Question 1

Which of the following statements about the use of the LIFO method in Australia is true?

Accepted Answer

A)  The LIFO method is not allowed to be used for either financial reporting or tax purposes. 
B)  The LIFO method may be used for both financial reporting and tax purposes. 
C)  The LIFO method may be used for financial reporting but not for tax purposes. 
D)  Use of the LIFO method must be approved by the Australian Securities and Investments Commission and the Australian Taxation Office. 
A)  The LIFO method is not allowed to be used for either financial reporting or tax purposes. 
B)  The LIFO method may be used for both financial reporting and tax purposes. 
C)  The LIFO method may be used for financial reporting but not for tax purposes. 
D)  Use of the LIFO method must be approved by the Australian Securities and Investments Commission and the Australian Taxation Office.

Question 2

The journal entries to record a credit sale under the perpetual inventory system will include a:

Accepted Answer

A)  debit to purchases 
B)  credit to inventory 
C)  debit to sales 
D)  debit to inventory. 
A)  debit to purchases 
B)  credit to inventory 
C)  debit to sales 
D)  debit to inventory.

Question 3

The following details relate to a perpetual inventory system:
$$\begin{array} { l c } 
& \$ \
\text { Purchases on credit } & 765000 \
\text { Cost of goods sold } & 816000 \
\text { Inventory at end } & 255000
\end{array}$$
What was the value of opening inventory?

Accepted Answer

A)  $459 000 
B)  $306 000 
C)  $204 000 
D)  $561 000. 
A)  $459 000 
B)  $306 000 
C)  $204 000 
D)  $561 000.

Question 4

A Cost of goods sold account is used in:

Accepted Answer

A)  the periodic system only 
B)  the perpetual system only 
C)  both the periodic and the perpetual systems 
D)  either system if provision has been made in the chart of accounts. 
A)  the periodic system only 
B)  the perpetual system only 
C)  both the periodic and the perpetual systems 
D)  either system if provision has been made in the chart of accounts.

Question 5

Which of the following statements about the use of the weighted average assumption is true?

Accepted Answer

A)  The balance sheet figure is between the LIFO and FIFO figures. 
B)  When prices are rising,it shows lower balance sheet figures than the LIFO method. 
C)  When prices are falling,it shows lower balance sheet figures than the FIFO method. 
D)  The weighted average cost is re-calculated after each transaction. 
A)  The balance sheet figure is between the LIFO and FIFO figures. 
B)  When prices are rising,it shows lower balance sheet figures than the LIFO method. 
C)  When prices are falling,it shows lower balance sheet figures than the FIFO method. 
D)  The weighted average cost is re-calculated after each transaction.

Question 6

The closing entry to close beginning inventory using the periodic method is:

Accepted Answer

A)  DR Purchases$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$CR Inventory 
B)  DR Profit and loss summary $\quad$$\quad$CR Inventory 
C)  DR Inventory$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$CR Profit and loss summary 
D)  DR Cost of goods sold$\quad$$\quad$$\quad$$\quad$CR Inventory 
A)  DR Purchases$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$CR Inventory 
B)  DR Profit and loss summary $\quad$$\quad$CR Inventory 
C)  DR Inventory$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$CR Profit and loss summary 
D)  DR Cost of goods sold$\quad$$\quad$$\quad$$\quad$CR Inventory

Question 7

Raw materials of inventory were purchased on credit for $200 000 on 10 June.The company uses the perpetual method.This transaction will:

Accepted Answer

A)  increase assets,liabilities and shareholders' equity 
B)  increase assets and liabilities but reduce shareholders' equity 
C)  increase liabilities but have no effect on assets or shareholders' equity 
D)  increase assets and increase liabilities. 
A)  increase assets,liabilities and shareholders' equity 
B)  increase assets and liabilities but reduce shareholders' equity 
C)  increase liabilities but have no effect on assets or shareholders' equity 
D)  increase assets and increase liabilities.

Question 8

Use the information below to answer the following questions:
A company purchases and sells Roofoo. It began last year with 5 units of Roofoo on hand at a cost of $10 each, and during the year its purchases and sales were as follows:
$$\begin{array} { l c c c c } 
\text { Date } & \begin{array} { c } 
\text { Units } \
\text { purchased }
\end{array} & \text { Units sold } & \begin{array} { c } 
\text { Units on } \
\text { hand }
\end{array} & \begin{array} { c } 
\text { Purchase } \
\text { price }
\end{array} \
\text { July 1 } & & & 5 & \$ 10 \
\text { Sept 10 } & 5 & & 10 & \$ 12 \
\text { Dec 20 } & & 6 & 4 & \
\text { Mar 3 } & 4 & & 8 & \$ 15 \
\text { June 10 } & &5 & 3 &
\end{array}$$
-What was the value of cost of goods sold of Roofoo,using the annual weighted average in a periodic inventory system?

Accepted Answer

A)  $131 
B)  $140 
C)  $170 
D)  $400.73. 
A)  $131 
B)  $140 
C)  $170 
D)  $400.73.

Question 9

Use the information below to answer the following questions:
Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2012. The following purchases and sales were made during September:

$\begin{array}{llcc}
  \text { Opening Balance } &  \text { Purchases } &  \text { Sales }   \
 \text {September1\quad 5 units@\$200 $ \$ $  } & \text {September3\quad 5 units @ \$240 $ \quad $}&  \text {September $ 7 \quad 7 $ units}\
 \text {  } & \text {  12\quad 3 units@\$260} & \text { 27\quad 5 units } \
 \text {  } & \text {25\quad 6 units@\$200  } & \text {  } \
\end{array}$
-What was the value of ending inventory of Algo,using the FIFO assumption?

Accepted Answer

A)  $1460 
B)  $1480 
C)  $2400 
D)  $1400. 
A)  $1460 
B)  $1480 
C)  $2400 
D)  $1400.

Question 10

Jog Ltd employs a perpetual inventory system.When a customer returns merchandise to Jog Ltd that he purchased on credit,which of these entries would Jog Ltd make?

Accepted Answer

A)  DR Accounts receivable$\quad$$\quad$$\quad$  CR Sales returns 
B)  DR Sales returns$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ CR Cash 
C)  DR Sales returns$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ CR Accounts receivable 
D)  DR Cash$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$CR Accounts receivable 
A)  DR Accounts receivable$\quad$$\quad$$\quad$  CR Sales returns 
B)  DR Sales returns$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ CR Cash 
C)  DR Sales returns$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ CR Accounts receivable 
D)  DR Cash$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$CR Accounts receivable

Question 11

Which of the following ledger accounts is NOT found in the ledger of an enterprise employing the periodic count method?

Accepted Answer

A)  purchases 
B)  purchases returns 
C)  cost of goods sold 
D)  discount expense. 
A)  purchases 
B)  purchases returns 
C)  cost of goods sold 
D)  discount expense.

Question 12

Which of the following statements about the use of the LIFO assumption is NOT true?

Accepted Answer

A)  In times of inflation,it produces a higher cost of goods sold than FIFO. 
B)  In times of falling prices,it produces lower income tax than FIFO. 
C)  The LIFO assumption matches revenues with expenses better than FIFO or average. 
D)  The LIFO assumption is affected by whether its amounts are determined using the periodic or perpetual control methods. 
A)  In times of inflation,it produces a higher cost of goods sold than FIFO. 
B)  In times of falling prices,it produces lower income tax than FIFO. 
C)  The LIFO assumption matches revenues with expenses better than FIFO or average. 
D)  The LIFO assumption is affected by whether its amounts are determined using the periodic or perpetual control methods.

Which of the following statements about the use of the LIFO method in Australia is true?

The journal entries to record a credit sale under the perpetual inventory system will include a:

The following details relate to a perpetual inventory system: \ Purchases on credit 765000 Cost of goods sold 816000 Inventory at end 255000 What was the value of opening inventory?

A Cost of goods sold account is used in:

Which of the following statements about the use of the weighted average assumption is true?

The closing entry to close beginning inventory using the periodic method is:

Raw materials of inventory were purchased on credit for $200 000 on 10 June.The company uses the perpetual method.This transaction will:

Jog Ltd employs a perpetual inventory system.When a customer returns merchandise to Jog Ltd that he purchased on credit,which of these entries would Jog Ltd make?

Which of the following ledger accounts is NOT found in the ledger of an enterprise employing the periodic count method?

Which of the following statements about the use of the LIFO assumption is NOT true?

Introduction to Financial Accounting

Measuring and Evaluating Financial Position and Financial Performance

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Financial Reporting Principles, accounting Standards and Auditing

Sustainability Reporting

Internal Control and Cash

Noncurrent Assets

Liabilities

Completing the Balance Sheet

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Appendix: Special Journals, subsidiary Ledgers and Control Accounts

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Exam 9: Inventory

Which of the following statements about the use of the LIFO method in Australia is true?

The journal entries to record a credit sale under the perpetual inventory system will include a:

The following details relate to a perpetual inventory system: \ Purchases on credit 765000 Cost of goods sold 816000 Inventory at end 255000 What was the value of opening inventory?

A Cost of goods sold account is used in:

Which of the following statements about the use of the weighted average assumption is true?

The closing entry to close beginning inventory using the periodic method is:

Raw materials of inventory were purchased on credit for $200 000 on 10 June.The company uses the perpetual method.This transaction will:

Jog Ltd employs a perpetual inventory system.When a customer returns merchandise to Jog Ltd that he purchased on credit,which of these entries would Jog Ltd make?

Which of the following ledger accounts is NOT found in the ledger of an enterprise employing the periodic count method?

Which of the following statements about the use of the LIFO assumption is NOT true?

Introduction to Financial Accounting

Measuring and Evaluating Financial Position and Financial Performance

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Financial Reporting Principles, accounting Standards and Auditing

Sustainability Reporting

Internal Control and Cash

Noncurrent Assets

Liabilities

Completing the Balance Sheet

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Appendix: Special Journals, subsidiary Ledgers and Control Accounts

Filters