Question 1

If the seller is responsible for paying freight charges, then ownership of inventory passes when goods arrive at their destination.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

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

Question 3

Discuss the important accounting features of a periodic inventory system including accounts and procedures used.

Accepted Answer

Each purchase of merchandise is debited

Question 4

If the _______________ is responsible for paying the freight, ownership of merchandise inventory passes when goods are loaded on the transport vehicle.

Accepted Answer

The answer of If the _______________ is responsible for paying...

Question 5

Given the following information, determine the cost of goods sold 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

Accepted Answer

A)  $282.15 
B)  $332.10 
C)  $281.25 
D)  $290.70 
E)  $210.30 
A)  $282.15 
B)  $332.10 
C)  $281.25 
D)  $290.70 
E)  $210.30

Question 6

Given the following information, determine the cost of goods sold for December 31 using the FIFO 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

Accepted Answer

A)  $282.15 
B)  $332.10 
C)  $281.25 
D)  $290.70 
E)  $210.30 
A)  $282.15 
B)  $332.10 
C)  $281.25 
D)  $290.70 
E)  $210.30

Question 7

The ____________________ ratio reflects how much inventory is available in terms of days' sales.

Accepted Answer

Days' sale

Question 8

An understatement of the ending inventory balance will understate cost of goods sold and overstate net income.

Accepted Answer

A) True 
 B)False

Question 9

Some companies use the _________________ principle or the __________________ constraint to avoid assigning incidental costs of acquiring merchandise to inventory.

Accepted Answer

Matching;

Question 10

Explain the effects of inventory valuation methods on the cost of ending inventory, income and income taxes.

Accepted Answer

The specific identification method ident

Question 11

When applying the lower of cost or market method of inventory valuation, market is defined as the ______________________.

Accepted Answer

The answer of When applying the lower of cost or...

Question 12

In applying the lower of cost or market method to inventory valuation, market is defined as the current replacement cost.

Accepted Answer

A) True 
 B)False

Question 13

The retail inventory method estimates the cost of ending inventory by applying the gross profit ratio to net sales.

Accepted Answer

A) True 
 B)False

Question 14

Given the following information, determine the cost of goods sold at November 30 using the Weighted Average perpetual inventory method.
November 3: 15 units were purchased at $8 per unit.
November 11: 18 units were purchased at $9.50 per unit.
November 15: 15 units were sold at $45 per unit
November 18: 30 units were purchased at $10.75 per unit
November 30: 20 units were sold at $55 per

Accepted Answer

The answer of Given the following information, determine the cost...

Question 15

A company made the following merchandise purchases and sales during the month of May:
$$\begin{array} { | l | l | l | l | } 
\hline \text { May 1 purchased } & 380 & \text { units at } & \$ 15 \text { each } \
\hline \text { May 5 purchased } & 270 & \text { units at } & \$ 17 \text { each } \
\hline \text { May 10 sold } & 400 & \text { units at } & \$ 50 \text { each } \
\hline \text { May 20 purchased } & 300 & \text { units at } & \$ 22 \text { each } \
\hline \text { May 25 sold } & 400 & \text { units at } & \$ 50 \text { each } \
\hline
\end{array}$$
There was no beginning inventory. If the company uses the LIFO periodic inventory method, what would be the cost of the ending inventory?

Accepted Answer

Cost of ending inven

Question 16

The consistency principle requires a company to use the same accounting methods period after period, so that financial statements are comparable across periods.

Accepted Answer

A) True 
 B)False

Question 17

A company has the following per unit original costs and replacement costs for its inventory:
 Part A: 10 units with a cost of $3 and replacement cost of $2.50
Part B: 40 units with a cost of $9 and replacement cost of $9.50
Part C: 75 units with a cost of $8 and replacement cost of $7.50
Under the lower of cost or market method, the total value of this company's ending inventory is:

Accepted Answer

A)  $990.00 
B)  $947.50 
C)  $967.50 or $947.50, depending upon whether LCM is applied to individual items or the inventory as a whole 
D)  $967.50 
E)  $990.00 or $947.50, depending upon whether LCM is applied to individual items or to the inventory as a whole 
A)  $990.00 
B)  $947.50 
C)  $967.50 or $947.50, depending upon whether LCM is applied to individual items or the inventory as a whole 
D)  $967.50 
E)  $990.00 or $947.50, depending upon whether LCM is applied to individual items or to the inventory as a whole

Question 18

A company's warehouse was destroyed by a tornado on March 15. The following information was the only information that was salvaged: 
Inventory, beginning: $28,000
Purchases for the period: $17,000
Sales for the period: $55,000
Sales returns for the period: $700
The company's average gross profit ratio is 35%. What is the estimated cost of the lost inventory?

Accepted Answer

A)  $9,705 
B)  $25,995 
C)  $29,250 
D)  $44,000 
E)  $45,000 
A)  $9,705 
B)  $25,995 
C)  $29,250 
D)  $44,000 
E)  $45,000

Question 19

Whether prices are rising or falling, FIFO always will yield the highest gross profit and net income.

Accepted Answer

A) True 
 B)False

Question 20

Given the following information, determine the cost of goods sold for November 30 using the FIFO perpetual inventory method.
November 3: 15 units were purchased at $8 per unit.
November 11: 18 units were purchased at $9.50 per unit.
November 15: 15 units were sold at $45 per unit
November 18: 30 units were purchased at $10.75 per unit
November 30: 20 units were sold at $55 per unit

Accepted Answer

The answer of Given the following information, determine the cost...

If the seller is responsible for paying freight charges, then ownership of inventory passes when goods arrive at their destination.

Discuss the important accounting features of a periodic inventory system including accounts and procedures used.

If the _______________ is responsible for paying the freight, ownership of merchandise inventory passes when goods are loaded on the transport vehicle.

The ____________________ ratio reflects how much inventory is available in terms of days' sales.

An understatement of the ending inventory balance will understate cost of goods sold and overstate net income.

Some companies use the _ principle or the __ constraint to avoid assigning incidental costs of acquiring merchandise to inventory.

Explain the effects of inventory valuation methods on the cost of ending inventory, income and income taxes.

When applying the lower of cost or market method of inventory valuation, market is defined as the ______________________.

In applying the lower of cost or market method to inventory valuation, market is defined as the current replacement cost.

The retail inventory method estimates the cost of ending inventory by applying the gross profit ratio to net sales.

The consistency principle requires a company to use the same accounting methods period after period, so that financial statements are comparable across periods.

Whether prices are rising or falling, FIFO always will yield the highest gross profit and net income.

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 the seller is responsible for paying freight charges, then ownership of inventory passes when goods arrive at their destination.

Discuss the important accounting features of a periodic inventory system including accounts and procedures used.

If the _______________ is responsible for paying the freight, ownership of merchandise inventory passes when goods are loaded on the transport vehicle.

The ____________________ ratio reflects how much inventory is available in terms of days' sales.

An understatement of the ending inventory balance will understate cost of goods sold and overstate net income.

Some companies use the _________________ principle or the __________________ constraint to avoid assigning incidental costs of acquiring merchandise to inventory.

Explain the effects of inventory valuation methods on the cost of ending inventory, income and income taxes.

When applying the lower of cost or market method of inventory valuation, market is defined as the ______________________.

In applying the lower of cost or market method to inventory valuation, market is defined as the current replacement cost.

The retail inventory method estimates the cost of ending inventory by applying the gross profit ratio to net sales.

The consistency principle requires a company to use the same accounting methods period after period, so that financial statements are comparable across periods.

Whether prices are rising or falling, FIFO always will yield the highest gross profit and net income.

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

Some companies use the _ principle or the __ constraint to avoid assigning incidental costs of acquiring merchandise to inventory.