Question 1

The LIFO conformity rule requires that if a company uses LIFO in reporting income to stockholders, it also must use LIFO on its tax return.

Accepted Answer

A) True 
 B)False

Question 2

If a change in accounts payable was added back to net income on the statement of cash flows prepared using the indirect method, then the amount owed to suppliers during the period had decreased.

Accepted Answer

A) True 
 B)False

Question 3

Refer to the financial statement information for Digital Forces.
Determine the dollar amount of cost of goods purchased for Digital Forces for 2015.

Accepted Answer

$136,000 Cost of Sales - 2015

Question 4

Which one of the following statements regarding the application of the lower of cost or market method is true?

Accepted Answer

A)  Generally, market value is greater than replacement cost. 
B)  When the lower of cost or market method is used, inventories are valued at selling price. 
C)  The lower of cost or market method is most commonly applied on a total inventory basis because it is a more conservative approach. 
D)  The lower of cost or market method is an exception to the historical cost principle. 
A)  Generally, market value is greater than replacement cost. 
B)  When the lower of cost or market method is used, inventories are valued at selling price. 
C)  The lower of cost or market method is most commonly applied on a total inventory basis because it is a more conservative approach. 
D)  The lower of cost or market method is an exception to the historical cost principle.

Question 5

Which one of the following statements is true?

Accepted Answer

A)  The flow of inventory costs should match the physical flow of the merchandise. 
B)  Accounting standards require that merchandise costs be specifically traced to units left in inventory and to units that have been sold 
C)  Accountants have developed methods which make assumptions concerning how costs should be assigned to inventory and cost of goods sold. 
D)  Alternative inventory cost flow assumptions have the same effect on the amount of net income reported. 
A)  The flow of inventory costs should match the physical flow of the merchandise. 
B)  Accounting standards require that merchandise costs be specifically traced to units left in inventory and to units that have been sold 
C)  Accountants have developed methods which make assumptions concerning how costs should be assigned to inventory and cost of goods sold. 
D)  Alternative inventory cost flow assumptions have the same effect on the amount of net income reported.

Question 6

Match the costs that might be included as part of the cost of inventory to the listed accounting treatment.
-Excise taxes paid on goods acquired

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 7

The three forms or states in the development of inventory for a manufacturer are direct materials, direct labor, and finished goods.

Accepted Answer

A) True 
 B)False

Question 8

Givens Corp.
Givens Corp. is a merchandising company that uses the periodic inventory system. Selected account balances are listed below:
  
-Refer to the information for Givens Corp. Calculate the gross profit.

Accepted Answer

A)  $241,000 
B)  $275,000 
C)  $289,000 
D)  $425,000 
A)  $241,000 
B)  $275,000 
C)  $289,000 
D)  $425,000

Question 9

Which one of the following types of inventory accounts would be used by a wholesaler or retailer?

Accepted Answer

A)  Raw materials inventory 
B)  Work in process inventory 
C)  Finished goods inventory 
D)  Merchandise inventory 
A)  Raw materials inventory 
B)  Work in process inventory 
C)  Finished goods inventory 
D)  Merchandise inventory

Question 10

Both U.S. GAAP and international financial reporting standards IFRS require the use of the lower-of-cost-or-market rule to value inventories.

Accepted Answer

A) True 
 B)False

Question 11

Maxim Company sells auto parts. The company employs a periodic inventory system. Identify all the effects on the accounting equation.
-Sold merchandise on credit to customers.

Accepted Answer

A) Increase in assets 
B) Decrease in assets 
C) Increase in liabilities 
D) Decrease in liabilities 
E) Increase on owners' equity
F)Decrease in owners' equity
G)Increase in assets and increase in owners' equity
H)Decrease in assets and decrease in owners' equity
I)Increase in liabilities and decrease in owners' equity
J)Decrease in liabilities and increase in owners' equity 
A) Increase in assets 
B) Decrease in assets 
C) Increase in liabilities 
D) Decrease in liabilities 
E) Increase on owners' equity
F)Decrease in owners' equity
G)Increase in assets and increase in owners' equity
H)Decrease in assets and decrease in owners' equity
I)Increase in liabilities and decrease in owners' equity
J)Decrease in liabilities and increase in owners' equity

Question 12

Which of the following would not be included in inventory costs?

Accepted Answer

A)  Freight costs incurred by the buyer in shipping inventory to its place of business. 
B)  The cost of insurance taken out during the time that inventory is in transit. 
C)  The cost of storing inventory before it is ready to be sold. 
D)  Shelving to hold the inventory. 
A)  Freight costs incurred by the buyer in shipping inventory to its place of business. 
B)  The cost of insurance taken out during the time that inventory is in transit. 
C)  The cost of storing inventory before it is ready to be sold. 
D)  Shelving to hold the inventory.

Question 13

Refer to the data for Learning Tree, Inc.
Explain why the amounts for ending inventory are different under the two average cost methods--weighted average periodic and moving average perpetual.

Accepted Answer

The amounts for ending inventory and cos

Question 14

Wendt, Inc. counted its ending inventory as $178,000 at year-end, January 31, 2014. Upon review of the records, it was noted that the following items were in transit during the count: A $2,000 of goods shipped by a supplier to Wendt sent FOB destination on January 31 were received February 5, and were not counted by Wendt.
B $5,000 of goods shipped by a supplier to Wendt sent FOB shipping point on January 30 were received February 2, and were not counted by Wendt.
C $6,000 of goods shipped by Wendt to a customer FOB shipping point on January 31 were received by the customer February 3, and were counted by Wendt.
Determine the correct inventory balance at January 31.

Accepted Answer

A)  $178,000 
B)  $177,000 
C)  $174,000 
D)  $172,000 
A)  $178,000 
B)  $177,000 
C)  $174,000 
D)  $172,000

Question 15

Using the following information, what is the amount of cost of goods sold?

Accepted Answer

A)  $26,900 
B)  $20,530 
C)  $28,130 
D)  $30,210 
A)  $26,900 
B)  $20,530 
C)  $28,130 
D)  $30,210

Question 16

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

The answer of A departure from the cost basis of...

Question 17

Match the terms with the descriptions related to merchandise sales and purchases.
-Requires updating of the inventory account at the time of each purchase and each sale.

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 18

Cost of goods sold is equal to beginning inventory plus the net cost of purchases minus
_________________________.

Accepted Answer

The answer of Cost of goods sold is equal to...

Question 19

At the year-end inventory count, if goods in transit are shipped FOB shipping point, they should be included in the inventory count of

Accepted Answer

A)  The seller 
B)  The buyer 
C)  Both the seller and the buyer 
D)  Neither the seller no the buyer 
A)  The seller 
B)  The buyer 
C)  Both the seller and the buyer 
D)  Neither the seller no the buyer

Question 20

A customer returned damaged goods for credit. Which of the seller's accounts decreases?

Accepted Answer

A)  Purchase Returns 
B)  Accounts Receivable 
C)  Sales Returns 
D)  Sales Revenue 
A)  Purchase Returns 
B)  Accounts Receivable 
C)  Sales Returns 
D)  Sales Revenue

The LIFO conformity rule requires that if a company uses LIFO in reporting income to stockholders, it also must use LIFO on its tax return.

If a change in accounts payable was added back to net income on the statement of cash flows prepared using the indirect method, then the amount owed to suppliers during the period had decreased.

Refer to the financial statement information for Digital Forces. Determine the dollar amount of cost of goods purchased for Digital Forces for 2015.

Which one of the following statements regarding the application of the lower of cost or market method is true?

Which one of the following statements is true?

Match the costs that might be included as part of the cost of inventory to the listed accounting treatment. -Excise taxes paid on goods acquired

The three forms or states in the development of inventory for a manufacturer are direct materials, direct labor, and finished goods.

Givens Corp. Givens Corp. is a merchandising company that uses the periodic inventory system. Selected account balances are listed below: -Refer to the information for Givens Corp. Calculate the gross profit.

Which one of the following types of inventory accounts would be used by a wholesaler or retailer?

Both U.S. GAAP and international financial reporting standards IFRS require the use of the lower-of-cost-or-market rule to value inventories.

Maxim Company sells auto parts. The company employs a periodic inventory system. Identify all the effects on the accounting equation. -Sold merchandise on credit to customers.

Which of the following would not be included in inventory costs?

Refer to the data for Learning Tree, Inc. Explain why the amounts for ending inventory are different under the two average cost methods--weighted average periodic and moving average perpetual.

Using the following information, what is the amount of cost of goods sold?

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

Match the terms with the descriptions related to merchandise sales and purchases. -Requires updating of the inventory account at the time of each purchase and each sale.

Cost of goods sold is equal to beginning inventory plus the net cost of purchases minus _________________________.

At the year-end inventory count, if goods in transit are shipped FOB shipping point, they should be included in the inventory count of

A customer returned damaged goods for credit. Which of the seller's accounts decreases?

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International-Financial-Reporting-Standards

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Exam 5: Inventories and Cost of Goods Sold

The LIFO conformity rule requires that if a company uses LIFO in reporting income to stockholders, it also must use LIFO on its tax return.

If a change in accounts payable was added back to net income on the statement of cash flows prepared using the indirect method, then the amount owed to suppliers during the period had decreased.

Refer to the financial statement information for Digital Forces. Determine the dollar amount of cost of goods purchased for Digital Forces for 2015.

Which one of the following statements regarding the application of the lower of cost or market method is true?

Which one of the following statements is true?

Match the costs that might be included as part of the cost of inventory to the listed accounting treatment. -Excise taxes paid on goods acquired

The three forms or states in the development of inventory for a manufacturer are direct materials, direct labor, and finished goods.

Givens Corp. Givens Corp. is a merchandising company that uses the periodic inventory system. Selected account balances are listed below: -Refer to the information for Givens Corp. Calculate the gross profit.

Which one of the following types of inventory accounts would be used by a wholesaler or retailer?

Both U.S. GAAP and international financial reporting standards IFRS require the use of the lower-of-cost-or-market rule to value inventories.

Maxim Company sells auto parts. The company employs a periodic inventory system. Identify all the effects on the accounting equation. -Sold merchandise on credit to customers.

Which of the following would not be included in inventory costs?

Refer to the data for Learning Tree, Inc. Explain why the amounts for ending inventory are different under the two average cost methods--weighted average periodic and moving average perpetual.

Using the following information, what is the amount of cost of goods sold?

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

Match the terms with the descriptions related to merchandise sales and purchases. -Requires updating of the inventory account at the time of each purchase and each sale.

Cost of goods sold is equal to beginning inventory plus the net cost of purchases minus _________________________.

At the year-end inventory count, if goods in transit are shipped FOB shipping point, they should be included in the inventory count of

A customer returned damaged goods for credit. Which of the seller's accounts decreases?

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International-Financial-Reporting-Standards

Filters