Question 1

Match the terms with the descriptions provided.
-For a given level of sales, the higher the cost of goods sold, the lower this measure.

Accepted Answer

A) Average days to sell inventory 
B) Gross margin 
C) Gross profit ratio 
D) Inventory turnover ratio 
E) Freight-in
F)Freight-out 
A) Average days to sell inventory 
B) Gross margin 
C) Gross profit ratio 
D) Inventory turnover ratio 
E) Freight-in
F)Freight-out C

Question 2

Under the _______________ inventory system, the inventory account is updated after each purchase or sale.

Accepted Answer

perpetual

Question 3

The inventory turnover ratio is defined as cost of goods sold divided by average inventory.

Accepted Answer

A) True 
 B)False  True

Question 4

If a company understates its inventory, what are the effects on cost of goods sold and net income for the current year?

Accepted Answer

A) Cost of goods sold will be understated and net income will be overstated. 
B) Cost of goods sold will be overstated and net income will be understated. 
C) Both cost of goods sold and net income will be understated. 
D) Both cost of goods sold and net income will be overstated. 
A) Cost of goods sold will be understated and net income will be overstated. 
B) Cost of goods sold will be overstated and net income will be understated. 
C) Both cost of goods sold and net income will be understated. 
D) Both cost of goods sold and net income will be overstated.

Question 5

What effects on a retail store's accounting equation occur when merchandise returned by customers is recorded?

Accepted Answer

A) Assets and stockholders' equity decrease. 
B) Assets and stockholders' equity increase. 
C) Assets decrease and liabilities increase. 
D) Stockholders' equity decreases and liabilities increase. 
A) Assets and stockholders' equity decrease. 
B) Assets and stockholders' equity increase. 
C) Assets decrease and liabilities increase. 
D) Stockholders' equity decreases and liabilities increase.

Question 6

Match the terms with the descriptions related to merchandise sales and purchases.
-Paid for merchandise outside of the discount period.

Accepted Answer

A) Transportation-in 
B) Perpetual inventory system 
C) Net purchases 
D) FOB destination 
E) Cost of goods available for sale
F)Periodic inventory system
G)FOB shipping point
H)Delivery expense 
A) Transportation-in 
B) Perpetual inventory system 
C) Net purchases 
D) FOB destination 
E) Cost of goods available for sale
F)Periodic inventory system
G)FOB shipping point
H)Delivery expense

Question 7

Beginning inventory was $32,000. During the year, Yancey Company purchased goods totaling $634,000 on account with terms of 2/10, n/30, FOB shipping point. Yancey Company paid $1,000 in total freight charges directly to the freight company. At the end of the year, inventory on hand totaled $45,000. Net sales reported on the income statement for the year totaled $1,300,000.
-Refer to the information provided for Yancey Company. How much is cost of goods sold assuming that Yancey Company takes advantage of one-half of the cash discount?

Accepted Answer

$660,660 cost of goo

Question 8

Tedder uses a periodic inventory system. At the end of January, 20 units were on hand. The following additional information is available for the month of January:
  
-Refer to the information provided for Tedder Co. If the company uses the weighted average method of inventory costing, how much is cost of goods sold for January?

Accepted Answer

A) $230 
B) $232 
C) $240 
D) $250 
A) $230 
B) $232 
C) $240 
D) $250

Question 9

When the shipping terms are FOB destination, the buyer must record transportation costs as an additional cost of acquiring the inventory under the perpetual inventory system.

Accepted Answer

A) True 
 B)False

Question 10

The excess of an inventory's value stated on a FIFO basis over its value stated on a LIFO basis is called a(n) ____________________.

Accepted Answer

The answer of The excess of an inventory's value stated...

Question 11

Match the terms with the descriptions provided.
-Companies that sell to other retailers.

Accepted Answer

A) Manufacturers 
B) Merchandisers 
C) Retailers 
D) Wholesalers 
E) Service companies 
A) Manufacturers 
B) Merchandisers 
C) Retailers 
D) Wholesalers 
E) Service companies

Question 12

The following data are available for one of the products sold by Robey Company, which uses a perpetual inventory system.  
-Refer to the information provided for Robey Company. If the Moving Average Cost method is used, determine the following amounts:
A) Cost of Goods sold for the month of February
B) Ending inventory on February 28th

Accepted Answer

A)(6 × $2) + [((4 × $2) + (30

Question 13

On September 1, Serrano Company purchased 70 units of Product A for $35,000 cash and also paid $1,500 transportation costs related to this purchase. On the same date, Serrano Company purchased 100 units of Product B for $10,000 on credit; however, the seller paid the $1,200 freight. The credit terms for Product B were 2/10, n/30. On September 3rd, Serrano Company determined that 5 units of Product A were defective, so they were returned to the seller. Serrano Company paid for its purchase of Product B on September 9th. On September 10th, Serrano Company purchased 90 units of Product C for $8,000 on credit with terms 1/10, n/30. The seller paid the freight. Serrano Company paid for its purchase of Product C on September 21st.
-Refer to the information presented for Serrano Company. Prepare all of Serrano Company's journal entries for September assuming the company uses a periodic inventory system.

Accepted Answer

The answer of On September 1, Serrano Company purchased 70...

Question 14

The following journal entry was included in the accounting records of Jumani Company:

This entry is needed to record the:

Accepted Answer

A) cost of merchandise sold. 
B) sales price of merchandise sold. 
C) cost of merchandise returned by a customer. 
D) net effect of a sales transaction. 
A) cost of merchandise sold. 
B) sales price of merchandise sold. 
C) cost of merchandise returned by a customer. 
D) net effect of a sales transaction.

Question 15

Which one of the following statements regarding changing inventory costing methods is true?

Accepted Answer

A) A change in inventory methods can be justified if the change is made to better match profits with revenue. 
B) Changing inventory costing methods violates consistency. 
C) One place that the reader of an annual report would be able to identify that a company changed inventory costing methods is the statement of stockholders' equity. 
D) Tax advantages are valid justification for changing inventory costing methods. 
A) A change in inventory methods can be justified if the change is made to better match profits with revenue. 
B) Changing inventory costing methods violates consistency. 
C) One place that the reader of an annual report would be able to identify that a company changed inventory costing methods is the statement of stockholders' equity. 
D) Tax advantages are valid justification for changing inventory costing methods.

Question 16

Klinc Company uses a perpetual inventory system and had the following inventory transactions for the month of June:
   The June 30th inventory included 45 units from the June 4th purchase and 45 units from the June 10th purchase.
-Refer to the information provided for Klinc Company. What is the cost of goods sold for June under the specific identification method?

Accepted Answer

A) $2,230 
B) $1,575 
C) $1,500 
D) $1,450 
A) $2,230 
B) $1,575 
C) $1,500 
D) $1,450

Question 17

A Purchases account is not needed under a periodic inventory system.

Accepted Answer

A) True 
 B)False

Question 18

Match the costs that might be included as part of the cost of inventory to the listed accounting treatment. (Choices may be used more than once.)
-Prices are rising; ending inventory is lower with this method.

Accepted Answer

A) Add to inventory cost 
B) Subtract from inventory cost 
C) Not an inventory cost 
A) Add to inventory cost 
B) Subtract from inventory cost 
C) Not an inventory cost

Question 19

Under a periodic inventory system, the ____________________ account accumulates the cost of inventory acquired during the period.

Accepted Answer

The answer of Under a periodic inventory system, the ____________________...

Question 20

The following data is available for one of the products sold by Chancet Company, which uses a perpetual inventory system:   Chancet Company's ending inventory for April was 25 units.
​
Complete the table by determining the amounts of April 30th inventory, cost of goods sold, and gross margin under each of the inventory costing methods listed below.
​
Ending Inventory Cost of Goods Sold Gross Margin
A) FIFO
B) LIFO
C) Moving Average Cost

Accepted Answer

The answer of The following data is available for one...

Match the terms with the descriptions provided. -For a given level of sales, the higher the cost of goods sold, the lower this measure.

Under the _______________ inventory system, the inventory account is updated after each purchase or sale.

The inventory turnover ratio is defined as cost of goods sold divided by average inventory.

If a company understates its inventory, what are the effects on cost of goods sold and net income for the current year?

What effects on a retail store's accounting equation occur when merchandise returned by customers is recorded?

Match the terms with the descriptions related to merchandise sales and purchases. -Paid for merchandise outside of the discount period.

When the shipping terms are FOB destination, the buyer must record transportation costs as an additional cost of acquiring the inventory under the perpetual inventory system.

The excess of an inventory's value stated on a FIFO basis over its value stated on a LIFO basis is called a(n) ____________________.

Match the terms with the descriptions provided. -Companies that sell to other retailers.

The following journal entry was included in the accounting records of Jumani Company: This entry is needed to record the:

Which one of the following statements regarding changing inventory costing methods is true?

A Purchases account is not needed under a periodic inventory system.

Match the costs that might be included as part of the cost of inventory to the listed accounting treatment. (Choices may be used more than once.) -Prices are rising; ending inventory is lower with this method.

Under a periodic inventory system, the ____________________ account accumulates the cost of inventory acquired during the period.

Accounting and The Financial Statements

The Accounting Information System

Accrual Accounting

Internal Control And Cash

Sales And Receivables

Operating Assets

Current and Contingent Liabilities

Long Term Liabilities

Stockholders Apos Equity

The Statement Of Cash Flows

Financial Statement Analysis

Finance and Stock Market Equilibrium

Filters

Exam 6: Cost Of Goods Sold and Inventory

Match the terms with the descriptions provided. -For a given level of sales, the higher the cost of goods sold, the lower this measure.

Under the _______________ inventory system, the inventory account is updated after each purchase or sale.

The inventory turnover ratio is defined as cost of goods sold divided by average inventory.

If a company understates its inventory, what are the effects on cost of goods sold and net income for the current year?

What effects on a retail store's accounting equation occur when merchandise returned by customers is recorded?

Match the terms with the descriptions related to merchandise sales and purchases. -Paid for merchandise outside of the discount period.

When the shipping terms are FOB destination, the buyer must record transportation costs as an additional cost of acquiring the inventory under the perpetual inventory system.

The excess of an inventory's value stated on a FIFO basis over its value stated on a LIFO basis is called a(n) ____________________.

Match the terms with the descriptions provided. -Companies that sell to other retailers.

The following journal entry was included in the accounting records of Jumani Company: This entry is needed to record the:

Which one of the following statements regarding changing inventory costing methods is true?

A Purchases account is not needed under a periodic inventory system.

Match the costs that might be included as part of the cost of inventory to the listed accounting treatment. (Choices may be used more than once.) -Prices are rising; ending inventory is lower with this method.

Under a periodic inventory system, the ____________________ account accumulates the cost of inventory acquired during the period.

Accounting and The Financial Statements

The Accounting Information System

Accrual Accounting

Internal Control And Cash

Sales And Receivables

Operating Assets

Current and Contingent Liabilities

Long Term Liabilities

Stockholders Apos Equity

The Statement Of Cash Flows

Financial Statement Analysis

Finance and Stock Market Equilibrium

Filters