Question 1

The lower of cost and net realizable value rule for inventory is an example of the application of:

Accepted Answer

A) The conservatism principle 
B) The historical cost principle 
C) The materiality constraint 
D) The matching principle 
A) The conservatism principle 
B) The historical cost principle 
C) The materiality constraint 
D) The matching principle

Question 2

The periodic inventory system is based on a physical inventory count of ending inventory and the costing of those goods to determine the proper amounts for cost of sales and ending inventory.

Accepted Answer

A) True 
 B)False

Question 3

When the periodic inventory system is used,the year-end statement of financial position may easily be prepared without taking a physical inventory.

Accepted Answer

A) True 
 B)False

Question 4

The cost of goods available for sale is allocated between

Accepted Answer

A) beginning inventory and ending inventory. 
B) beginning inventory and cost of goods on hand. 
C) ending inventory and cost of goods sold. 
D) beginning inventory and cost of goods purchased. 
A) beginning inventory and ending inventory. 
B) beginning inventory and cost of goods on hand. 
C) ending inventory and cost of goods sold. 
D) beginning inventory and cost of goods purchased.

Question 5

Joe Company sold merchandise with an invoice price of $1,000 to Gibbs,Inc.,with terms of 2/10,n/30.Which of the following is the correct entry for Joe Company to record the collection from Gibbs within the 10 days if the company uses the periodic inventory system?

Accepted Answer

A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D

Question 6

In the periodic inventory system,ending inventory is determined by taking an actual physical count of goods on hand on the last day of the accounting period; beginning inventory for the next period is determined by taking another physical count of goods on the first day of the new period.

Accepted Answer

A) True 
 B)False

Question 7

Will Company's independent accountant discovered that the ending inventory for 20B had been overstated by the company by $2,000.Before the correction,what was the effect in the 20B income statement because of the overstatement of the ending inventory?

Accepted Answer

A) Pretax profit understated by $2,000. 
B) Cost of goods sold was understated by $2,000. 
C) Pretax profit was overstated and the cost of goods sold was understated by $2000. 
D) Pretax profit was overstated by $2,000. 
A) Pretax profit understated by $2,000. 
B) Cost of goods sold was understated by $2,000. 
C) Pretax profit was overstated and the cost of goods sold was understated by $2000. 
D) Pretax profit was overstated by $2,000.

Question 8

Telly Company reported profit in 20A of $22,000 and in 20B of $32,000.Later it was discovered that the 20A ending inventory was overstated by $5,000.Compute the amount of profit (disregard income tax)for 20A and 20B.
20A $____________________ 20B $__________________

Accepted Answer

20A--$22,000 - $5,00

Question 9

Inventory that originally cost $10,000 was written down to its net realizable value of $8,500 in the last accounting period.At the end of the current accounting period,the net realizable value is determined to be $10,500.At what amount should the inventory be reported on the current period's statement of financial position?

Accepted Answer

A) $10,000. 
B) $10,500. 
C) $8,500. 
D) $9,500. 
A) $10,000. 
B) $10,500. 
C) $8,500. 
D) $9,500.

Question 10

Two systems are used in accounting for inventory--perpetual and periodic.Which of the following statements is correct?

Accepted Answer

A) In a perpetual inventory system,the inventory account is not changed for each purchase during the accounting period. 
B) In a perpetual inventory system,cost of goods sold is recorded at the time of each sale during the accounting period. 
C) In a periodic inventory system,cost of goods sold is developed from a comparison of beginning inventory and ending inventory only. 
D) In a periodic inventory system,the inventory account is increased for each purchase during the accounting period. 
A) In a perpetual inventory system,the inventory account is not changed for each purchase during the accounting period. 
B) In a perpetual inventory system,cost of goods sold is recorded at the time of each sale during the accounting period. 
C) In a periodic inventory system,cost of goods sold is developed from a comparison of beginning inventory and ending inventory only. 
D) In a periodic inventory system,the inventory account is increased for each purchase during the accounting period.

Question 11

If a company decreases their inventory turnover ratio from last year to the current year,which of the following could cause that change?

Accepted Answer

A) Reduction of inventory levels through implementation of Just-in-Time. 
B) Speedier production processes. 
C) Increase in inventory levels through change in product mix. 
D) Increasing sales at a faster rate than the growth in inventory while maintaining a constant gross profit percentage. 
A) Reduction of inventory levels through implementation of Just-in-Time. 
B) Speedier production processes. 
C) Increase in inventory levels through change in product mix. 
D) Increasing sales at a faster rate than the growth in inventory while maintaining a constant gross profit percentage.

Question 12

Which of the following costs would not be part of product inventory costs for a manufacturer such as Harley Davidson?

Accepted Answer

A) Costs to store finished motorcycles until they are sold. 
B) Kickstands purchased for use in manufacturing the motorcycles. 
C) The factory manager's salary and benefits. 
D) The wages and benefits of an employee in the welding department. 
A) Costs to store finished motorcycles until they are sold. 
B) Kickstands purchased for use in manufacturing the motorcycles. 
C) The factory manager's salary and benefits. 
D) The wages and benefits of an employee in the welding department.

Question 13

Give the journal entries for the transactions listed below under each of the two inventory systems.A.Purchase merchandise for cash,$1,000 B.Sold merchandise for $600 cash that had a cost of $480 (cost is 80% of the sales price)C.Accepted a sales return from a customer: Sales price $30.A cash refund was given to the customer.The goods were returned to regular inventory

Accepted Answer

The answer of Give the journal entries for the transactions...

Question 14

A company reports its 20B cost of goods sold at $20.0 billion.Its ending inventory for 20B is $1.8 billion and for 20A,ending inventory was $1.5 billion.How much inventory did the company purchase during 20B?

Accepted Answer

A) $18.5 billion 
B) $19.7 billion 
C) $20.3 billion 
D) $21.8 billion 
A) $18.5 billion 
B) $19.7 billion 
C) $20.3 billion 
D) $21.8 billion

Question 15

Wilburn Company reported the following data at year-end: Sales,$100,000; Beginning inventory,$8,000; Ending inventory,$6,000; Cost of goods sold,$60,000; and Gross margin,$40,000.What was the amount of merchandise purchases for the year?

Accepted Answer

A) $40,000 
B) $46,000 
C) $58,000 
D) $68,000 
A) $40,000 
B) $46,000 
C) $58,000 
D) $68,000

Question 16

The lower of cost and net realizable value basis of valuing inventories ensures that inventories are

Accepted Answer

A) valued at their current cost. 
B) not undervalued. 
C) not overvalued. 
D) valued at their selling price. 
A) valued at their current cost. 
B) not undervalued. 
C) not overvalued. 
D) valued at their selling price.

Question 17

Supply the missing dollar amounts for the 2012 income statement of RDS Company by writing your answer in the table provided for you for each of the following independent cases.Show your computations below the table.

Accepted Answer

The answer of Supply the missing dollar amounts for the...

Question 18

When a perpetual inventory system is used,the purchases returns and allowances account will not be part of the general ledger accounts.

Accepted Answer

A) True 
 B)False

Question 19

HD Motorcycles has an inventory turnover ratio of 10.1 in 2012 compared to their competitor TT Motorcycle with a 2.6 ratio in 2012.Which of the following is the most likely cause of TT Co's lower ratio?

Accepted Answer

A) Lower levels of inventory compared to HD. 
B) It takes TT Co.fewer days to sell their inventory. 
C) TT Co's smaller size makes it difficult for them to achieve the economies of scale in comparison to HD's scale of operations. 
D) Higher inventory levels compared to HD. 
A) Lower levels of inventory compared to HD. 
B) It takes TT Co.fewer days to sell their inventory. 
C) TT Co's smaller size makes it difficult for them to achieve the economies of scale in comparison to HD's scale of operations. 
D) Higher inventory levels compared to HD.

Question 20

In periods of falling prices,FIFO will result in a higher cost of goods sold than the average cost formula.

Accepted Answer

A) True 
 B)False

The lower of cost and net realizable value rule for inventory is an example of the application of:

The periodic inventory system is based on a physical inventory count of ending inventory and the costing of those goods to determine the proper amounts for cost of sales and ending inventory.

When the periodic inventory system is used,the year-end statement of financial position may easily be prepared without taking a physical inventory.

The cost of goods available for sale is allocated between

Joe Company sold merchandise with an invoice price of $1,000 to Gibbs,Inc.,with terms of 2/10,n/30.Which of the following is the correct entry for Joe Company to record the collection from Gibbs within the 10 days if the company uses the periodic inventory system?

In the periodic inventory system,ending inventory is determined by taking an actual physical count of goods on hand on the last day of the accounting period; beginning inventory for the next period is determined by taking another physical count of goods on the first day of the new period.

Will Company's independent accountant discovered that the ending inventory for 20B had been overstated by the company by $2,000.Before the correction,what was the effect in the 20B income statement because of the overstatement of the ending inventory?

Telly Company reported profit in 20A of $22,000 and in 20B of $32,000.Later it was discovered that the 20A ending inventory was overstated by $5,000.Compute the amount of profit (disregard income tax)for 20A and 20B. 20A $__ 20B $

Two systems are used in accounting for inventory--perpetual and periodic.Which of the following statements is correct?

If a company decreases their inventory turnover ratio from last year to the current year,which of the following could cause that change?

Which of the following costs would not be part of product inventory costs for a manufacturer such as Harley Davidson?

A company reports its 20B cost of goods sold at $20.0 billion.Its ending inventory for 20B is $1.8 billion and for 20A,ending inventory was $1.5 billion.How much inventory did the company purchase during 20B?

Wilburn Company reported the following data at year-end: Sales,$100,000; Beginning inventory,$8,000; Ending inventory,$6,000; Cost of goods sold,$60,000; and Gross margin,$40,000.What was the amount of merchandise purchases for the year?

The lower of cost and net realizable value basis of valuing inventories ensures that inventories are

Supply the missing dollar amounts for the 2012 income statement of RDS Company by writing your answer in the table provided for you for each of the following independent cases.Show your computations below the table.

When a perpetual inventory system is used,the purchases returns and allowances account will not be part of the general ledger accounts.

HD Motorcycles has an inventory turnover ratio of 10.1 in 2012 compared to their competitor TT Motorcycle with a 2.6 ratio in 2012.Which of the following is the most likely cause of TT Co's lower ratio?

In periods of falling prices,FIFO will result in a higher cost of goods sold than the average cost formula.

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Filters

Exam 8: Reporting and Interpreting Property, plant, and Equipment; Intangibles; and Natural Resources

The lower of cost and net realizable value rule for inventory is an example of the application of:

The periodic inventory system is based on a physical inventory count of ending inventory and the costing of those goods to determine the proper amounts for cost of sales and ending inventory.

When the periodic inventory system is used,the year-end statement of financial position may easily be prepared without taking a physical inventory.

The cost of goods available for sale is allocated between

Joe Company sold merchandise with an invoice price of $1,000 to Gibbs,Inc.,with terms of 2/10,n/30.Which of the following is the correct entry for Joe Company to record the collection from Gibbs within the 10 days if the company uses the periodic inventory system?

In the periodic inventory system,ending inventory is determined by taking an actual physical count of goods on hand on the last day of the accounting period; beginning inventory for the next period is determined by taking another physical count of goods on the first day of the new period.

Will Company's independent accountant discovered that the ending inventory for 20B had been overstated by the company by $2,000.Before the correction,what was the effect in the 20B income statement because of the overstatement of the ending inventory?

Telly Company reported profit in 20A of $22,000 and in 20B of $32,000.Later it was discovered that the 20A ending inventory was overstated by $5,000.Compute the amount of profit (disregard income tax)for 20A and 20B. 20A $____________________ 20B $__________________

Two systems are used in accounting for inventory--perpetual and periodic.Which of the following statements is correct?

If a company decreases their inventory turnover ratio from last year to the current year,which of the following could cause that change?

Which of the following costs would not be part of product inventory costs for a manufacturer such as Harley Davidson?

A company reports its 20B cost of goods sold at $20.0 billion.Its ending inventory for 20B is $1.8 billion and for 20A,ending inventory was $1.5 billion.How much inventory did the company purchase during 20B?

Wilburn Company reported the following data at year-end: Sales,$100,000; Beginning inventory,$8,000; Ending inventory,$6,000; Cost of goods sold,$60,000; and Gross margin,$40,000.What was the amount of merchandise purchases for the year?

The lower of cost and net realizable value basis of valuing inventories ensures that inventories are

Supply the missing dollar amounts for the 2012 income statement of RDS Company by writing your answer in the table provided for you for each of the following independent cases.Show your computations below the table.

When a perpetual inventory system is used,the purchases returns and allowances account will not be part of the general ledger accounts.

HD Motorcycles has an inventory turnover ratio of 10.1 in 2012 compared to their competitor TT Motorcycle with a 2.6 ratio in 2012.Which of the following is the most likely cause of TT Co's lower ratio?

In periods of falling prices,FIFO will result in a higher cost of goods sold than the average cost formula.

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Filters

Telly Company reported profit in 20A of $22,000 and in 20B of $32,000.Later it was discovered that the 20A ending inventory was overstated by $5,000.Compute the amount of profit (disregard income tax)for 20A and 20B. 20A $__ 20B $