipped FOB shipping point on December 31 
D)  Forgetting to tag a section of inventory 
E)  Forgetting to count an inventory item 
A)  Counting inventory purchased that was shipped FOB destination on December 31 
B)  Double counting an aisle of product 
C)  Counting inventory purchased that was shipped FOB shipping point on December 31 
D)  Forgetting to tag a section of inventory 
E)  Forgetting to count an inventory item

Prepare the journal entries to record the cost of an item for $28 that sold for $40 cash under the perpetual inventory method.

Compare the effects of the different costing methods on the financial statements -The choice of inventory costing method does not have an effect on net income.

Inventory turnover measures the number of times a company turns over its beginning inventory during a period.

Compare the effects of the different costing methods on the financial statements -In order to pay the least income tax possible in periods of rising inventory costs, which inventory costing method should the company use?

Which account would always be used for an inventory adjustment?

If shrinkage is found for $500, what is the adjusting entry that would be required?

If cost of goods sold was understated in Period 1, then what is the effect of cost of goods sold and gross profit in Period 2?

The first step in using the gross profit method to estimate ending inventory is to:

Assume that in Year 1, the ending merchandise inventory is overstated by $30,000. If this is the only error in Years 1 and 2, fill in the items below, indicating which items will be understated, overstated, or correctly stated for Years 1 and 2.

What are the two things about inventory that must be disclosed in the notes of the financial statements?

Which of the following is an INCORRECT statement if ending inventory is overstated?

If Period 1 ending inventory is overstated, then what items are affected on the income statement? Indicate whether the item would be understated or overstated.

The LEAST widely used of the inventory valuation methods is:

Goods available for sale are $40,000; beginning inventory is $16,000; ending inventory is $20,000; and cost of goods sold is $50,000. The inventory turnover is __________.

Which of the following would probably NOT need to be disclosed in a footnote?

Compare the effects of the different costing methods on the financial statements -________ helps investors compare a company's financial statements from one period to the next.

Journalize the following transactions using the perpetual inventory method. June 11 Purchased $6,700 of merchandise on account, terms 4/10, n/45. June 14 Returned $990 of merchandise that was damaged for credit. June 18 Paid balance of account from purchase of June 11.

A company has $8,200 in net sales, $1,100 in gross profit, $2,500 in ending inventory, and $2,000 in beginning inventory. What is the company's cost of goods sold?

Which of the following would NOT cause an error in the physical inventory count on December 31?

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Ethics, Internal Control, and Cash

Accounting for a Merchandising Business

Sales and Receivables

Long-Term Assets

Current Liabilities and Long-Term Debt

Corporations: Share Capital and Retained Earnings

The Cash Flow Statement

Financial Statement Analysis

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Exam 6: Inventory

Prepare the journal entries to record the cost of an item for $28 that sold for $40 cash under the perpetual inventory method.

Compare the effects of the different costing methods on the financial statements -The choice of inventory costing method does not have an effect on net income.

Inventory turnover measures the number of times a company turns over its beginning inventory during a period.

Compare the effects of the different costing methods on the financial statements -In order to pay the least income tax possible in periods of rising inventory costs, which inventory costing method should the company use?

Which account would always be used for an inventory adjustment?

If shrinkage is found for $500, what is the adjusting entry that would be required?

If cost of goods sold was understated in Period 1, then what is the effect of cost of goods sold and gross profit in Period 2?

The first step in using the gross profit method to estimate ending inventory is to:

Assume that in Year 1, the ending merchandise inventory is overstated by $30,000. If this is the only error in Years 1 and 2, fill in the items below, indicating which items will be understated, overstated, or correctly stated for Years 1 and 2.

What are the two things about inventory that must be disclosed in the notes of the financial statements?

Which of the following is an INCORRECT statement if ending inventory is overstated?

If Period 1 ending inventory is overstated, then what items are affected on the income statement? Indicate whether the item would be understated or overstated.

The LEAST widely used of the inventory valuation methods is:

Goods available for sale are $40,000; beginning inventory is $16,000; ending inventory is $20,000; and cost of goods sold is $50,000. The inventory turnover is __________.

Which of the following would probably NOT need to be disclosed in a footnote?

Compare the effects of the different costing methods on the financial statements -________ helps investors compare a company's financial statements from one period to the next.

Journalize the following transactions using the perpetual inventory method. June 11 Purchased $6,700 of merchandise on account, terms 4/10, n/45. June 14 Returned $990 of merchandise that was damaged for credit. June 18 Paid balance of account from purchase of June 11.

A company has $8,200 in net sales, $1,100 in gross profit, $2,500 in ending inventory, and $2,000 in beginning inventory. What is the company's cost of goods sold?

Which of the following would NOT cause an error in the physical inventory count on December 31?

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Ethics, Internal Control, and Cash

Accounting for a Merchandising Business

Sales and Receivables

Long-Term Assets

Current Liabilities and Long-Term Debt

Corporations: Share Capital and Retained Earnings

The Cash Flow Statement

Financial Statement Analysis

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