Question 1

In a periodic inventory system,the cost of purchases is recognized as

Accepted Answer

A) an integral part of the calculation of cost of goods sold. 
B) the only part of the calculation of cost of goods sold. 
C) an increase in the Inventory account. 
D) an increase in an asset account. 
A) an integral part of the calculation of cost of goods sold. 
B) the only part of the calculation of cost of goods sold. 
C) an increase in the Inventory account. 
D) an increase in an asset account.

Question 2

One problem with the weighted average cost method is that it allows management to manipulate income.

Accepted Answer

A) True 
 B)False

Question 3

When merchandise is sold FOB shipping point,the buyer is responsible for the shipping costs.

Accepted Answer

A) True 
 B)False

Question 4

Giant-Mart purchased a large shipment of shoes from Primus,Inc.on credit near the end of its accounting period.Primus shipped the shoes in January and Giant-Mart received the shoes in February.Assume that Giant-Mart's accounting period ends on January 31,while Giant's accounting period ends on May 31.Answer each independent question in the set that follows.
​
Required
Under what shipping terms would Giant-Mart include the shoes as part of inventory on its January 31 balance sheet?

Accepted Answer

Giant-Mart will include the sh

Question 5

Which of the following statements is true?

Accepted Answer

A) Inventory losses can be identified and controlled better under the perpetual system. 
B) Inventory can only be sold at the end of an accounting period under the periodic system. 
C) There is no difference in cost to implement a perpetual as compared to a periodic system. 
D) The perpetual system eliminates the need for an annual inventory count. 
A) Inventory losses can be identified and controlled better under the perpetual system. 
B) Inventory can only be sold at the end of an accounting period under the periodic system. 
C) There is no difference in cost to implement a perpetual as compared to a periodic system. 
D) The perpetual system eliminates the need for an annual inventory count.

Question 6

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 for Grappa,Inc.
 
How much is the cost of goods purchased for 2018?

Accepted Answer

$580,000 (Purchases)

Question 7

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 for Grappa,Inc.
 
What amount is cost of goods available for sale for 2018?

Accepted Answer

$580,000 (Purchases)+ $18,000

Question 8

A __________ is an amount deducted by customers for payment within the discount period.

Accepted Answer

The answer of A __________ is an amount deducted by...

Question 9

Herndon Corp.purchased merchandise on account from Likert Corp.on November 18,2017.On November 21,2017,Herndon returned damaged merchandise to Likert and was granted an adjustment on its account.Herndon uses the periodic inventory system.What effect does the merchandise return have on Herndon's accounting equation?

Accepted Answer

A) Assets and stockholders' equity decrease. 
B) Assets and liabilities decrease. 
C) Liabilities decrease and stockholders' equity increases. 
D) Liabilities and stockholders' equity decrease. 
A) Assets and stockholders' equity decrease. 
B) Assets and liabilities decrease. 
C) Liabilities decrease and stockholders' equity increases. 
D) Liabilities and stockholders' equity decrease.

Question 10

Many countries prohibit the use of LIFO for tax or financial reporting purposes.

Accepted Answer

A) True 
 B)False

Question 11

Net purchases equals purchases less purchase returns,allowances,and discounts plus transportation-in.

Accepted Answer

A) True 
 B)False

Question 12

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

- How many units did Roki Inc.sell during June?

Accepted Answer

A) 50 
B) 90 
C) 100 
D) 150 
A) 50 
B) 90 
C) 100 
D) 150

Question 13

The inventory turnover ratio is a measure of how many times during a period a company sells off its inventory.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements regarding cost of goods available for sale is true?

Accepted Answer

A) Cost of goods available for sale is an expense account. 
B) Cost of goods available for sale is added to beginning inventory to determine cost of purchases during the period. 
C) Cost of goods available for sale is subtracted from net sales to arrive at the gross margin. 
D) Cost of goods available for sale is a "pool" of costs to be distributed between what was sold and what was not sold during a period. 
A) Cost of goods available for sale is an expense account. 
B) Cost of goods available for sale is added to beginning inventory to determine cost of purchases during the period. 
C) Cost of goods available for sale is subtracted from net sales to arrive at the gross margin. 
D) Cost of goods available for sale is a "pool" of costs to be distributed between what was sold and what was not sold during a period.

Question 15

Quan uses a periodic inventory system.The company had the following data for the month of April: 
$$\begin{array}{lll}
\text { April } 1 & \text { On hand, } 10 \text { units } @ \$ 2 \text { each } & \$ 20 \
19 & \text { Purchased } 90 \text { units } @ \$ 3 \text { each } & 270 \
& \text { Cost of goods avail able for sale } & \$ 290\
30 &\text { On hand, } 20 \text { units }
\end{array}$$
- If Quan,Inc.uses the weighted average cost 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 16

Cost of goods available for sale is equal to beginning inventory less cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 17

Which f the following statements is true if the amount assigned to ending inventory is incorrect?

Accepted Answer

A) The balance sheet is affected,but the income statement is not. 
B) The income statement is affected,but the balance sheet is not. 
C) Neither the balance sheet nor the income statement are affected. 
D) Both the balance sheet and the income statement are affected. 
A) The balance sheet is affected,but the income statement is not. 
B) The income statement is affected,but the balance sheet is not. 
C) Neither the balance sheet nor the income statement are affected. 
D) Both the balance sheet and the income statement are affected.

Question 18

Hawk Store counted some of its inventory twice.As a result,its operating expenses will be

Accepted Answer

A) correct only if Hawk Store calculates it cost of goods sold correctly. 
B) correct since operating expenses are not affected by inventory costs. 
C) overstated. 
D) understated. 
A) correct only if Hawk Store calculates it cost of goods sold correctly. 
B) correct since operating expenses are not affected by inventory costs. 
C) overstated. 
D) understated.

Question 19

Purchases is the temporary account used in a perpetual inventory system to record acquisitions of merchandise.

Accepted Answer

A) True 
 B)False

Question 20

If ending inventory is overstated,then net income is overstated as well.

Accepted Answer

A) True 
 B)False

In a periodic inventory system,the cost of purchases is recognized as

One problem with the weighted average cost method is that it allows management to manipulate income.

When merchandise is sold FOB shipping point,the buyer is responsible for the shipping costs.

Which of the following statements is true?

A __________ is an amount deducted by customers for payment within the discount period.

Many countries prohibit the use of LIFO for tax or financial reporting purposes.

Net purchases equals purchases less purchase returns,allowances,and discounts plus transportation-in.

The inventory turnover ratio is a measure of how many times during a period a company sells off its inventory.

Which of the following statements regarding cost of goods available for sale is true?

Cost of goods available for sale is equal to beginning inventory less cost of goods sold.

Which f the following statements is true if the amount assigned to ending inventory is incorrect?

Hawk Store counted some of its inventory twice.As a result,its operating expenses will be

Purchases is the temporary account used in a perpetual inventory system to record acquisitions of merchandise.

If ending inventory is overstated,then net income is overstated as well.

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

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Exam 5: Inventories and Cost of Goods Sold

In a periodic inventory system,the cost of purchases is recognized as

One problem with the weighted average cost method is that it allows management to manipulate income.

When merchandise is sold FOB shipping point,the buyer is responsible for the shipping costs.

Which of the following statements is true?

A __________ is an amount deducted by customers for payment within the discount period.

Many countries prohibit the use of LIFO for tax or financial reporting purposes.

Net purchases equals purchases less purchase returns,allowances,and discounts plus transportation-in.

The inventory turnover ratio is a measure of how many times during a period a company sells off its inventory.

Which of the following statements regarding cost of goods available for sale is true?

Cost of goods available for sale is equal to beginning inventory less cost of goods sold.

Which f the following statements is true if the amount assigned to ending inventory is incorrect?

Hawk Store counted some of its inventory twice.As a result,its operating expenses will be

Purchases is the temporary account used in a perpetual inventory system to record acquisitions of merchandise.

If ending inventory is overstated,then net income is overstated as well.

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