Question 1

Under the specific invoice method,costs are matched with individual sale items.

Accepted Answer

A) True 
 B)False

Question 2

A purchases journal may be used to track inventory.

Accepted Answer

A) True 
 B)False

Question 3

If a change is made in the inventory valuation method,no disclosure is necessary.

Accepted Answer

A) True 
 B)False

Question 4

In a perpetual inventory system:

Accepted Answer

A) Merchandise Inventory is credited every time inventory is purchased. 
B) Cost of Goods Sold is debited every time inventory is sold. 
C) a physical inventory is never taken performed. 
D) all of the above take place. 
A) Merchandise Inventory is credited every time inventory is purchased. 
B) Cost of Goods Sold is debited every time inventory is sold. 
C) a physical inventory is never taken performed. 
D) all of the above take place.

Question 5

The principle of consistency states that:

Accepted Answer

A) changes in accounting methods should occur from one fiscal period to the next. 
B) a company cannot change from one inventory valuation method to another. 
C) a company should switch from LIFO to FIFO every other period. 
D) by using the same method,the financial statements are more meaningful. 
A) changes in accounting methods should occur from one fiscal period to the next. 
B) a company cannot change from one inventory valuation method to another. 
C) a company should switch from LIFO to FIFO every other period. 
D) by using the same method,the financial statements are more meaningful.

Question 6

Bright Garden Center had the following data for May:
$$\begin{array} { | l | r | r | } 
\hline & \text { Cost Price } & \text { Retail Price } \
\hline \text { Beginning inventory } & \$ 2,000 & \$ 3,600 \
\hline \text { Purchases } & 3,000 & 4,400 \
\hline \text { Sales } & & 4,500 \
\hline
\end{array}$$
Use four decimal places.The cost of the estimated inventory on May 31 under the retail method is:

Accepted Answer

A) $3,500.00. 
B) $2,871.50 
C) $2,187.50 
D) $500.00 
A) $3,500.00. 
B) $2,871.50 
C) $2,187.50 
D) $500.00

Question 7

If merchandise is purchased ________,the buyer becomes the owner when the merchandise is placed on the carrier.

Accepted Answer

F.O.B.ship

Question 8

Calculate the cost of goods sold under each of the following methods given the information below about purchases and sales during the year.Assume a periodic inventory system.Round to four decimal places.
 $$\begin{array} { l r l l } 
\text { May } & 1 & \text { Beginuing inventory } & 70 @ \$ 25 \
& 10 & \text { Purchases } & 90 @ \$ 28 \
& 19 & \text { Purchases } & 50 @ \$ 30
\end{array}$$ 
May 1-31 Sales 130 units
a)________ FIFO
b)________ LIFO
c)________ Weighted-average

Accepted Answer

a)FIFO (70 × $25)+ (60 × $28)=

Question 9

The freight paid on goods purchased F.O.B.shipping point was debited to the Purchases account.The company uses the periodic method.This error would cause:

Accepted Answer

A) the period end expenses to be understated. 
B) the period end expenses to be overstated. 
C) the period's net income to be understated. 
D) None of these is correct. 
A) the period end expenses to be understated. 
B) the period end expenses to be overstated. 
C) the period's net income to be understated. 
D) None of these is correct.

Question 10

Which of the following items should be included in merchandise inventory?

Accepted Answer

A) Supplies on hand 
B) Goods that have been consigned to another company 
C) Goods in transit shipped to another company FOB destination 
D) Both B and C 
A) Supplies on hand 
B) Goods that have been consigned to another company 
C) Goods in transit shipped to another company FOB destination 
D) Both B and C

Question 11

Possible reasons for a business estimating the value of the ending inventory should include:

Accepted Answer

A) the inventory is destroyed by fire. 
B) the business uses periodic system and needs to prepare interim financial statements. 
C) the business uses perpetual system so a physical inventory is never needed. 
D) Both A and B are correct. 
A) the inventory is destroyed by fire. 
B) the business uses periodic system and needs to prepare interim financial statements. 
C) the business uses perpetual system so a physical inventory is never needed. 
D) Both A and B are correct.

Question 12

Tack Room Clothing uses the retail method to estimate cost of ending inventory for its interim reports.From the following facts,estimate Tack Room's ending inventory at cost at August 31.
 $$\begin{array} { l r } 
\text { August } 1 \text { inventory at cost } & \$ 900 \
\text { August } 1 \text { inventory at retail } & 1,200 \
\text { Net purchases at cost } & 9,000 \
\text { Net purchases at retail } & 12,000 \
\text { Net sales at retail } & 12,500
\end{array}$$

Accepted Answer

@#IMG-DLM& $9,900/$1

Question 13

To use the gross profit method to estimate the value of the ending inventory,the company needs the following information:

Accepted Answer

A) average gross profit rate,net sales,ending inventory,and net purchases. 
B) average gross profit rate,net sales,beginning inventory at cost,and net purchases at retail. 
C) average gross profit rate,net sales,ending inventory at retail,and net purchases at retail. 
D) average gross profit rate,net sales,beginning inventory at cost,and net purchases at cost. 
A) average gross profit rate,net sales,ending inventory,and net purchases. 
B) average gross profit rate,net sales,beginning inventory at cost,and net purchases at retail. 
C) average gross profit rate,net sales,ending inventory at retail,and net purchases at retail. 
D) average gross profit rate,net sales,beginning inventory at cost,and net purchases at cost.

Question 14

Last year's ending inventory was understated.This error would cause:

Accepted Answer

A) this period's net income to be overstated. 
B) this period's net income to be understated. 
C) this period's end assets to be overstated. 
D) None of these is correct. 
A) this period's net income to be overstated. 
B) this period's net income to be understated. 
C) this period's end assets to be overstated. 
D) None of these is correct.

Question 15

Sterling Supply uses a periodic inventory system.Sterling Supply sold 25 globes during March.Other data for March includes:
$$\begin{array} { | c | l | c | } 
\hline \text { Mar. 1 } & \text { Balance } & 30 @ \$ 12 \
\hline 11 & \text { Purchased } & 20 @ \$ 15 \
\hline 25 & \text { Purchased } & 10 @ \$ 10 \
\hline
\end{array}$$
Round per unit cost to two decimal places.Cost of goods sold under the weighted-average method is:

Accepted Answer

A) $281.25. 
B) $155.00. 
C) $316.75. 
D) $168.75. 
A) $281.25. 
B) $155.00. 
C) $316.75. 
D) $168.75.

Question 16

LIFO reflects the oldest costs for inventory on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 17

Under the ________ inventory system,entries are made to the merchandise inventory or cost of goods sold account during the year.

Accepted Answer

The answer of Under the ________ inventory system,entries are made...

Question 18

Paid for merchandise after the discount period expired.- Perpetual
Debit ________ Credit ________

Accepted Answer

The answer of Paid for merchandise after the discount period...

Question 19

An incorrect inventory figure will affect only the balance sheet.

Accepted Answer

A) True 
 B)False

Question 20

If goods are shipped FOB shipping point by the seller,when does title pass?

Accepted Answer

A) When the goods arrive at the buyer's location 
B) When the goods leave the seller's location 
C) When the goods are signed for 
D) None of the above 
A) When the goods arrive at the buyer's location 
B) When the goods leave the seller's location 
C) When the goods are signed for 
D) None of the above

Exam 15: Accounting for Merchandise Inventory

Under the specific invoice method,costs are matched with individual sale items.

A purchases journal may be used to track inventory.

If a change is made in the inventory valuation method,no disclosure is necessary.

In a perpetual inventory system:

The principle of consistency states that:

Bright Garden Center had the following data for May: Cost Price Retail Price Beginning inventory \ 2,000 \ 3,600 Purchases 3,000 4,400 Sales 4,500 Use four decimal places.The cost of the estimated inventory on May 31 under the retail method is:

If merchandise is purchased ________,the buyer becomes the owner when the merchandise is placed on the carrier.

The freight paid on goods purchased F.O.B.shipping point was debited to the Purchases account.The company uses the periodic method.This error would cause:

Which of the following items should be included in merchandise inventory?

Possible reasons for a business estimating the value of the ending inventory should include:

To use the gross profit method to estimate the value of the ending inventory,the company needs the following information:

Last year's ending inventory was understated.This error would cause:

Sterling Supply uses a periodic inventory system.Sterling Supply sold 25 globes during March.Other data for March includes: Mar. 1 Balance 30@\ 12 11 Purchased 20@\ 15 25 Purchased 10@\ 10 Round per unit cost to two decimal places.Cost of goods sold under the weighted-average method is:

LIFO reflects the oldest costs for inventory on the balance sheet.

Under the ________ inventory system,entries are made to the merchandise inventory or cost of goods sold account during the year.

Paid for merchandise after the discount period expired.- Perpetual Debit ________ Credit ________

An incorrect inventory figure will affect only the balance sheet.

If goods are shipped FOB shipping point by the seller,when does title pass?

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: the Beginning of the Payroll Process

Paying,recording,and Reporting Payroll and Payroll Taxes:

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Property,plant,equipment,and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values,dividends,treasury Stocks,

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

Filters

Paid for merchandise after the discount period expired.- Perpetual Debit Credit