Question 1

Which one of the following statements is not true?

Accepted Answer

A) The Inventory account is updated after every sale or purchase of merchandise under the perpetual inventory system. 
B) The Inventory account is updated only at the end of the accounting period under the periodic inventory system. 
C) The Cost of Goods Sold account is updated after each sale of merchandise under the periodic inventory system. 
D) The Purchases account is used only under the periodic inventory system. 
A) The Inventory account is updated after every sale or purchase of merchandise under the perpetual inventory system. 
B) The Inventory account is updated only at the end of the accounting period under the periodic inventory system. 
C) The Cost of Goods Sold account is updated after each sale of merchandise under the periodic inventory system. 
D) The Purchases account is used only under the periodic inventory system.

Question 2

Finished goods for a manufacturer are the equivalent of merchandise inventory for a retailer or wholesaler in that both represent the inventory of goods held for sale.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) Assets and stockholders' equity decrease. 
B) Assets and stockholders' equity increase. 
C) Assets decrease and liabilities increase. 
D) There is no net effect. 
A) Assets and stockholders' equity decrease. 
B) Assets and stockholders' equity increase. 
C) Assets decrease and liabilities increase. 
D) There is no net effect.

Question 4

Like sales revenue,cost of goods sold represents an inflow of assets.

Accepted Answer

A) True 
 B)False

Question 5

If an entity overstates its ending inventory for the current year,what are the effects on assets,cost of goods sold,income before taxes,and retained earnings for the current year?

Accepted Answer

An overstatement of ending inventory for

Question 6

The excess of the value of a company's inventory stated at FIFO over the value stated at LIFO is called the __________.

Accepted Answer

The answer of The excess of the value of a...

Question 7

Quan uses a periodic inventory system.The company had the following data for the month of April:  
$$\begin{array}{llll}
\text { April } 1 & \text { On hand, } 10 \text { units } @ \$ 2 \text { each } & \$ 20 \
19 & \text { Purchased } 90 \text { units } @ \$ 3 \text { each } & 270 \
& \text { Cost of goods avail able for sale } & \$ 290\
30 &\text { On hand, } 20 \text { units }
\end{array}$$
 
-If Quan,Inc.uses the FIFO method,how much is cost of goods sold for April?

Accepted Answer

A) $230 
B) $232 
C) $240 
D) $250 
A) $230 
B) $232 
C) $240 
D) $250

Question 8

Which one of the following types of inventory accounts would be used by a wholesaler or retailer?

Accepted Answer

A) Raw Materials Inventory 
B) Work-in-Process Inventory 
C) Finished Goods Inventory 
D) Merchandise Inventory 
A) Raw Materials Inventory 
B) Work-in-Process Inventory 
C) Finished Goods Inventory 
D) Merchandise Inventory

Question 9

Cooking Corner

Cooking Corner reported inventory on its balance sheet at December 31, 2016 at $32,000. During 2017, Cooking Corner purchased goods totaling $634,000 on account with terms of 2/10, n/30, FOB shipping point. Total charges paid by Cooking Corner directly to the freight company were $1,000. At the end of 2017, inventory on hand totaled to $45,000. Net sales for 2017 totaled $1,300,000. Cooking Corner employs a periodic inventory system.

-Refer to the information about Cooking Corner.
 
How much is Cooking Corner's cost of goods sold assuming that Cooking Corner takes advantage of one-half of the cash discount?

Accepted Answer

$32,000 (Beginning inventory)+

Question 10

George's Department Store
George's Department Store is a merchandising company that uses the periodic inventory system.Selected account balances are listed below:
 $$\begin{array} { l r } 
\text { Sales } & \$ 200,000 \
\text { Purchases } & 90,000 \
\text { Inventory (beginning) } & 23,000 \
\text { Inventory (ending) } & 17,000 \
\text { Purchase returns and allowances } & 3,000 \
\text { Purchase discounts } & 7,000 \
\text { Transportation-in } & 4,000 \
\text { Sales discounts } & 8,000 \
\text { Sales returns and allowances } & 5,000
\end{array}$$
-Refer to the account information for George's Department Store. Determine gross profit.

Accepted Answer

A) $93,000 
B) $97,000 
C) $103,000 
D) None of these choices 
A) $93,000 
B) $97,000 
C) $103,000 
D) None of these choices

Question 11

The three forms of inventory for a manufacturer are direct materials,direct labor,and finished goods.

Accepted Answer

A) True 
 B)False

Question 12

The buyer must include goods purchased FOB shipping point in its Inventory account if the goods are still in transit.

Accepted Answer

A) True 
 B)False

Question 13

When the market value of inventory items has declined below its cost,which method would be the most appropriate in complying with GAAP?

Accepted Answer

A) Gross profit 
B) LIFO 
C) Lower of cost or market 
D) Retail 
A) Gross profit 
B) LIFO 
C) Lower of cost or market 
D) Retail

Question 14

Under the __________ method,an increase in inventory is shown as an adjustment to net income in the Operating Activities category of the statement of cash flows.

Accepted Answer

The answer of Under the __________ method,an increase in inventory...

Question 15

The Ramien Store held inventory items at the end of 2017.Which items should Ramien include as part of its total inventory cost?

Accepted Answer

A) Freight incurred in shipping goods to customers 
B) Annual income taxes paid for operations 
C) Excise taxes and sales taxes paid to purchase the inventory 
D) Cost of salaries of clerks that sell the inventory items 
A) Freight incurred in shipping goods to customers 
B) Annual income taxes paid for operations 
C) Excise taxes and sales taxes paid to purchase the inventory 
D) Cost of salaries of clerks that sell the inventory items

Question 16

Transportation-in is

Accepted Answer

A) an operating expense. 
B) recorded as a purchases expense in a periodic inventory system. 
C) added to transportation-out as part of the calculation of cost of goods sold. 
D) part of cost of goods purchased. 
A) an operating expense. 
B) recorded as a purchases expense in a periodic inventory system. 
C) added to transportation-out as part of the calculation of cost of goods sold. 
D) part of cost of goods purchased.

Question 17

Vern Corp.sold merchandise to a customer on credit.The invoice amount was $2,000;the invoice date was June 10;credit terms were 1/20,n/30.Which one of the following statements is true?

Accepted Answer

A) The customer can take a $20 discount if the invoice is paid on July 10. 
B) The customer should pay $2,000 if the invoice is paid on July 9. 
C) The customer must pay a $20 penalty if payment is made after July 9. 
D) The customer must pay $2,020 if payment is made after June 20. 
A) The customer can take a $20 discount if the invoice is paid on July 10. 
B) The customer should pay $2,000 if the invoice is paid on July 9. 
C) The customer must pay a $20 penalty if payment is made after July 9. 
D) The customer must pay $2,020 if payment is made after June 20.

Question 18

The recognition of cost of goods sold as an expense in the same period that sales revenue is recognized from the sale of merchandise is a good example of the

Accepted Answer

A) matching principle. 
B) full disclosure principle. 
C) revenue realization principle. 
D) historical cost principle. 
A) matching principle. 
B) full disclosure principle. 
C) revenue realization principle. 
D) historical cost principle.

Question 19

Roki Inc.uses the periodic inventory system and has the following data for the month of June:  
$$\begin{array} { r l r } 
\text { June }1 & \text { On hand, 50 units } @ \$ 15.00 \text { each } & \$ 750.00 \
5 & \text { Purchased 115 units } \$ 15.10 \text { each } &1,736.50\
14 & \text { Purchased } 75 \text { units } @ \$ 15.20 \text { each } & 1,140.00  \
& \text { Total cost of goods avalable for sale } & \$ 3,626.50  \
30 & \text { On hand, 90 units } &\
&
\end{array}$$

- If Roki uses the LIFO method,the cost of goods sold for June would be

Accepted Answer

A) $1,354.00. 
B) $2,200.00. 
C) $2,272.50. 
D) $2,296.08. 
A) $1,354.00. 
B) $2,200.00. 
C) $2,272.50. 
D) $2,296.08.

Question 20

Cost of goods sold represents an outflow of an asset,inventory,from the sale of products.

Accepted Answer

A) True 
 B)False

Which one of the following statements is not true?

Finished goods for a manufacturer are the equivalent of merchandise inventory for a retailer or wholesaler in that both represent the inventory of goods held for sale.

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

Like sales revenue,cost of goods sold represents an inflow of assets.

If an entity overstates its ending inventory for the current year,what are the effects on assets,cost of goods sold,income before taxes,and retained earnings for the current year?

The excess of the value of a company's inventory stated at FIFO over the value stated at LIFO is called the __________.

Which one of the following types of inventory accounts would be used by a wholesaler or retailer?

The three forms of inventory for a manufacturer are direct materials,direct labor,and finished goods.

The buyer must include goods purchased FOB shipping point in its Inventory account if the goods are still in transit.

When the market value of inventory items has declined below its cost,which method would be the most appropriate in complying with GAAP?

Under the __________ method,an increase in inventory is shown as an adjustment to net income in the Operating Activities category of the statement of cash flows.

The Ramien Store held inventory items at the end of 2017.Which items should Ramien include as part of its total inventory cost?

Transportation-in is

Vern Corp.sold merchandise to a customer on credit.The invoice amount was $2,000;the invoice date was June 10;credit terms were 1/20,n/30.Which one of the following statements is true?

The recognition of cost of goods sold as an expense in the same period that sales revenue is recognized from the sale of merchandise is a good example of the

Cost of goods sold represents an outflow of an asset,inventory,from the sale of products.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters

Exam 5: Inventories and Cost of Goods Sold

Which one of the following statements is not true?

Finished goods for a manufacturer are the equivalent of merchandise inventory for a retailer or wholesaler in that both represent the inventory of goods held for sale.

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

Like sales revenue,cost of goods sold represents an inflow of assets.

If an entity overstates its ending inventory for the current year,what are the effects on assets,cost of goods sold,income before taxes,and retained earnings for the current year?

The excess of the value of a company's inventory stated at FIFO over the value stated at LIFO is called the __________.

Which one of the following types of inventory accounts would be used by a wholesaler or retailer?

The three forms of inventory for a manufacturer are direct materials,direct labor,and finished goods.

The buyer must include goods purchased FOB shipping point in its Inventory account if the goods are still in transit.

When the market value of inventory items has declined below its cost,which method would be the most appropriate in complying with GAAP?

Under the __________ method,an increase in inventory is shown as an adjustment to net income in the Operating Activities category of the statement of cash flows.

The Ramien Store held inventory items at the end of 2017.Which items should Ramien include as part of its total inventory cost?

Transportation-in is

Vern Corp.sold merchandise to a customer on credit.The invoice amount was $2,000;the invoice date was June 10;credit terms were 1/20,n/30.Which one of the following statements is true?

The recognition of cost of goods sold as an expense in the same period that sales revenue is recognized from the sale of merchandise is a good example of the

Cost of goods sold represents an outflow of an asset,inventory,from the sale of products.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters