Question 1

When the current year's ending inventory amount is overstated, the

Accepted Answer

A)  current year's cost of goods sold is overstated. 
B)  current year's total assets are understated. 
C)  current year's net income is overstated. 
D)  next year's income is overstated. 
A)  current year's cost of goods sold is overstated. 
B)  current year's total assets are understated. 
C)  current year's net income is overstated. 
D)  next year's income is overstated.

Question 2

From the following information, determine the amount of freight-in.

Accepted Answer

A)  $3,000 
B)  $4,000 
C)  $2,000 
D)  $1,000 
A)  $3,000 
B)  $4,000 
C)  $2,000 
D)  $1,000

Question 3

Hardy Company is a wholesale electronics distributor. On December 31, 2011, it prepared the following partial income statement:
$\begin{array}{lr}
\text { Grosss sales.}&\$600,400\
\text { Sales discounts}&400\
\text {Net sales }&\$600,000\
\text {Cost of goods sold: }&\
\text {Beginning inventary . }&\$200,000\
\text { Net purchases}&300,000\
\end{array}$

Given this information, if Hardy Company's gross margin is 30 percent of net sales, what is the correct ending inventory balance?

Accepted Answer

A)  $80,000 
B)  $120,000 
C)  $180,000 
D)  $500,000 
A)  $80,000 
B)  $120,000 
C)  $180,000 
D)  $500,000

Question 4

Cost of goods sold is equal to

Accepted Answer

A)  the cost of inventory on hand at the end of a period plus net purchases minus the cost of inventory on hand at the beginning of a period. 
B)  the cost of inventory on hand at the beginning of a period minus net purchases plus the cost of inventory on hand at the end of a period. 
C)  the cost of inventory on hand at the beginning of a period plus net sales minus the cost of inventory on hand at the end of a period. 
D)  the cost of inventory on hand at the beginning of a period plus net purchases minus the cost of inventory on hand at the end of a period. 
A)  the cost of inventory on hand at the end of a period plus net purchases minus the cost of inventory on hand at the beginning of a period. 
B)  the cost of inventory on hand at the beginning of a period minus net purchases plus the cost of inventory on hand at the end of a period. 
C)  the cost of inventory on hand at the beginning of a period plus net sales minus the cost of inventory on hand at the end of a period. 
D)  the cost of inventory on hand at the beginning of a period plus net purchases minus the cost of inventory on hand at the end of a period.

Question 5

Following are the account balances from Jackson Company's income statement:
 
Given this information, the cost of merchandise available for sale during 2011 is

Accepted Answer

A)  $65,000. 
B)  $59,000. 
C)  $69,000. 
D)  $61,000. 
A)  $65,000. 
B)  $59,000. 
C)  $69,000. 
D)  $61,000.

Question 6

A firm using the perpetual inventory method returned defective merchandise costing $2,000 to one of its suppliers. The entry to record this transaction will include a debit to

Accepted Answer

A)  Accounts Receivable. 
B)  Inventory. 
C)  Purchase Returns and Allowances. 
D)  Accounts Payable. 
A)  Accounts Receivable. 
B)  Inventory. 
C)  Purchase Returns and Allowances. 
D)  Accounts Payable.

Question 7

Miller Inc. is a wholesaler of office supplies. The activity for Model III calculators during August is shown below:
 
See information for Miller Inc. above. If Miller Inc. uses a LIFO cost perpetual inventory system, the ending inventory of Model III calculators at August 31 is reported as

Accepted Answer

A)  $146,400. 
B)  $150,080. 
C)  $150,160. 
D)  $152,960. 
A)  $146,400. 
B)  $150,080. 
C)  $150,160. 
D)  $152,960.

Question 8

Miller Inc. is a wholesaler of office supplies. The activity for Model III calculators during August is shown below:
 
See information for Miller Inc. above. If Miller Inc. uses a FIFO cost perpetual inventory system, the ending inventory of Model III calculators at August 31 is reported as

Accepted Answer

A)  $150,080. 
B)  $150,160. 
C)  $152,232. 
D)  $152,960. 
A)  $150,080. 
B)  $150,160. 
C)  $152,232. 
D)  $152,960.

Question 9

Selected information from the accounting records of Thayer Company is as follows:
 
Thayer's inventory turnover for 2011 is

Accepted Answer

A)  5.36 times. 
B)  3.85 times. 
C)  3.67 times. 
D)  3.57 times. 
A)  5.36 times. 
B)  3.85 times. 
C)  3.67 times. 
D)  3.57 times.

Question 10

Purchases and sales during a recent period for Coleman, Inc. were:
 
Beginning inventory was 100 units at $1 each.
See information for Coleman, Inc.above. Given this information, what is the ending inventory if the periodic LIFO costing alternative is used?

Accepted Answer

A)  $400 
B)  $500 
C)  $1,250 
D)  $3,100 
A)  $400 
B)  $500 
C)  $1,250 
D)  $3,100

Question 11

The following information is available from Preston Company's 2011 accounting records:
 
Preston's 2011 cost of goods sold is

Accepted Answer

A)  $465,000. 
B)  $475,000. 
C)  $505,000. 
D)  $585,000. 
A)  $465,000. 
B)  $475,000. 
C)  $505,000. 
D)  $585,000.

Question 12

Boston Company reported the following net income amounts:
   
In 2012, the company discovered errors that had been made in computing the ending inventories for 2009 and 2010, as follows:
   
Compute the correct net incomes for (1) 2009, (2) 2010, and (3) 2011.

Accepted Answer

The answer of Boston Company reported the following net income...

Question 13

Venus Inc. carries Product A in inventory on December 31 at its unit cost of $22.50. Because of a sharp decline in demand for the product, the selling price is reduced to $24.00 per unit. Venus's normal profit margin on Product A is $4.80, disposal costs are $3.00 per unit, and the replacement cost is $15.90. Under the rule of lower of cost or market, Venus's December 31 inventory of Product A should be valued at a unit cost of

Accepted Answer

A)  $15.90. 
B)  $16.20. 
C)  $21.00. 
D)  $22.50. 
A)  $15.90. 
B)  $16.20. 
C)  $21.00. 
D)  $22.50.

Question 14

An overstatement of ending inventory in Period 1 would result in income of Period 2 being

Accepted Answer

A)  overstated. 
B)  understated. 
C)  correctly stated. 
D)  The answer cannot be determined from the information given. 
A)  overstated. 
B)  understated. 
C)  correctly stated. 
D)  The answer cannot be determined from the information given.

Question 15

The following information is available for Lyman Company:
 
Assuming that a business year consists of 360 days, the number of days' sales in average inventories for 2011 was

Accepted Answer

A)  49.5. 
B)  93. 
C)  99. 
D)  105. 
A)  49.5. 
B)  93. 
C)  99. 
D)  105.

Question 16

Goods in transit at year-end purchased FOB shipping point were appropriately recorded in the purchases account but were incorrectly excluded from the ending inventory. What effect will this omission have on the company's assets, liabilities, and retained earnings at year-end?

Accepted Answer

A)  No effect, no effect, overstated 
B)  No effect, no effect, understated 
C)  Understated, no effect, overstated 
D)  Understated, no effect, understated 
A)  No effect, no effect, overstated 
B)  No effect, no effect, understated 
C)  Understated, no effect, overstated 
D)  Understated, no effect, understated

Question 17

Miller Company needs an estimate of its ending inventory balance. The following information is available:
$\begin{array}{ll}
&\text { Cost } & \text { Retail } \
\text {Sales revenue }&\
\text {Beginning inventory  }&\$ 35,000 & \$ 180,000 \
\text {Net purchases }&100,000 & 62,000 \
\text {Grosssmargin percentage }&30 \% & 135,000
\end{array}$
Given this information, when using the gross margin estimation method, ending inventory is approximately

Accepted Answer

A)  $1,000. 
B)  $9,000. 
C)  $19,000. 
D)  $11,650. 
A)  $1,000. 
B)  $9,000. 
C)  $19,000. 
D)  $11,650.

Question 18

Which of the following would not be reported as inventory?

Accepted Answer

A)  Land acquired for resale by a real estate firm 
B)  Stocks and bonds held for resale by a brokerage firm 
C)  Partially completed goods held by a manufacturing company 
D)  Machinery acquired by a manufacturing company for use in the production process 
A)  Land acquired for resale by a real estate firm 
B)  Stocks and bonds held for resale by a brokerage firm 
C)  Partially completed goods held by a manufacturing company 
D)  Machinery acquired by a manufacturing company for use in the production process

Question 19

Which one of the following would cause a decrease in the cost ratio as used in the retail inventory method?

Accepted Answer

A)  Higher retail prices 
B)  Lower net markups 
C)  More employee discounts given 
D)  Higher freight-in charges 
A)  Higher retail prices 
B)  Lower net markups 
C)  More employee discounts given 
D)  Higher freight-in charges

Question 20

The gross profit method of inventory valuation is not valid when

Accepted Answer

A)  there is substantial increase in the quantity of inventory during the year. 
B)  there is substantial increase in the cost of inventory during the year. 
C)  the gross margin percentage changes significantly during the year. 
D)  all ending inventory is destroyed by fire before it can be counted. 
A)  there is substantial increase in the quantity of inventory during the year. 
B)  there is substantial increase in the cost of inventory during the year. 
C)  the gross margin percentage changes significantly during the year. 
D)  all ending inventory is destroyed by fire before it can be counted.

When the current year's ending inventory amount is overstated, the

From the following information, determine the amount of freight-in.

Cost of goods sold is equal to

Following are the account balances from Jackson Company's income statement: Given this information, the cost of merchandise available for sale during 2011 is

A firm using the perpetual inventory method returned defective merchandise costing $2,000 to one of its suppliers. The entry to record this transaction will include a debit to

Miller Inc. is a wholesaler of office supplies. The activity for Model III calculators during August is shown below: See information for Miller Inc. above. If Miller Inc. uses a LIFO cost perpetual inventory system, the ending inventory of Model III calculators at August 31 is reported as

Miller Inc. is a wholesaler of office supplies. The activity for Model III calculators during August is shown below: See information for Miller Inc. above. If Miller Inc. uses a FIFO cost perpetual inventory system, the ending inventory of Model III calculators at August 31 is reported as

Selected information from the accounting records of Thayer Company is as follows: Thayer's inventory turnover for 2011 is

Purchases and sales during a recent period for Coleman, Inc. were: Beginning inventory was 100 units at $1 each. See information for Coleman, Inc.above. Given this information, what is the ending inventory if the periodic LIFO costing alternative is used?

The following information is available from Preston Company's 2011 accounting records: Preston's 2011 cost of goods sold is

Boston Company reported the following net income amounts: In 2012, the company discovered errors that had been made in computing the ending inventories for 2009 and 2010, as follows: Compute the correct net incomes for (1) 2009, (2) 2010, and (3) 2011.

An overstatement of ending inventory in Period 1 would result in income of Period 2 being

The following information is available for Lyman Company: Assuming that a business year consists of 360 days, the number of days' sales in average inventories for 2011 was

Goods in transit at year-end purchased FOB shipping point were appropriately recorded in the purchases account but were incorrectly excluded from the ending inventory. What effect will this omission have on the company's assets, liabilities, and retained earnings at year-end?

Which of the following would not be reported as inventory?

Which one of the following would cause a decrease in the cost ratio as used in the retail inventory method?

The gross profit method of inventory valuation is not valid when

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, Pensions, Other Comp Issues

Earnings Per Share

Derivatives, Contingencies, Business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

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Exam 9: Inventory and Cost of Goods Sold

When the current year's ending inventory amount is overstated, the

From the following information, determine the amount of freight-in.

Cost of goods sold is equal to

Following are the account balances from Jackson Company's income statement: Given this information, the cost of merchandise available for sale during 2011 is

A firm using the perpetual inventory method returned defective merchandise costing $2,000 to one of its suppliers. The entry to record this transaction will include a debit to

Miller Inc. is a wholesaler of office supplies. The activity for Model III calculators during August is shown below: See information for Miller Inc. above. If Miller Inc. uses a LIFO cost perpetual inventory system, the ending inventory of Model III calculators at August 31 is reported as

Miller Inc. is a wholesaler of office supplies. The activity for Model III calculators during August is shown below: See information for Miller Inc. above. If Miller Inc. uses a FIFO cost perpetual inventory system, the ending inventory of Model III calculators at August 31 is reported as

Selected information from the accounting records of Thayer Company is as follows: Thayer's inventory turnover for 2011 is

Purchases and sales during a recent period for Coleman, Inc. were: Beginning inventory was 100 units at $1 each. See information for Coleman, Inc.above. Given this information, what is the ending inventory if the periodic LIFO costing alternative is used?

The following information is available from Preston Company's 2011 accounting records: Preston's 2011 cost of goods sold is

Boston Company reported the following net income amounts: In 2012, the company discovered errors that had been made in computing the ending inventories for 2009 and 2010, as follows: Compute the correct net incomes for (1) 2009, (2) 2010, and (3) 2011.

An overstatement of ending inventory in Period 1 would result in income of Period 2 being

The following information is available for Lyman Company: Assuming that a business year consists of 360 days, the number of days' sales in average inventories for 2011 was

Goods in transit at year-end purchased FOB shipping point were appropriately recorded in the purchases account but were incorrectly excluded from the ending inventory. What effect will this omission have on the company's assets, liabilities, and retained earnings at year-end?

Which of the following would not be reported as inventory?

Which one of the following would cause a decrease in the cost ratio as used in the retail inventory method?

The gross profit method of inventory valuation is not valid when

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, Pensions, Other Comp Issues

Earnings Per Share

Derivatives, Contingencies, Business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters