Evaluate each inventory error separately and determine whether it overstates or understates cost of goods sold and net income. \[\begin{array} { | l | l | l | } \hline \text { Inventory error: } & \text { Cost of goods sold is: } & \text { Net income is: } \\ \hline \text { Understatement of beginning inventory } & & \\ \hline \text { Understatement of ending inventory } & & \\ \hline \text { Overstatement of beginning inventory } & & \\ \hline \text { Overstatement of ending inventory } & & \\ \hline \end{array}\]

The answer of Evaluate each inventory error separately and determine...

A company made the following merchandise purchases and sales during the month of July: \[\begin{array} { | l | l | l | l | } \hline \text { July 1 purchased } & 380 & \text { units at } & \$ 15 \text { each } \\ \hline \text { July 5 purchased } & 270 & \text { units at } & \$ 20 \text { each } \\ \hline \text { July 9 sold } & 500 & \text { units at } & \$ 55 \text { each } \\ \hline \text { July 14 purchased } & 300 & \text { units at } & \$ 24 \text { each } \\ \hline \text { July 20 sold } & 250 & \text { units at } & \$ 55 \text { each } \\ \hline \text { July 30 purchased } & 250 & \text { units at } & \$ 30 \text { each } \\ \hline \end{array}\] There was no beginning inventory. If the company uses the first-in, first-out perpetual inventory method what would be the cost of the ending inventory?

The answer of A company made the following merchandise purchases...

A company that uses a perpetual inventory system made the following cash purchases and sales. There was no beginning inventory. \[\begin{array} { | l | l | } \hline \text { January 1: } & \text { Purchased } 100 \text { units at } \$ 10 \text { per unit } \\ \hline \text { February 5: } & \text { Purchased } 60 \text { units at } \$ 12 \text { per unit } \\ \hline \text { March 16: } & \text { Sold } 40 \text { Units for } \$ 16 \text { per unit } \\ \hline \end{array}\] Prepare the general journal entries to record the March 16 sale using the LIFO inventory valuation method.

The answer of A company that uses a perpetual inventory...

Exam 5: Inventories and Cost of Sales

Given the following information, determine the cost of ending inventory at December 31 using the Weighted Average perpetual inventory method. December 2: 5 units were purchased at $7 per unit. December 9: 10 units were purchased at $9.40 per unit. December 11: 12 units were sold at $35 per unit December 15: 20 units were purchased at $10.15 per unit December 22: 18 units were sold at $35 per unit

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Question 81

If damaged goods can be sold at a reduced price, they are included in inventory at their ________________________.

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Question 82

A company had inventory on November 1 of 5 units at a cost of $20 each. On November 2, they purchased 10 units at $22 each. On November 6 they purchased 6 units at $25 each. On November 5, 8 units were sold for $55 each. Using the Weighted Average perpetual inventory method, what was the value of the inventory on November 30?

(Multiple Choice)

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Question 83

The conservatism principle:

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Question 84

On June 30 a company needed to estimate its ending inventory to prepare its second quarter financial statements. The following information is available: Beginning inventory, April 1: $6,000 Net sales: $70,000 Net purchases: $36,000 The company's gross margin ratio is 12%. Using the gross profit method, the cost of goods sold would be:

(Multiple Choice)

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Question 85

The reliability of the gross profit method depends on a good estimate of the gross profit ratio.

(True/False)

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Question 86

If obsolete or damaged goods can be sold, they will be included in inventory at their net realizable value.

(True/False)

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Question 87

The ______________________ method of assigning costs to inventory and cost of goods sold requires that the cost of goods available for sale be divided by the units of inventory available when each sale takes place.

(Essay)

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Question 88

When purchase costs regularly rise, the ___________________ method of inventory valuation yields the lowest gross profit and net income, providing a tax advantage.

(Short Answer)

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Question 89

Neither GAAP nor IFRS allow inventory to be adjusted upward beyond the original cost.

(True/False)

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Question 90

Use the following information to estimate the third quarter ending inventory under the gross profit method. This company's gross profit ratio is 20%. Third quarter beginning inventory: $54,000 Net sales for third quarter: $85,000 Net purchases for third quarter: $21,000

(Multiple Choice)

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Question 91

Evaluate each inventory error separately and determine whether it overstates or understates cost of goods sold and net income. Inventory error: Cost of goods sold is: Net income is: Understatement of beginning inventory Understatement of ending inventory Overstatement of beginning inventory Overstatement of ending inventory

(Essay)

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Question 92

Damaged and obsolete goods:

(Multiple Choice)

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Question 93

A company normally sells its product for $40 per unit. However, the selling price has fallen to $30 per unit. This company's current inventory consists of 200 units purchased at $32 per unit. Replacement cost has now fallen to $26 per unit. Calculate the value of this company's inventory at the lower of cost or market.

(Multiple Choice)

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Question 94

An advantage of LIFO is that it assigns the most recent costs to cost of goods sold and does a better job of matching current costs with revenues on the income statement.

(True/False)

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Question 95

A company made the following merchandise purchases and sales during the month of July: July 1 purchased 380 units at \ 15 each July 5 purchased 270 units at \ 20 each July 9 sold 500 units at \ 55 each July 14 purchased 300 units at \ 24 each July 20 sold 250 units at \ 55 each July 30 purchased 250 units at \ 30 each There was no beginning inventory. If the company uses the first-in, first-out perpetual inventory method what would be the cost of the ending inventory?

(Essay)

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Question 96

Regardless of what inventory method or system is used, cost of goods available for sale must be allocated between _ and _.

(Short Answer)

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Question 97

Under LIFO, the most recent costs are assigned to ending inventory.

(True/False)

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Question 98

An advantage of the _________________ method of inventory valuation is that it tends to smooth out the effect of erratic changes in costs.

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Question 99

A company that uses a perpetual inventory system made the following cash purchases and sales. There was no beginning inventory. January 1: Purchased 100 units at \ 10 per unit February 5: Purchased 60 units at \ 12 per unit March 16: Sold 40 Units for \ 16 per unit Prepare the general journal entries to record the March 16 sale using the LIFO inventory valuation method.

(Essay)

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Question 100

Showing 81 - 100 of 199

If damaged goods can be sold at a reduced price, they are included in inventory at their ________________________.

The conservatism principle:

The reliability of the gross profit method depends on a good estimate of the gross profit ratio.

If obsolete or damaged goods can be sold, they will be included in inventory at their net realizable value.

The ______________________ method of assigning costs to inventory and cost of goods sold requires that the cost of goods available for sale be divided by the units of inventory available when each sale takes place.

When purchase costs regularly rise, the ___________________ method of inventory valuation yields the lowest gross profit and net income, providing a tax advantage.

Neither GAAP nor IFRS allow inventory to be adjusted upward beyond the original cost.

Use the following information to estimate the third quarter ending inventory under the gross profit method. This company's gross profit ratio is 20%. Third quarter beginning inventory: $54,000 Net sales for third quarter: $85,000 Net purchases for third quarter: $21,000

Damaged and obsolete goods:

An advantage of LIFO is that it assigns the most recent costs to cost of goods sold and does a better job of matching current costs with revenues on the income statement.

Regardless of what inventory method or system is used, cost of goods available for sale must be allocated between _ and _.

Under LIFO, the most recent costs are assigned to ending inventory.

An advantage of the _________________ method of inventory valuation is that it tends to smooth out the effect of erratic changes in costs.

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Cash and Internal Controls

Accounts and Notes Receivable

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costing

Decentralization and Performance Evaluation

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Investments and International Operations

Accounting for Partnerships

Appendix : Accounting With Special Journals

Filters

Exam 5: Inventories and Cost of Sales

If damaged goods can be sold at a reduced price, they are included in inventory at their ________________________.

The conservatism principle:

The reliability of the gross profit method depends on a good estimate of the gross profit ratio.

If obsolete or damaged goods can be sold, they will be included in inventory at their net realizable value.

The ______________________ method of assigning costs to inventory and cost of goods sold requires that the cost of goods available for sale be divided by the units of inventory available when each sale takes place.

When purchase costs regularly rise, the ___________________ method of inventory valuation yields the lowest gross profit and net income, providing a tax advantage.

Neither GAAP nor IFRS allow inventory to be adjusted upward beyond the original cost.

Use the following information to estimate the third quarter ending inventory under the gross profit method. This company's gross profit ratio is 20%. Third quarter beginning inventory: $54,000 Net sales for third quarter: $85,000 Net purchases for third quarter: $21,000

Damaged and obsolete goods:

An advantage of LIFO is that it assigns the most recent costs to cost of goods sold and does a better job of matching current costs with revenues on the income statement.

Regardless of what inventory method or system is used, cost of goods available for sale must be allocated between ___________________ and ___________________.

Under LIFO, the most recent costs are assigned to ending inventory.

An advantage of the _________________ method of inventory valuation is that it tends to smooth out the effect of erratic changes in costs.

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Cash and Internal Controls

Accounts and Notes Receivable

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costing

Decentralization and Performance Evaluation

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Investments and International Operations

Accounting for Partnerships

Appendix : Accounting With Special Journals

Filters

Regardless of what inventory method or system is used, cost of goods available for sale must be allocated between _ and _.