Question 1

Inventory is usually carried in the accounting records at

Accepted Answer

A)  Lower of cost or market 
B)  Market 
C)  Cost 
D)  Selling price 
A)  Lower of cost or market 
B)  Market 
C)  Cost 
D)  Selling price

Question 2

Which of the following accounts would NOT normally have a debit balance?

Accepted Answer

A)  Inventory 
B)  Cost of Goods Sold 
C)  Purchase Discounts 
D)  Freight-In 
A)  Inventory 
B)  Cost of Goods Sold 
C)  Purchase Discounts 
D)  Freight-In

Question 3

Commodity X sells for $18.00; selling expenses are $3.60; normal profit is $4.50. If the cost of Commodity X is $11.70 and the replacement cost is $10.00, the lower of cost or market is

Accepted Answer

A)  $8.10 
B)  $9.00 
C)  $9.90 
D)  $11.70 
A)  $8.10 
B)  $9.00 
C)  $9.90 
D)  $11.70

Question 4

During a period of continuing inflation, which inventory cost flow alternative usually results in the highest reported net income?

Accepted Answer

A)  FIFO 
B)  LIFO 
C)  Average cost 
D)  All of these result in the same reported net income 
A)  FIFO 
B)  LIFO 
C)  Average cost 
D)  All of these result in the same reported net income

Question 5

The net sales figure of XYZ Company in 2012 was $300,000. If the cost of goods available for sale was $280,000 and gross margin was 35 percent of net sales, ending inventory must have been

Accepted Answer

A)  $70,000 
B)  $85,000 
C)  $195,000 
D)  $105,000 
A)  $70,000 
B)  $85,000 
C)  $195,000 
D)  $105,000

Question 6

How many years does it take for an inventory error to correct itself assuming the ending inventory count in the second year is correct?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 7

Which of the following statements is true of the gross margin method of estimating the dollar amount of ending inventory?

Accepted Answer

A)  It is helpful in estimating inventory when a fire burns the warehouse 
B)  It uses the current gross margin percentage in its calculation 
C)  It is a method of estimating ending inventory that can be used only in retail firms 
D)  All of these statements are true 
A)  It is helpful in estimating inventory when a fire burns the warehouse 
B)  It uses the current gross margin percentage in its calculation 
C)  It is a method of estimating ending inventory that can be used only in retail firms 
D)  All of these statements are true

Question 8

A firm using the perpetual inventory method returned defective merchandise costing $2,000 to one of its suppliers. The entry to record this transaction will include a debit to

Accepted Answer

A)  Accounts Receivable 
B)  Inventory 
C)  Purchase Returns 
D)  Accounts Payable 
A)  Accounts Receivable 
B)  Inventory 
C)  Purchase Returns 
D)  Accounts Payable

Inventory is usually carried in the accounting records at

Which of the following accounts would NOT normally have a debit balance?

Commodity X sells for $18.00; selling expenses are $3.60; normal profit is $4.50. If the cost of Commodity X is $11.70 and the replacement cost is $10.00, the lower of cost or market is

During a period of continuing inflation, which inventory cost flow alternative usually results in the highest reported net income?

The net sales figure of XYZ Company in 2012 was $300,000. If the cost of goods available for sale was $280,000 and gross margin was 35 percent of net sales, ending inventory must have been

How many years does it take for an inventory error to correct itself assuming the ending inventory count in the second year is correct?

Which of the following statements is true of the gross margin method of estimating the dollar amount of ending inventory?

A firm using the perpetual inventory method returned defective merchandise costing $2,000 to one of its suppliers. The entry to record this transaction will include a debit to

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Completing the Operating Cycle

Investments: Property, Plant, and Equipment and Intangible Assets

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Management Accounting and Cost Concepts

Cost Flows and Business Organizations

Activity-Based Costing

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

Filters

Exam 7: Inventory and the Cost of Sales

Inventory is usually carried in the accounting records at

Which of the following accounts would NOT normally have a debit balance?

Commodity X sells for $18.00; selling expenses are $3.60; normal profit is $4.50. If the cost of Commodity X is $11.70 and the replacement cost is $10.00, the lower of cost or market is

During a period of continuing inflation, which inventory cost flow alternative usually results in the highest reported net income?

The net sales figure of XYZ Company in 2012 was $300,000. If the cost of goods available for sale was $280,000 and gross margin was 35 percent of net sales, ending inventory must have been

How many years does it take for an inventory error to correct itself assuming the ending inventory count in the second year is correct?

Which of the following statements is true of the gross margin method of estimating the dollar amount of ending inventory?

A firm using the perpetual inventory method returned defective merchandise costing $2,000 to one of its suppliers. The entry to record this transaction will include a debit to

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Completing the Operating Cycle

Investments: Property, Plant, and Equipment and Intangible Assets

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Management Accounting and Cost Concepts

Cost Flows and Business Organizations

Activity-Based Costing

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

Filters