Question 1

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...

Question 2

An advantage of the weighted-average method is that:

Accepted Answer

A)  it assigns an equal cost to each unit so net income does not fluctuate as much as with other methods. 
B)  it takes into account the number of units purchased at each amount, not a simple average cost. 
C)  it matches current selling prices and current costs. 
D)  Both A and B are correct. 
A)  it assigns an equal cost to each unit so net income does not fluctuate as much as with other methods. 
B)  it takes into account the number of units purchased at each amount, not a simple average cost. 
C)  it matches current selling prices and current costs. 
D)  Both A and B are correct.

Question 3

Indicate the account(s) to be debited and credited to record the following transactions.

-Paid for merchandise within the discount period. - Perpetual
Debit ________ Credit ________ & ________

Accepted Answer

A)  Cash 
B)  Accounts receivable 
C)  Merchandise inventory 
D)  Supplies 
E)  Accounts payable
F) Sales
G) Sales returns and allowances
H) Sales discounts
I) Cost of goods sold
J) Purchases
K) Purchase returns and allowances
L)Purchase discounts
M) Freight-in 
A)  Cash 
B)  Accounts receivable 
C)  Merchandise inventory 
D)  Supplies 
E)  Accounts payable
F) Sales
G) Sales returns and allowances
H) Sales discounts
I) Cost of goods sold
J) Purchases
K) Purchase returns and allowances
L)Purchase discounts
M) Freight-in

Question 4

The weighted-average method:

Accepted Answer

A)  calculates an average unit cost by dividing the total cost of goods sold by the total units sold. 
B)  calculates an average unit cost by dividing the total cost of goods available for sale by the total units of goods available for sale. 
C)  calculates an average unit cost by adding the total cost of goods available for sale to the total units of goods available for sale. 
D)  None of these answers is correct. 
A)  calculates an average unit cost by dividing the total cost of goods sold by the total units sold. 
B)  calculates an average unit cost by dividing the total cost of goods available for sale by the total units of goods available for sale. 
C)  calculates an average unit cost by adding the total cost of goods available for sale to the total units of goods available for sale. 
D)  None of these answers is correct.

Question 5

A business has sales of $184,158 and a normal gross profit of 45%. The estimated cost of goods sold is: (Round your answer to the nearest dollar.)

Accepted Answer

A)  $184,158. 
B)  $82,871. 
C)  $101,287. 
D)  Cannot be determined. 
A)  $184,158. 
B)  $82,871. 
C)  $101,287. 
D)  Cannot be determined.

Question 6

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.

Accepted Answer

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

Question 7

In assigning a cost to ending inventory, the cost flow has to follow the physical flow.

Accepted Answer

A) True 
 B)False

Question 8

An advantage of the specific invoice method is that:

Accepted Answer

A)  costs are matched with the sales they helped to produce. 
B)  it is simple to use if company has small amounts of high-cost goods. 
C)  flow of goods and flow of costs are the same. 
D)  All of the above is correct. 
A)  costs are matched with the sales they helped to produce. 
B)  it is simple to use if company has small amounts of high-cost goods. 
C)  flow of goods and flow of costs are the same. 
D)  All of the above is correct.

Question 9

Under the perpetual or periodic inventory system, customer merchandise returns are recorded to ___________ and Accounts Receivable (or Cash).

Accepted Answer

Sales Retu

Question 10

Items that are very similar, such as grains and fuels, would be costed using the ________ system of inventory valuation.

Accepted Answer

The answer of Items that are very similar, such as...

Question 11

A disadvantage of the LIFO method is that:

Accepted Answer

A)  it doesn't match physical flow of goods. 
B)  ending inventory is valued at very old costs. 
C)  it matches current selling prices and current costs. 
D)  Both A and B are correct. 
A)  it doesn't match physical flow of goods. 
B)  ending inventory is valued at very old costs. 
C)  it matches current selling prices and current costs. 
D)  Both A and B are correct.

Question 12

Compute the cost of ending inventory using the retail method when goods available for sale at cost are $10,000, retail is $27,000, and sales at retail equal $23,000. What will the cost ratio be? What will the cost of ending inventory be?

Accepted Answer

A)  Cost ratio 37%; ending inventory $4,000 
B)  Cost ratio 43%; ending inventory $17,000 
C)  Cost ratio 85%; ending inventory $8,520 
D)  Cost ratio 37%; ending inventory $1,480 
A)  Cost ratio 37%; ending inventory $4,000 
B)  Cost ratio 43%; ending inventory $17,000 
C)  Cost ratio 85%; ending inventory $8,520 
D)  Cost ratio 37%; ending inventory $1,480

Question 13

Merchandise Inventory is a liability account.

Accepted Answer

A) True 
 B)False

Question 14

Prepare journal entries for the following transactions for HO Train Shop applying the perpetual inventory system. Omit explanations.
Nov. 2 Purchased on account 300 model engines for $3,000.
12 Returned 30 engines for full credit.
19 Sold 40 of the engines to R. Holmes for $800 cash.
25 Paid the balance due on the engines.

Accepted Answer

The answer of Prepare journal entries for the following transactions...

Question 15

Under the perpetual inventory system, which of the following accounts is debited with a merchandise purchase?

Accepted Answer

A)  Sales 
B)  Purchases 
C)  Purchase Returns and Allowances 
D)  Merchandise Inventory 
A)  Sales 
B)  Purchases 
C)  Purchase Returns and Allowances 
D)  Merchandise Inventory

Question 16

______ accounts for merchandise inventory on a transaction-by-transaction basis.

Accepted Answer

A)  A periodic inventory system 
B)  A perpetual inventory system 
C)  An inventory accounting system 
D)  Both A and B are correct. 
A)  A periodic inventory system 
B)  A perpetual inventory system 
C)  An inventory accounting system 
D)  Both A and B are correct.

Question 17

The journal entry to record a purchase of inventory on credit under the perpetual system includes:

Accepted Answer

A)  a credit to Merchandise Inventory. 
B)  a debit to Cash. 
C)  a credit to Accounts Payable. 
D)  Both A and C are correct. 
A)  a credit to Merchandise Inventory. 
B)  a debit to Cash. 
C)  a credit to Accounts Payable. 
D)  Both A and C are correct.

Question 18

Indicate the account(s) to be debited and credited to record the following transactions.

-Purchased merchandise on credit; terms of 2/10, n/30. - Periodic
Debit ________ Credit ________

Accepted Answer

A)  Cash 
B)  Accounts receivable 
C)  Merchandise inventory 
D)  Supplies 
E)  Accounts payable
F) Sales
G) Sales returns and allowances
H) Sales discounts
I) Cost of goods sold
J) Purchases
K) Purchase returns and allowances
L)Purchase discounts
M) Freight-in 
A)  Cash 
B)  Accounts receivable 
C)  Merchandise inventory 
D)  Supplies 
E)  Accounts payable
F) Sales
G) Sales returns and allowances
H) Sales discounts
I) Cost of goods sold
J) Purchases
K) Purchase returns and allowances
L)Purchase discounts
M) Freight-in

Question 19

Goods that are consigned to another party:

Accepted Answer

A)  belong to the other party because title has passed. 
B)  belong to the company that has consigned them. 
C)  belong to the consignee. 
D)  Both B and C are correct. 
A)  belong to the other party because title has passed. 
B)  belong to the company that has consigned them. 
C)  belong to the consignee. 
D)  Both B and C are correct.

Question 20

This method assumes that the oldest goods are sold first.

Accepted Answer

A)  LIFO 
B)  FIFO 
C)  Specific invoice method 
D)  Weighted-average method 
A)  LIFO 
B)  FIFO 
C)  Specific invoice method 
D)  Weighted-average method

Exam 15: Accounting for Merchandise Inventory

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

An advantage of the weighted-average method is that:

Indicate the account(s) to be debited and credited to record the following transactions. -Paid for merchandise within the discount period. - Perpetual Debit ________ Credit ________ & ________

The weighted-average method:

A business has sales of $184,158 and a normal gross profit of 45%. The estimated cost of goods sold is: (Round your answer to the nearest dollar.)

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.

In assigning a cost to ending inventory, the cost flow has to follow the physical flow.

An advantage of the specific invoice method is that:

Under the perpetual or periodic inventory system, customer merchandise returns are recorded to ___________ and Accounts Receivable (or Cash).

Items that are very similar, such as grains and fuels, would be costed using the ________ system of inventory valuation.

A disadvantage of the LIFO method is that:

Compute the cost of ending inventory using the retail method when goods available for sale at cost are $10,000, retail is $27,000, and sales at retail equal $23,000. What will the cost ratio be? What will the cost of ending inventory be?

Merchandise Inventory is a liability account.

Under the perpetual inventory system, which of the following accounts is debited with a merchandise purchase?

______ accounts for merchandise inventory on a transaction-by-transaction basis.

The journal entry to record a purchase of inventory on credit under the perpetual system includes:

Indicate the account(s) to be debited and credited to record the following transactions. -Purchased merchandise on credit; terms of 2/10, n/30. - Periodic Debit ________ Credit ________

Goods that are consigned to another party:

This method assumes that the oldest goods are sold first.

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

Indicate the account(s) to be debited and credited to record the following transactions. -Paid for merchandise within the discount period. - Perpetual Debit Credit &

Indicate the account(s) to be debited and credited to record the following transactions. -Purchased merchandise on credit; terms of 2/10, n/30. - Periodic Debit Credit