Question 1

When merchandise is sold and the perpetual system of inventory is used,the journal entry to record a sale of merchandise on account would include:

Accepted Answer

A) debiting Accounts Receivable and crediting Sales. 
B) debiting Accounts Receivable and crediting Inventory. 
C) debiting Accounts Receivable and crediting Cost of Goods Sold. 
D) debiting Cost of Goods Sold and crediting Accounts Receivable. 
A) debiting Accounts Receivable and crediting Sales. 
B) debiting Accounts Receivable and crediting Inventory. 
C) debiting Accounts Receivable and crediting Cost of Goods Sold. 
D) debiting Cost of Goods Sold and crediting Accounts Receivable.

Question 2

________ produces the lowest cost of goods sold and the highest gross profit when prices are increasing.

Accepted Answer

A) FIFO 
B) LIFO 
C) Average cost 
D) Specific identification 
A) FIFO 
B) LIFO 
C) Average cost 
D) Specific identification

Question 3

Under the average cost method,the physical flow of goods through the business will:

Accepted Answer

A) have no relationship to the flow of costs through the accounting records. 
B) closely match the flow of costs through the accounting records. 
C) exactly match the flow of costs through the accounting records. 
D) be nearly the opposite of the flow of costs through the accounting records. 
A) have no relationship to the flow of costs through the accounting records. 
B) closely match the flow of costs through the accounting records. 
C) exactly match the flow of costs through the accounting records. 
D) be nearly the opposite of the flow of costs through the accounting records.

Question 4

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

A) 2)22. 
B) 2)78. 
C) 2)50. 
D) 2)00. 
A) 2)22. 
B) 2)78. 
C) 2)50. 
D) 2)00.

Question 5

Applying LCM to the items that make up ending inventory is an application of which of the following concepts?

Accepted Answer

A) Materiality 
B) Conservatism 
C) Reliability 
D) Full disclosure 
A) Materiality 
B) Conservatism 
C) Reliability 
D) Full disclosure

Question 6

The inventory system whereby the merchandise inventory account balance is merely a record of the most recent physical inventory count is called the:

Accepted Answer

A) periodic system. 
B) perpetual system. 
C) LIFO system. 
D) FIFO system. 
A) periodic system. 
B) perpetual system. 
C) LIFO system. 
D) FIFO system.

Question 7

The objective of inventory tracking is to allocate the cost of goods available for sale between the cost of units sold and the cost of unsold inventory.

Accepted Answer

A) True 
 B)False

Question 8

The inventory system that uses the merchandise inventory account as an active account is called the:

Accepted Answer

A) periodic system. 
B) perpetual system. 
C) LIFO system. 
D) FIFO system. 
A) periodic system. 
B) perpetual system. 
C) LIFO system. 
D) FIFO system.

Question 9

Under the specific-identification method,the physical flow of goods through the business will:

Accepted Answer

A) have no relationship to the flow of costs through the accounting records. 
B) closely match the flow of costs through the accounting records. 
C) exactly match the flow of costs through the accounting records. 
D) be nearly the opposite of the flow of costs through the accounting records. 
A) have no relationship to the flow of costs through the accounting records. 
B) closely match the flow of costs through the accounting records. 
C) exactly match the flow of costs through the accounting records. 
D) be nearly the opposite of the flow of costs through the accounting records.

Question 10

Inventory errors cancel out at the end of ________ accounting periods.

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 11

Other than the cost of purchasing the inventory,another large cost of inventory would be storage of the inventory.

Accepted Answer

A) True 
 B)False

Question 12

Lionworks Enterprises had the following inventory data:
 
Assuming FIFO,what is the ending inventory after the July 14 sale?

Accepted Answer

A) $208 
B) $228 
C) $232 
D) $214 
A) $208 
B) $228 
C) $232 
D) $214

Question 13

Ignoring a write-off of inventory because it will not make a difference to financial statement users is an example of:

Accepted Answer

A) conservatism. 
B) consistency. 
C) materiality. 
D) entity. 
A) conservatism. 
B) consistency. 
C) materiality. 
D) entity.

Question 14

The journal entry to record the purchase of $7,400 of inventory on account under the perpetual inventory system is:

Accepted Answer

A) debit Inventory,$7,400;credit Cash,$7,400. 
B) debit Purchases,$7,400;credit Accounts Payable,$7,400. 
C) debit Inventory,$7,400;credit Accounts Payable,$7,400. 
D) debit Cost of Goods Sold,$7,400;credit Inventory,$7,400. 
A) debit Inventory,$7,400;credit Cash,$7,400. 
B) debit Purchases,$7,400;credit Accounts Payable,$7,400. 
C) debit Inventory,$7,400;credit Accounts Payable,$7,400. 
D) debit Cost of Goods Sold,$7,400;credit Inventory,$7,400.

Question 15

New technology,like the latest cell phones and HDTV,would probably be costed using the:

Accepted Answer

A) LIFO method of inventory costing. 
B) FIFO method of inventory costing. 
C) moving average method of inventory costing. 
D) any method as the physical flow and the cost flow are different. 
A) LIFO method of inventory costing. 
B) FIFO method of inventory costing. 
C) moving average method of inventory costing. 
D) any method as the physical flow and the cost flow are different.

Question 16

If shrinkage is found for $500,an adjusting entry would be made as follows:

Accepted Answer

A) debit Inventory for $500;credit Cost of Goods Sold for $500. 
B) debit Inventory for $500;credit Sales Returns and Allowances for $500. 
C) debit Cost of Goods Sold for $500;credit Inventory for $500. 
D) debit Sales Returns and Allowances for $500;credit Inventory for $500. 
A) debit Inventory for $500;credit Cost of Goods Sold for $500. 
B) debit Inventory for $500;credit Sales Returns and Allowances for $500. 
C) debit Cost of Goods Sold for $500;credit Inventory for $500. 
D) debit Sales Returns and Allowances for $500;credit Inventory for $500.

Question 17

Cypress Co.has the following LIFO perpetual inventory records:
 
The current replacement cost of the ending inventory is $5,200.To apply the lower-of-cost-or-market rule,the journal entry would be:

Accepted Answer

A) Debit Cost of Goods Sold $750,credit Inventory $750 
B) Debit Inventory $750,credit Cost of Goods Sold $750 
C) Debit Cost of Goods Sold $1,100,credit Inventory $1,100 
D) Debit inventory $1,100,credit Cost of Goods Sold $1,100 
A) Debit Cost of Goods Sold $750,credit Inventory $750 
B) Debit Inventory $750,credit Cost of Goods Sold $750 
C) Debit Cost of Goods Sold $1,100,credit Inventory $1,100 
D) Debit inventory $1,100,credit Cost of Goods Sold $1,100

Question 18

A company using the perpetual inventory system does not need to perform a physical count of inventory.

Accepted Answer

A) True 
 B)False

Question 19

The ending inventory of one year becomes the beginning inventory of the next year.

Accepted Answer

A) True 
 B)False

Question 20

The ending physical inventory count revised for adjustments is listed on the Balance Sheet as a:

Accepted Answer

A) current asset before Accounts Receivable. 
B) current asset after Accounts Receivable. 
C) long-term asset. 
D) current asset immediately after cash. 
A) current asset before Accounts Receivable. 
B) current asset after Accounts Receivable. 
C) long-term asset. 
D) current asset immediately after cash.

When merchandise is sold and the perpetual system of inventory is used,the journal entry to record a sale of merchandise on account would include:

________ produces the lowest cost of goods sold and the highest gross profit when prices are increasing.

Under the average cost method,the physical flow of goods through the business will:

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:

Applying LCM to the items that make up ending inventory is an application of which of the following concepts?

The inventory system whereby the merchandise inventory account balance is merely a record of the most recent physical inventory count is called the:

The objective of inventory tracking is to allocate the cost of goods available for sale between the cost of units sold and the cost of unsold inventory.

The inventory system that uses the merchandise inventory account as an active account is called the:

Under the specific-identification method,the physical flow of goods through the business will:

Inventory errors cancel out at the end of ________ accounting periods.

Other than the cost of purchasing the inventory,another large cost of inventory would be storage of the inventory.

Lionworks Enterprises had the following inventory data: Assuming FIFO,what is the ending inventory after the July 14 sale?

Ignoring a write-off of inventory because it will not make a difference to financial statement users is an example of:

The journal entry to record the purchase of $7,400 of inventory on account under the perpetual inventory system is:

New technology,like the latest cell phones and HDTV,would probably be costed using the:

If shrinkage is found for $500,an adjusting entry would be made as follows:

Cypress Co.has the following LIFO perpetual inventory records: The current replacement cost of the ending inventory is $5,200.To apply the lower-of-cost-or-market rule,the journal entry would be:

A company using the perpetual inventory system does not need to perform a physical count of inventory.

The ending inventory of one year becomes the beginning inventory of the next year.

The ending physical inventory count revised for adjustments is listed on the Balance Sheet as a:

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

The Challenges of Accounting: Standards, internal Control, audits, fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Financial Statement Analysis

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Exam 5: Inventory

When merchandise is sold and the perpetual system of inventory is used,the journal entry to record a sale of merchandise on account would include:

________ produces the lowest cost of goods sold and the highest gross profit when prices are increasing.

Under the average cost method,the physical flow of goods through the business will:

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:

Applying LCM to the items that make up ending inventory is an application of which of the following concepts?

The inventory system whereby the merchandise inventory account balance is merely a record of the most recent physical inventory count is called the:

The objective of inventory tracking is to allocate the cost of goods available for sale between the cost of units sold and the cost of unsold inventory.

The inventory system that uses the merchandise inventory account as an active account is called the:

Under the specific-identification method,the physical flow of goods through the business will:

Inventory errors cancel out at the end of ________ accounting periods.

Other than the cost of purchasing the inventory,another large cost of inventory would be storage of the inventory.

Lionworks Enterprises had the following inventory data: Assuming FIFO,what is the ending inventory after the July 14 sale?

Ignoring a write-off of inventory because it will not make a difference to financial statement users is an example of:

The journal entry to record the purchase of $7,400 of inventory on account under the perpetual inventory system is:

New technology,like the latest cell phones and HDTV,would probably be costed using the:

If shrinkage is found for $500,an adjusting entry would be made as follows:

Cypress Co.has the following LIFO perpetual inventory records: The current replacement cost of the ending inventory is $5,200.To apply the lower-of-cost-or-market rule,the journal entry would be:

A company using the perpetual inventory system does not need to perform a physical count of inventory.

The ending inventory of one year becomes the beginning inventory of the next year.

The ending physical inventory count revised for adjustments is listed on the Balance Sheet as a:

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

The Challenges of Accounting: Standards, internal Control, audits, fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Financial Statement Analysis

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