Question 1

Which ratio tells how much long it takes a company to pay its suppliers?

Accepted Answer

A)  Number of days' sales in inventory 
B)  Accounts receivable turnover 
C)  Number of days' purchases in accounts payable 
D)  Inventory turnover 
A)  Number of days' sales in inventory 
B)  Accounts receivable turnover 
C)  Number of days' purchases in accounts payable 
D)  Inventory turnover

Question 2

Monango Clothing Store sells jackets. During January, its inventory records of one brand of designer jackets were as follows:   Using this information, perpetual LIFO cost of goods sold is

Accepted Answer

A)  $860 
B)  $750 
C)  $796 
D)  $806 
A)  $860 
B)  $750 
C)  $796 
D)  $806

Question 3

If the ending inventory is overstated, net income for the same period will be

Accepted Answer

A)  Unaffected 
B)  Overstated 
C)  Understated 
D)  Cannot be determined from the information given 
A)  Unaffected 
B)  Overstated 
C)  Understated 
D)  Cannot be determined from the information given

Question 4

The cost of finished goods inventory includes all BUT which of the following?

Accepted Answer

A)  Advertising costs 
B)  Manufacturing overhead costs 
C)  Labor costs 
D)  Raw material costs 
A)  Advertising costs 
B)  Manufacturing overhead costs 
C)  Labor costs 
D)  Raw material costs

Question 5

Cait Company sold $5,000 of inventory on December 31, 2011. This sale was recorded in the books and was also included in the ending inventory count. How will this information affect the financial statements for 2012?

Accepted Answer

A)  Cost of goods sold will be overstated by $5,000 
B)  Gross margin will be understated by $5,000 
C)  Gross margin will be overstated by $5,000 
D)  Beginning inventory will be understated by $5,000 
A)  Cost of goods sold will be overstated by $5,000 
B)  Gross margin will be understated by $5,000 
C)  Gross margin will be overstated by $5,000 
D)  Beginning inventory will be understated by $5,000

Question 6

Rhame Company has the following information related to its two products:
  
Given the above information, determine the following items:

Accepted Answer

Given the above info

Question 7

Penn Company needs an estimate of its ending inventory balance. The following information is available:   Given this information, when using the gross margin estimation method, ending inventory is approximately

Accepted Answer

A)  $1,000 
B)  $9,000 
C)  $19,000 
D)  $11,650 
A)  $1,000 
B)  $9,000 
C)  $19,000 
D)  $11,650

Question 8

The financial statements of Alphonso, Inc., reflect the following data:
  
You are analyzing the company's statements to determine how much of the company's operating cycle must be financed through external financing.

Accepted Answer

You are analyzing the company'

Question 9

Tena Company has the following information related to its two products:
 
- Refer to Exhibit 7-8. Assuming that the lower of cost or market rule is applied to individual products, the amount at which product A should be valued is

Accepted Answer

A)  $12 
B)  $9 
C)  $10 
D)  $8 
A)  $12 
B)  $9 
C)  $10 
D)  $8

Question 10

If the ending inventory balance is understated, net income of the same period will be

Accepted Answer

A)  Overstated 
B)  Understated 
C)  Unaffected 
D)  Cannot be determined from the information given 
A)  Overstated 
B)  Understated 
C)  Unaffected 
D)  Cannot be determined from the information given

Question 11

Purchases and sales during a recent period for Bottineau Inc. were   Beginning inventory was 200 units at $2 each. Given this information, what is the ending inventory if the periodic FIFO costing alternative is used?

Accepted Answer

A)  $1,600 
B)  $2,000 
C)  $5,000 
D)  $12,400 
A)  $1,600 
B)  $2,000 
C)  $5,000 
D)  $12,400

Question 12

Lindsey Corporation had the following account balances:
 
- Refer to Exhibit 7-2.Given the information above,gross margin is

Accepted Answer

A) $86,000 
B) $94,000 
C) $106,000 
D) $114,000 
A) $86,000 
B) $94,000 
C) $106,000 
D) $114,000

Question 13

Which of the following statements is true under the periodic inventory method?

Accepted Answer

A)  Freight-In is subtracted from purchases in order to derive net purchases 
B)  Freight-In is added to purchases in order to derive net purchases 
C)  Freight-In is used only with the perpetual inventory method, not with the periodic inventory method 
D)  Freight-In is neither subtracted nor added to purchases in order to derive net purchases 
A)  Freight-In is subtracted from purchases in order to derive net purchases 
B)  Freight-In is added to purchases in order to derive net purchases 
C)  Freight-In is used only with the perpetual inventory method, not with the periodic inventory method 
D)  Freight-In is neither subtracted nor added to purchases in order to derive net purchases

Question 14

The inventory shrinkage account is

Accepted Answer

A)  Used only with the perpetual inventory method 
B)  A permanent (real) account 
C)  A balance sheet account 
D)  Used only with the periodic inventory method 
A)  Used only with the perpetual inventory method 
B)  A permanent (real) account 
C)  A balance sheet account 
D)  Used only with the periodic inventory method

Question 15

Montgomery Corporation has the following account balances:   Given this information, total cost of goods available for sale is

Accepted Answer

A)  $60,000 
B)  $57,000 
C)  $58,000 
D)  $62,000 
A)  $60,000 
B)  $57,000 
C)  $58,000 
D)  $62,000

Question 16

For external reporting purposes, inventory shrinkage is usually combined with which account?

Accepted Answer

A)  Merchandise inventory 
B)  Gross profit 
C)  Cost of goods sold 
D)  Operating expenses 
A)  Merchandise inventory 
B)  Gross profit 
C)  Cost of goods sold 
D)  Operating expenses

Question 17

The December 31, 2012, balance sheet and income statement for Santana Company are presented below.     Given this information, Santana's number of days' purchases in accounts payable during 2012 was

Accepted Answer

A)  75 
B)  80 
C)  98 
D)  102 
A)  75 
B)  80 
C)  98 
D)  102

Question 18

The following information is available for Belden Company:   Assuming that a business year consists of 360 days, the number of days' sales in inventory for 2012 was

Accepted Answer

A)  49.5 
B)  93 
C)  99 
D)  105 
A)  49.5 
B)  93 
C)  99 
D)  105

Question 19

If cost of goods sold is $12,000 and the ending inventory balance is $6,000, the

Accepted Answer

A)  Beginning inventory is $18,000 
B)  Net income is $6,000 
C)  Cost of goods available for sale is $18,000 
D)  Purchases are $6,000 
A)  Beginning inventory is $18,000 
B)  Net income is $6,000 
C)  Cost of goods available for sale is $18,000 
D)  Purchases are $6,000

Question 20

Inventory valued at lower of cost or market can never be recorded at amounts below its

Accepted Answer

A)  Net realizable value 
B)  Net realizable value minus a normal profit margin 
C)  Sales price 
D)  Ceiling 
A)  Net realizable value 
B)  Net realizable value minus a normal profit margin 
C)  Sales price 
D)  Ceiling

Exam 7: Inventory and the Cost of Sales

Which ratio tells how much long it takes a company to pay its suppliers?

Monango Clothing Store sells jackets. During January, its inventory records of one brand of designer jackets were as follows: Using this information, perpetual LIFO cost of goods sold is

If the ending inventory is overstated, net income for the same period will be

The cost of finished goods inventory includes all BUT which of the following?

Cait Company sold $5,000 of inventory on December 31, 2011. This sale was recorded in the books and was also included in the ending inventory count. How will this information affect the financial statements for 2012?

Rhame Company has the following information related to its two products: Given the above information, determine the following items:

Penn Company needs an estimate of its ending inventory balance. The following information is available: Given this information, when using the gross margin estimation method, ending inventory is approximately

The financial statements of Alphonso, Inc., reflect the following data: You are analyzing the company's statements to determine how much of the company's operating cycle must be financed through external financing.

Tena Company has the following information related to its two products: - Refer to Exhibit 7-8. Assuming that the lower of cost or market rule is applied to individual products, the amount at which product A should be valued is

If the ending inventory balance is understated, net income of the same period will be

Purchases and sales during a recent period for Bottineau Inc. were Beginning inventory was 200 units at $2 each. Given this information, what is the ending inventory if the periodic FIFO costing alternative is used?

Lindsey Corporation had the following account balances: - Refer to Exhibit 7-2.Given the information above,gross margin is

Which of the following statements is true under the periodic inventory method?

The inventory shrinkage account is

Montgomery Corporation has the following account balances: Given this information, total cost of goods available for sale is

For external reporting purposes, inventory shrinkage is usually combined with which account?

The December 31, 2012, balance sheet and income statement for Santana Company are presented below. Given this information, Santana's number of days' purchases in accounts payable during 2012 was

The following information is available for Belden Company: Assuming that a business year consists of 360 days, the number of days' sales in inventory for 2012 was

If cost of goods sold is $12,000 and the ending inventory balance is $6,000, the

Inventory valued at lower of cost or market can never be recorded at amounts below its

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Completing the Operating Cycle

Investments: Property, Plant, and Equipment and Intangible Assets

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Management Accounting and Cost Concepts

Cost Flows and Business Organizations

Activity-Based Costing

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

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