Question 1

Differentiate between the record keeping required for sales and cost of goods sold under a perpetual versus a periodic inventory system.

Accepted Answer

Under both inventory systems, an entry i

Question 2

Match the terms with the descriptions related to merchandise sales and purchases.
-The buyer must pay the shipping costs.

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 3

Vaden Company uses the periodic inventory system. The data presented below is from the company's accounting records for the year ended December 31:   Calculate the company's cost of goods sold for the year.

Accepted Answer

$30,000 beginning inventory +

Question 4

Match the terms with the descriptions provided.
-The amount that the inventory would increase or decrease if the company had used FIFO instead of LIFO.

Accepted Answer

A) Consignment 
B) Discount period 
C) Inventory 
D) LIFO Reserve 
E) Lower of cost or market rule
F)Purchase allowance
G)Purchase discounts
H)Purchase returns
I)Purchases 
A) Consignment 
B) Discount period 
C) Inventory 
D) LIFO Reserve 
E) Lower of cost or market rule
F)Purchase allowance
G)Purchase discounts
H)Purchase returns
I)Purchases

Question 5

During a period of increasing purchase prices, which inventory costing method will yield the lowest cost of goods sold?

Accepted Answer

A) any method in which the company uses a periodic system 
B) FIFO 
C) LIFO 
D) weighted average cost 
A) any method in which the company uses a periodic system 
B) FIFO 
C) LIFO 
D) weighted average cost

Question 6

When inventories are written down due to the application of the lower of cost or market (LCM) rule, which of the following is usually increased?

Accepted Answer

A) cost of goods sold 
B) inventories 
C) operating expenses 
D) accumulated depreciation--inventory 
A) cost of goods sold 
B) inventories 
C) operating expenses 
D) accumulated depreciation--inventory

Question 7

A departure from the cost basis of accounting may be necessary when the ____________________ of the inventory is less than its cost to the company.

Accepted Answer

market value
fair ma

Question 8

Items should be included as part of the company's inventory if they are

Accepted Answer

A) purchased from a creditor, although not paid for by year end. 
B) held in anticipation of an increase in market value. 
C) determined to be part of cost of goods sold. 
D) sold during the period. 
A) purchased from a creditor, although not paid for by year end. 
B) held in anticipation of an increase in market value. 
C) determined to be part of cost of goods sold. 
D) sold during the period.

Question 9

When merchandise is sold FOB destination, the seller is responsible for the shipping costs.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is false regarding the choice between alternative inventory costing methods?

Accepted Answer

A) Each alternative method provides for the same amount of cost of goods available for sale to be allocated between ending inventory and cost of goods sold. 
B) In terms of current costs, FIFO presents a more realistic balance sheet; whereas LIFO presents a more realistic income statement. 
C) Companies sometimes choose FIFO because it is easier and less expensive to implement; whereas LIFO is often chosen for the tax benefits. 
D) Companies sometimes choose FIFO because it presents a more realistic income statement in terms of current market values. 
A) Each alternative method provides for the same amount of cost of goods available for sale to be allocated between ending inventory and cost of goods sold. 
B) In terms of current costs, FIFO presents a more realistic balance sheet; whereas LIFO presents a more realistic income statement. 
C) Companies sometimes choose FIFO because it is easier and less expensive to implement; whereas LIFO is often chosen for the tax benefits. 
D) Companies sometimes choose FIFO because it presents a more realistic income statement in terms of current market values.

Question 11

Match the terms with the descriptions provided.
-The difference between a company's net sales and its cost of goods sold.

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

Question 12

Which of the following statements is true regarding just-in-time inventory management?

Accepted Answer

A) It requires a perpetual inventory system. 
B) It requires an average cost inventory costing method. 
C) It requires detailed information about profitability and the users of the company's financial statements. 
D) It requires detailed information about order-to-delivery times, receiving-to-sales times, and inventory quantities. 
A) It requires a perpetual inventory system. 
B) It requires an average cost inventory costing method. 
C) It requires detailed information about profitability and the users of the company's financial statements. 
D) It requires detailed information about order-to-delivery times, receiving-to-sales times, and inventory quantities.

Question 13

Match the inventory-related accounts to costs that may be included in inventories for retailers and manufacturers.
-Cost of material, labor, and other production-related costs incurred to date in unfinished goods.

Accepted Answer

A) merchandise inventory 
B) raw materials 
C) work-in-process 
D) finished goods 
E) cost of goods sold 
A) merchandise inventory 
B) raw materials 
C) work-in-process 
D) finished goods 
E) cost of goods sold

Question 14

Satoor, Inc.Satoor, Inc., which uses a periodic inventory system, purchased merchandise from Taye Company on July 7 for $15,000. The credit terms were 1/10, n/30. The goods were shipped FOB shipping point on July 7. Satoor, Inc. received the merchandise on July 10 and paid the amount due on July 15.
-Refer to the information provided for Satoor, Inc. Who is responsible for payment of the transportation costs on the merchandise sold?

Accepted Answer

A) seller 
B) buyer 
C) split equally between the two companies 
D) Cannot be determined from the information provided. 
A) seller 
B) buyer 
C) split equally between the two companies 
D) Cannot be determined from the information provided.

Question 15

Match the terms with the descriptions provided.
-In the periodic inventory system, the account used to record the cost of merchandise acquired for resale.

Accepted Answer

A) Consignment 
B) Discount period 
C) Inventory 
D) LIFO Reserve 
E) Lower of cost or market rule
F)Purchase allowance
G)Purchase discounts
H)Purchase returns
I)Purchases 
A) Consignment 
B) Discount period 
C) Inventory 
D) LIFO Reserve 
E) Lower of cost or market rule
F)Purchase allowance
G)Purchase discounts
H)Purchase returns
I)Purchases

Question 16

Noland, Inc. uses the LIFO method of inventory costing and is facing the possibility of a LIFO liquidation for the current year. Merchandise purchase prices have increased since the LIFO method was adopted. If the company does not purchase additional merchandise before year-end, which one of the following effects will occur as a result of a LIFO liquidation?

Accepted Answer

A) Reported earnings for the current year will be higher. 
B) Income taxes for the current year will be lower. 
C) Cost of goods sold for the current year will be higher. 
D) Gross margin for the current year will be lower. 
A) Reported earnings for the current year will be higher. 
B) Income taxes for the current year will be lower. 
C) Cost of goods sold for the current year will be higher. 
D) Gross margin for the current year will be lower.

Question 17

When the market value of inventory items has declined below their cost, which method would be the most appropriate in complying with GAAP?

Accepted Answer

A) retail 
B) LIFO 
C) lower of cost or market 
D) FIFO 
A) retail 
B) LIFO 
C) lower of cost or market 
D) FIFO

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.)
-Returned goods to the seller.

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

Cost of goods sold is the difference between costs of goods available for sale and ending inventory.

Accepted Answer

A) True 
 B)False

Question 20

Match the inventory-related accounts to costs that may be included in inventories for retailers and manufacturers.
-Costs of completed items that have been sold to customers.

Accepted Answer

A) merchandise inventory 
B) raw materials 
C) work-in-process 
D) finished goods 
E) cost of goods sold 
A) merchandise inventory 
B) raw materials 
C) work-in-process 
D) finished goods 
E) cost of goods sold

Differentiate between the record keeping required for sales and cost of goods sold under a perpetual versus a periodic inventory system.

Match the terms with the descriptions related to merchandise sales and purchases. -The buyer must pay the shipping costs.

Vaden Company uses the periodic inventory system. The data presented below is from the company's accounting records for the year ended December 31: Calculate the company's cost of goods sold for the year.

Match the terms with the descriptions provided. -The amount that the inventory would increase or decrease if the company had used FIFO instead of LIFO.

During a period of increasing purchase prices, which inventory costing method will yield the lowest cost of goods sold?

When inventories are written down due to the application of the lower of cost or market (LCM) rule, which of the following is usually increased?

A departure from the cost basis of accounting may be necessary when the ____________________ of the inventory is less than its cost to the company.

Items should be included as part of the company's inventory if they are

When merchandise is sold FOB destination, the seller is responsible for the shipping costs.

Which of the following statements is false regarding the choice between alternative inventory costing methods?

Match the terms with the descriptions provided. -The difference between a company's net sales and its cost of goods sold.

Which of the following statements is true regarding just-in-time inventory management?

Match the inventory-related accounts to costs that may be included in inventories for retailers and manufacturers. -Cost of material, labor, and other production-related costs incurred to date in unfinished goods.

Match the terms with the descriptions provided. -In the periodic inventory system, the account used to record the cost of merchandise acquired for resale.

When the market value of inventory items has declined below their cost, which method would be the most appropriate in complying with GAAP?

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.) -Returned goods to the seller.

Cost of goods sold is the difference between costs of goods available for sale and ending inventory.

Match the inventory-related accounts to costs that may be included in inventories for retailers and manufacturers. -Costs of completed items that have been sold to customers.

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

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Exam 6: Cost Of Goods Sold and Inventory

Differentiate between the record keeping required for sales and cost of goods sold under a perpetual versus a periodic inventory system.

Match the terms with the descriptions related to merchandise sales and purchases. -The buyer must pay the shipping costs.

Vaden Company uses the periodic inventory system. The data presented below is from the company's accounting records for the year ended December 31: Calculate the company's cost of goods sold for the year.

Match the terms with the descriptions provided. -The amount that the inventory would increase or decrease if the company had used FIFO instead of LIFO.

During a period of increasing purchase prices, which inventory costing method will yield the lowest cost of goods sold?

When inventories are written down due to the application of the lower of cost or market (LCM) rule, which of the following is usually increased?

A departure from the cost basis of accounting may be necessary when the ____________________ of the inventory is less than its cost to the company.

Items should be included as part of the company's inventory if they are

When merchandise is sold FOB destination, the seller is responsible for the shipping costs.

Which of the following statements is false regarding the choice between alternative inventory costing methods?

Match the terms with the descriptions provided. -The difference between a company's net sales and its cost of goods sold.

Which of the following statements is true regarding just-in-time inventory management?

Match the inventory-related accounts to costs that may be included in inventories for retailers and manufacturers. -Cost of material, labor, and other production-related costs incurred to date in unfinished goods.

Match the terms with the descriptions provided. -In the periodic inventory system, the account used to record the cost of merchandise acquired for resale.

When the market value of inventory items has declined below their cost, which method would be the most appropriate in complying with GAAP?

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.) -Returned goods to the seller.

Cost of goods sold is the difference between costs of goods available for sale and ending inventory.

Match the inventory-related accounts to costs that may be included in inventories for retailers and manufacturers. -Costs of completed items that have been sold to customers.

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