Question 1

Ace Electronics sold $350 of merchandise to a customer on account.The sales tax was 6%.How much sales revenue did Ace earn?

Accepted Answer

A) $350 
B) $371 
C) $329 
D) $0 
A) $350 
B) $371 
C) $329 
D) $0

Question 2

In times of rising prices,a lower-of-cost-or-market write down is more likely if LIFO is used.

Accepted Answer

A) True 
 B)False

Question 3

Rigby Company buys merchandise from Shoshone Company with an invoice cost of $100,000 and shipping terms of FOB shipping point.The freight costs amount to $1,000.Which of the following statements is TRUE?

Accepted Answer

A) Rigby Company will record freight-in costs of $1,000. 
B) Shoshone Company will record freight-out costs of $1,000. 
C) Shoshone Company will record freight-in costs of $1,000. 
D) Rigby Company will have inventory cost of $10,000. 
A) Rigby Company will record freight-in costs of $1,000. 
B) Shoshone Company will record freight-out costs of $1,000. 
C) Shoshone Company will record freight-in costs of $1,000. 
D) Rigby Company will have inventory cost of $10,000.

Question 4

Which statement below best explains the credit terms of 2/15,n/30?

Accepted Answer

A) The buyer will receive a 15 percent discount if it pays within two days of the purchase. 
B) The buyer will receive a 15 percent discount if it pays within thirty days. 
C) The buyer will receive a 2 percent discount if it pays within fifteen days. 
D) The buyer will receive a 2 percent discount if it pays within thirty days. 
A) The buyer will receive a 15 percent discount if it pays within two days of the purchase. 
B) The buyer will receive a 15 percent discount if it pays within thirty days. 
C) The buyer will receive a 2 percent discount if it pays within fifteen days. 
D) The buyer will receive a 2 percent discount if it pays within thirty days.

Question 5

Which company is most likely to have a higher inventory turnover? A company with ________.

Accepted Answer

A) higher-priced goods and lower gross profit 
B) lower-priced goods and lower gross profit 
C) higher-priced goods and higher gross profit 
D) a higher gross profit ratio 
A) higher-priced goods and lower gross profit 
B) lower-priced goods and lower gross profit 
C) higher-priced goods and higher gross profit 
D) a higher gross profit ratio

Question 6

Inventory data for Missoula Merchandising,Inc.are provided below.Sales for the period were 2,800 units.Each sold for $8.The company maintains a weighted-average periodic inventory system.   Determine the gross profit for the quarter ended March 31.

Accepted Answer

A) $12,635 
B) $12,600 
C) $13,000 
D) $22,400 
A) $12,635 
B) $12,600 
C) $13,000 
D) $22,400

Question 7

Determine the effect on net income of each of the following errors.Treat each part of this question as an independent case and assume that the error given is the only error during the year.
a.Ending inventory is overstated by $5,000.
b.Beginning inventory is overstated by $7,000.
c.Ending inventory is understated by $4,000.
d.Beginning inventory is understated by $6,000.
e.Ending inventory is overstated by $2,500.
f.Beginning inventory is overstated by $9,500.
g.Ending inventory is understated by $6,200.

Accepted Answer

a.Net income in the current year will be

Question 8

GAAP for inventory costs ________.

Accepted Answer

A) allow two cost flow assumptions: FIFO and LIFO 
B) require companies to report the same net income regardless of which inventory cost flow assumption is used.This is called the income conformity rule 
C) allow for only one inventory cost flow assumption to enhance comparability 
D) allow for more than two inventory cost flow assumptions 
A) allow two cost flow assumptions: FIFO and LIFO 
B) require companies to report the same net income regardless of which inventory cost flow assumption is used.This is called the income conformity rule 
C) allow for only one inventory cost flow assumption to enhance comparability 
D) allow for more than two inventory cost flow assumptions

Question 9

Mighty Ducks,Inc.'s inventory activity in October 2011 was as follows:   Which of the following shows the correct effect on the accounting equation of the October 25 sale on account using the perpetual FIFO method of accounting for inventory?

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Question 10

Compare and contrast FIFO,LIFO,and the weighted-average cost flow methods.

Accepted Answer

FIFO,LIFO and the weighted average cost

Question 11

At December 31,Payless,Inc.reported inventory on the balance sheet at its cost of $200,000.However,the market value of the inventory at that date was $190,000.Put an X in the appropriate box to show the effect of continuing to report the inventory at cost:

Accepted Answer

The answer of At December 31,Payless,Inc.reported inventory on the balance...

Question 12

The Quiet Gravestone Company has only one product: a large,3-foot gravestone.Data for inventory during February of the current year are provided below.Assume the company uses a perpetual inventory system and the FIFO cost flow method.
   Sales for the month were:
February 7: seven sold at $1,000
February 15: five sold at $1,050
February 20: ten sold at $1,100
Required:
1.What is the cost of goods sold for the February 7 sale?
2.What is the cost of goods sold for the February 15 sale?
3.What is the cost of goods sold for the February 20 sale?
4. If the company used a periodic inventory system and the FIFO cost flow method, what would cost of goods sold be for the month?

Accepted Answer

1.COGS: $284 = (5 x $40)+ (2 x

Question 13

IFRS do not allow the LIFO cost flow method to be used when accounting for inventory.

Accepted Answer

A) True 
 B)False

Question 14

For each of the purchases below made by Daily Grind,Inc.,fill in the inventory amount net of discounts,and then indicate with an "X" whether you should include or exclude the purchase from Daily Grind's inventory balance at December 31.

Accepted Answer

The answer of For each of the purchases below made...

Question 15

If the shipping terms are FOB shipping point,the seller has to pay for freight costs.

Accepted Answer

A) True 
 B)False

Question 16

Acme Enterprise sold $150 of merchandise to a customer for cash.The sales tax was 7%.How much sales revenue did Acme earn?

Accepted Answer

A) $10.50 
B) $160.50 
C) $150.00 
D) $139.50 
A) $10.50 
B) $160.50 
C) $150.00 
D) $139.50

Question 17

Rigby Company purchased merchandise from a supplier in Hong Kong with an invoice cost of $10,000 and shipping terms of FOB destination.The freight costs amount to $1,000.Rigby should record inventory at a cost of ________.

Accepted Answer

A) $11,000 
B) $10,000 
C) $9,000 
D) $1,000 
A) $11,000 
B) $10,000 
C) $9,000 
D) $1,000

Question 18

On November 27,Acme,Inc.ordered merchandise from Zenith Company.Zenith shipped the merchandise to Acme on November 29,FOB destination.The merchandise arrived at Acme's warehouse on December 1.Acme paid for the merchandise on January 2.When should Acme record the purchase?

Accepted Answer

A) November 27 
B) November 29 
C) December 1 
D) January 2 
A) November 27 
B) November 29 
C) December 1 
D) January 2

Question 19

FIFO means that the costs of the oldest items in inventory are ________.

Accepted Answer

A) the costs that attach to ending inventory at the end of the period 
B) the costs that attach to the inventory sold during the period 
C) reduced to the lower of cost or market value during the period 
D) expensed when purchased 
A) the costs that attach to ending inventory at the end of the period 
B) the costs that attach to the inventory sold during the period 
C) reduced to the lower of cost or market value during the period 
D) expensed when purchased

Question 20

In times of rising prices,________ will be more apt to result in a lower-of-cost-or-market write down.

Accepted Answer

A) the LIFO method 
B) the FIFO method 
C) the Weighted average cost method 
D) Each method is as likely to result in a lower-of-cost-or-market write down as the others are. 
A) the LIFO method 
B) the FIFO method 
C) the Weighted average cost method 
D) Each method is as likely to result in a lower-of-cost-or-market write down as the others are.

Ace Electronics sold $350 of merchandise to a customer on account.The sales tax was 6%.How much sales revenue did Ace earn?

In times of rising prices,a lower-of-cost-or-market write down is more likely if LIFO is used.

Rigby Company buys merchandise from Shoshone Company with an invoice cost of $100,000 and shipping terms of FOB shipping point.The freight costs amount to $1,000.Which of the following statements is TRUE?

Which statement below best explains the credit terms of 2/15,n/30?

Which company is most likely to have a higher inventory turnover? A company with ________.

Inventory data for Missoula Merchandising,Inc.are provided below.Sales for the period were 2,800 units.Each sold for $8.The company maintains a weighted-average periodic inventory system. Determine the gross profit for the quarter ended March 31.

GAAP for inventory costs ________.

Mighty Ducks,Inc.'s inventory activity in October 2011 was as follows: Which of the following shows the correct effect on the accounting equation of the October 25 sale on account using the perpetual FIFO method of accounting for inventory?

Compare and contrast FIFO,LIFO,and the weighted-average cost flow methods.

At December 31,Payless,Inc.reported inventory on the balance sheet at its cost of $200,000.However,the market value of the inventory at that date was $190,000.Put an X in the appropriate box to show the effect of continuing to report the inventory at cost:

IFRS do not allow the LIFO cost flow method to be used when accounting for inventory.

For each of the purchases below made by Daily Grind,Inc.,fill in the inventory amount net of discounts,and then indicate with an "X" whether you should include or exclude the purchase from Daily Grind's inventory balance at December 31.

If the shipping terms are FOB shipping point,the seller has to pay for freight costs.

Acme Enterprise sold $150 of merchandise to a customer for cash.The sales tax was 7%.How much sales revenue did Acme earn?

Rigby Company purchased merchandise from a supplier in Hong Kong with an invoice cost of $10,000 and shipping terms of FOB destination.The freight costs amount to $1,000.Rigby should record inventory at a cost of ________.

On November 27,Acme,Inc.ordered merchandise from Zenith Company.Zenith shipped the merchandise to Acme on November 29,FOB destination.The merchandise arrived at Acme's warehouse on December 1.Acme paid for the merchandise on January 2.When should Acme record the purchase?

FIFO means that the costs of the oldest items in inventory are ________.

In times of rising prices,________ will be more apt to result in a lower-of-cost-or-market write down.

Business: Whats It All About

Qualities of Accounting Information

Accruals and Deferrals: Timing Is Everything in Accounting

Payment for Goods and Services: Cash and Accounts Receivable

Acquisition and Use of Long-Term Assets

Accounting for Liabilities

Accounting for Shareholders Equity

Preparing and Analyzing the Statement of Cash Flows

Using Financial Statement Analysis to Evaluate Firm Performance

Quality of Earnings, corporate Governance, and Ifrs

Filters

Exam 5: The Purchase and Sale of Inventory

Ace Electronics sold $350 of merchandise to a customer on account.The sales tax was 6%.How much sales revenue did Ace earn?

In times of rising prices,a lower-of-cost-or-market write down is more likely if LIFO is used.

Rigby Company buys merchandise from Shoshone Company with an invoice cost of $100,000 and shipping terms of FOB shipping point.The freight costs amount to $1,000.Which of the following statements is TRUE?

Which statement below best explains the credit terms of 2/15,n/30?

Which company is most likely to have a higher inventory turnover? A company with ________.

Inventory data for Missoula Merchandising,Inc.are provided below.Sales for the period were 2,800 units.Each sold for $8.The company maintains a weighted-average periodic inventory system. Determine the gross profit for the quarter ended March 31.

GAAP for inventory costs ________.

Mighty Ducks,Inc.'s inventory activity in October 2011 was as follows: Which of the following shows the correct effect on the accounting equation of the October 25 sale on account using the perpetual FIFO method of accounting for inventory?

Compare and contrast FIFO,LIFO,and the weighted-average cost flow methods.

At December 31,Payless,Inc.reported inventory on the balance sheet at its cost of $200,000.However,the market value of the inventory at that date was $190,000.Put an X in the appropriate box to show the effect of continuing to report the inventory at cost:

IFRS do not allow the LIFO cost flow method to be used when accounting for inventory.

For each of the purchases below made by Daily Grind,Inc.,fill in the inventory amount net of discounts,and then indicate with an "X" whether you should include or exclude the purchase from Daily Grind's inventory balance at December 31.

If the shipping terms are FOB shipping point,the seller has to pay for freight costs.

Acme Enterprise sold $150 of merchandise to a customer for cash.The sales tax was 7%.How much sales revenue did Acme earn?

Rigby Company purchased merchandise from a supplier in Hong Kong with an invoice cost of $10,000 and shipping terms of FOB destination.The freight costs amount to $1,000.Rigby should record inventory at a cost of ________.

On November 27,Acme,Inc.ordered merchandise from Zenith Company.Zenith shipped the merchandise to Acme on November 29,FOB destination.The merchandise arrived at Acme's warehouse on December 1.Acme paid for the merchandise on January 2.When should Acme record the purchase?

FIFO means that the costs of the oldest items in inventory are ________.

In times of rising prices,________ will be more apt to result in a lower-of-cost-or-market write down.

Business: Whats It All About

Qualities of Accounting Information

Accruals and Deferrals: Timing Is Everything in Accounting

Payment for Goods and Services: Cash and Accounts Receivable

Acquisition and Use of Long-Term Assets

Accounting for Liabilities

Accounting for Shareholders Equity

Preparing and Analyzing the Statement of Cash Flows

Using Financial Statement Analysis to Evaluate Firm Performance

Quality of Earnings, corporate Governance, and Ifrs

Filters