Question 1

In a perpetual inventory system:

Accepted Answer

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

Question 2

A disadvantage of the weighted-average method is that:

Accepted Answer

A)  current prices have no more significance than prices of goods bought a month earlier. 
B)  net income will not fluctuate as much as with other methods. 
C)  it takes into account the number of units purchased at each amount, not a simple average cost. 
D)  All of the above is correct. 
A)  current prices have no more significance than prices of goods bought a month earlier. 
B)  net income will not fluctuate as much as with other methods. 
C)  it takes into account the number of units purchased at each amount, not a simple average cost. 
D)  All of the above is correct.

Question 3

The inventory method where the flow of goods and flow of costs are the same is:

Accepted Answer

A)  LIFO. 
B)  specific invoice. 
C)  weighted-average. 
D)  FIFO. 
A)  LIFO. 
B)  specific invoice. 
C)  weighted-average. 
D)  FIFO.

Question 4

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

-Paid for freight charges. - 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 5

Chocolate Heaven had the following data for November:   The cost of the estimated inventory on November 30 under the retail method is: (Round any percentages to two decimal places, X.XX%, and your final answer to the nearest dollar.)

Accepted Answer

A)  $6,198. 
B)  $8,900. 
C)  $21,101. 
D)  $3,000. 
A)  $6,198. 
B)  $8,900. 
C)  $21,101. 
D)  $3,000.

Question 6

Which of the following goods should Blake Company include in its December 31, 201X, count?

Accepted Answer

A)  Goods held on consignment for Goodson Automotive 
B)  Goods sold to Denning, F.O.B. destination, and arrival date scheduled for February 10 
C)  Goods in transit purchased F.O.B. 
D)  Goods that are not salable 
A)  Goods held on consignment for Goodson Automotive 
B)  Goods sold to Denning, F.O.B. destination, and arrival date scheduled for February 10 
C)  Goods in transit purchased F.O.B. 
D)  Goods that are not salable

Question 7

The beginning inventory of this year is understated. This error would cause:

Accepted Answer

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

Question 8

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

-Customer returned goods purchased on credit - 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 9

When merchandise is sold, the periodic inventory system requires a debit to Cost of Goods Sold and a credit to Merchandise Inventory.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following accounts is used with a periodic inventory system?

Accepted Answer

A)  Sales 
B)  Sales Discounts 
C)  Purchases Returns and Allowances 
D)  All of these answers are correct. 
A)  Sales 
B)  Sales Discounts 
C)  Purchases Returns and Allowances 
D)  All of these answers are correct.

Question 11

Inlet Inc. has a normal gross profit of 25%. The current year's beginning inventory was $3,500, purchases were $14,000, and retail sales were $20,000. The estimated ending inventory under the gross profit method is:

Accepted Answer

A)  $13,000. 
B)  $10,500. 
C)  $2,500. 
D)  $3,500. 
A)  $13,000. 
B)  $10,500. 
C)  $2,500. 
D)  $3,500.

Question 12

Which is NOT a good reason to use the specific invoice method?

Accepted Answer

A)  The flow of goods and flow of cost are the same. 
B)  It can be used with goods with large sales volume. 
C)  It is simple to use if there is a small amount of high-cost unique goods. 
D)  Costs are matched with the sales they helped to produce. 
A)  The flow of goods and flow of cost are the same. 
B)  It can be used with goods with large sales volume. 
C)  It is simple to use if there is a small amount of high-cost unique goods. 
D)  Costs are matched with the sales they helped to produce.

Question 13

When ending inventory is understated:

Accepted Answer

A)  cost of goods sold is overstated and profit is understated. 
B)  beginning inventory is overstated and profit is understated. 
C)  cost of goods sold is understated and profit is understated. 
D)  cost of goods sold is overstated and profit is overstated. 
A)  cost of goods sold is overstated and profit is understated. 
B)  beginning inventory is overstated and profit is understated. 
C)  cost of goods sold is understated and profit is understated. 
D)  cost of goods sold is overstated and profit is overstated.

Question 14

An inventory ledger is not used to track details of quantities and costs.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

The gross profit method:

Accepted Answer

A)  determines the value of the ending inventory using a cost-to-retail ratio. 
B)  is often used for interim financial reports. 
C)  determines the value of the ending inventory using a predetermined gross profit rate. 
D)  Both A and B are correct. 
A)  determines the value of the ending inventory using a cost-to-retail ratio. 
B)  is often used for interim financial reports. 
C)  determines the value of the ending inventory using a predetermined gross profit rate. 
D)  Both A and B are correct.

Question 17

A method that uses average gross profit rate and net sales to compute inventory is:

Accepted Answer

A)  the retail method. 
B)  the gross profit method. 
C)  the weighted-average method. 
D)  None of these answers is correct. 
A)  the retail method. 
B)  the gross profit method. 
C)  the weighted-average method. 
D)  None of these answers is correct.

Question 18

The ________ is the one who consigns the merchandise.

Accepted Answer

The answer of The ________ is the one who consigns...

Question 19

Sales Returns & Allowances is recorded on the:

Accepted Answer

A)  Balance Sheet. 
B)  Statement of owner's equity. 
C)  Income Statement. 
D)  None of these is correct. 
A)  Balance Sheet. 
B)  Statement of owner's equity. 
C)  Income Statement. 
D)  None of these is correct.

Question 20

Prescott Plates uses a periodic inventory system. Prescott sold 35 dining sets during September. Other data for September include:   Prescott sold 10 units from the Sept 1 balance, 15 from the Sept 6 purchase, and 10 from the Sept 12 purchase. Ending Inventory under the Specific Invoice method is:

Accepted Answer

A)  $11,750. 
B)  $6,240. 
C)  $5,820. 
D)  $4,520. 
A)  $11,750. 
B)  $6,240. 
C)  $5,820. 
D)  $4,520.

Exam 15: Accounting for Merchandise Inventory

In a perpetual inventory system:

A disadvantage of the weighted-average method is that:

The inventory method where the flow of goods and flow of costs are the same is:

Indicate the account(s) to be debited and credited to record the following transactions. -Paid for freight charges. - Periodic Debit ________ Credit ________

Chocolate Heaven had the following data for November: The cost of the estimated inventory on November 30 under the retail method is: (Round any percentages to two decimal places, X.XX%, and your final answer to the nearest dollar.)

Which of the following goods should Blake Company include in its December 31, 201X, count?

The beginning inventory of this year is understated. This error would cause:

Indicate the account(s) to be debited and credited to record the following transactions. -Customer returned goods purchased on credit - Periodic Debit ________ Credit ________

When merchandise is sold, the periodic inventory system requires a debit to Cost of Goods Sold and a credit to Merchandise Inventory.

Which of the following accounts is used with a periodic inventory system?

Inlet Inc. has a normal gross profit of 25%. The current year's beginning inventory was $3,500, purchases were $14,000, and retail sales were $20,000. The estimated ending inventory under the gross profit method is:

Which is NOT a good reason to use the specific invoice method?

When ending inventory is understated:

An inventory ledger is not used to track details of quantities and costs.

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

The gross profit method:

A method that uses average gross profit rate and net sales to compute inventory is:

The ________ is the one who consigns the merchandise.

Sales Returns & Allowances is recorded on the:

Prescott Plates uses a periodic inventory system. Prescott sold 35 dining sets during September. Other data for September include: Prescott sold 10 units from the Sept 1 balance, 15 from the Sept 6 purchase, and 10 from the Sept 12 purchase. Ending Inventory under the Specific Invoice method is:

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 freight charges. - Periodic Debit Credit

Indicate the account(s) to be debited and credited to record the following transactions. -Customer returned goods purchased on credit - Periodic Debit Credit