Exam 5: Inventories and Cost of Goods Sold

The ratio of a company's cost of goods sold to its average inventory is called its __________.

Under FIFO,the units in the ending inventory represent the oldest purchase of the period.

Adam Inc.uses a perpetual inventory system and has the following data for January: Jan. 1 On hand, 10 units @\ 2 each \ 20 4 Sold 8 units @\ 10 each 80 22 Purchased 50 units @\ 4 each 200 26 Sold 48 units @\ 10 each 480 - If Adam uses the FIFO method,how much is ending inventory on January 31?

Under the indirect method of preparing the statement of cash flows,an increase in accounts payable is added to net income to determine cash flow from operating activities.

The adjustment to write down inventory to its market value results in a loss on the income statement.

The __________ method results in the best approximation of cost of goods sold on the income statement.

When a weighted average cost assumption is applied with a perpetual system,it is sometimes called a(n)__________.

Complete the following data taken from the condensed income statements for merchandising companies: Action,Break,and Connors. Action Break Connors Net income \ 315 ? \ 215 Sales ? \ 865 560 Gross profit 430 ? 325 Operating expenses ? 125 ? Cost of goods sold 545 320 ?

Using the following information,what is the amount of cost of goods sold? ? ? Purchases \ 32,000 Merchandise inventory, September 1 5,700 Merchandise inventory, September 30 6,370 Purchase returns and allowances 1,200 Purchase discounts 960 Transportation-in 1,040 Sales 63,000 Sales returns and allowances 910

According to the IRS's LIFO conformity rule,a company that chooses LIFO to report net income to its stockholders may not use LIFO in preparing its tax return.

George's Department Store George's Department Store is a merchandising company that uses the periodic inventory system.Selected account balances are listed below: Sales \ 200,000 Purchases 90,000 Inventory (beginning) 23,000 Inventory (ending) 17,000 Purchase returns and allowances 3,000 Purchase discounts 7,000 Transportation-in 4,000 Sales discounts 8,000 Sales returns and allowances 5,000 -Refer to the account information for George's Department Store. ? Calculate net sales.

Under the periodic inventory system,a physical inventory must be taken at the end of the period to determine cost of goods sold.

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.

If cost of goods sold under FIFO was $8,000 and was $10,000 under LIFO,assuming a tax rate of 40%,how much tax savings resulted from using LIFO?

What net effect is there on a retail store's accounting equation when merchandise sold for a profit is returned by customers?

Cost of goods sold is

Sales revenue is an inflow of assets.

Which inventory costing method might allow a company to make significant inventory purchases at year-end for the purpose of manipulating income?

Blenham,Inc.sells merchandise on credit.If a customer pays its balance due within the discount period,what is the effect of the payment on Blenham's accounting equation?

The weighted average cost is calculated by adding up the units' costs from each purchase and then dividing by the number of purchases.