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 debited every time inventory is sold. 
C) a physical inventory is taken at least annually. 
D) all of the above take place. 
A) Merchandise Inventory is debited every time inventory is purchased. 
B) Cost of Goods Sold is debited every time inventory is sold. 
C) a physical inventory is taken at least annually. 
D) all of the above take place.

Question 2

Under the ________ inventory system, cost of goods sold and the amount of merchandise inventory on hand are updated when merchandise is bought and sold.

Accepted Answer

The answer of Under the ________ inventory system, cost of...

Question 3

Inventory becomes part of Cost of Goods Sold when a company:

Accepted Answer

A) receives the inventory. 
B) purchases the inventory. 
C) sells the inventory. 
D) makes payment on the inventory. 
A) receives the inventory. 
B) purchases the inventory. 
C) sells the inventory. 
D) makes payment on the inventory.

Question 4

LIFO reflects most recent costs for inventory on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 5

Under the perpetual inventory system, in addition to making the entry to record a return of goods from a customer, a company would:

Accepted Answer

A) debit Merchandise Inventory and credit Cost of Goods Sold. 
B) debit Cost of Goods Sold and credit Merchandise Inventory. 
C) debit Sales and credit Cost of Goods Sold. 
D) debit Purchases and credit Cost of Goods Sold. 
A) debit Merchandise Inventory and credit Cost of Goods Sold. 
B) debit Cost of Goods Sold and credit Merchandise Inventory. 
C) debit Sales and credit Cost of Goods Sold. 
D) debit Purchases and credit Cost of Goods Sold.

Question 6

Under the ________ inventory system, no 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, no entries...

Question 7

The company returned $200 of damaged merchandise. The entry to record this under the periodic inventory method is:

Accepted Answer

A) debit Merchandise Inventory $200; credit Accounts Payable $200. 
B) debit Cost of Goods Sold $200; credit Accounts Payable $200. 
C) debit Accounts Payable $200; credit Purchases Returns and Allowances $200. 
D) debit Accounts Payable $200; credit Merchandise Inventory $200. 
A) debit Merchandise Inventory $200; credit Accounts Payable $200. 
B) debit Cost of Goods Sold $200; credit Accounts Payable $200. 
C) debit Accounts Payable $200; credit Purchases Returns and Allowances $200. 
D) debit Accounts Payable $200; credit Merchandise Inventory $200.

Question 8

The retail method is used by many merchandising businesses to estimate the amount of inventory.

Accepted Answer

A) True 
 B)False

Question 9

If goods are shipped FOB destination point by the seller, when does title pass?

Accepted Answer

A) When the goods arrive at the buyer's location 
B) When they leave the seller's location 
C) When they are signed for 
D) None of the above 
A) When the goods arrive at the buyer's location 
B) When they leave the seller's location 
C) When they are signed for 
D) None of the above

Question 10

FIFO provides an up-to-date ending inventory on the balance sheet because it uses the latest purchases to calculate ending inventory.

Accepted Answer

A) True 
 B)False

Question 11

If the ending inventory is overstated in period 1:

Accepted Answer

A) beginning inventory in period 2 is overstated. 
B) goods available for sale in period 2 are overstated. 
C) cost of goods sold in period 2 is overstated. 
D) All of these answers are correct. 
A) beginning inventory in period 2 is overstated. 
B) goods available for sale in period 2 are overstated. 
C) cost of goods sold in period 2 is overstated. 
D) All of these answers are correct.

Question 12

Under the perpetual inventory method, purchase returns are credited to ________.

Accepted Answer

merchandis

Question 13

Under the average-cost method, costs are matched with individual sale items.

Accepted Answer

A) True 
 B)False

Question 14

Given the following accounts:
   Indicate the account(s)to be debited and credited to record the following transactions.
-Sold merchandise on account. - Perpetual
Debit ________ & ________ Credit ________ & ________

Accepted Answer

Debit 2 &

Question 15

The perpetual inventory system is a system which:

Accepted Answer

A) updates inventory continuously. 
B) uses either FIFO, LIFO, weighted-average, or specific invoice method. 
C) never needs a physical inventory taken. 
D) both A and B. 
A) updates inventory continuously. 
B) uses either FIFO, LIFO, weighted-average, or specific invoice method. 
C) never needs a physical inventory taken. 
D) both A and B.

Question 16

Hawkeye Tack uses a periodic inventory system. Hawkeye Tack sold 80 sweaters during September. Other data for September includes:   Cost of goods sold under the FIFO method is:

Accepted Answer

A) $800. 
B) $2,406. 
C) $1,024. 
D) $2,182. 
A) $800. 
B) $2,406. 
C) $1,024. 
D) $2,182.

Question 17

An incorrect inventory figure will affect only the income statement.

Accepted Answer

A) True 
 B)False

Question 18

The journal entry to record a sale of inventory under the perpetual system includes:

Accepted Answer

A) a debit to Cost of Goods Sold and a credit to Merchandise Inventory. 
B) a debit to Cost of Goods Sold and a debit to Merchandise Inventory. 
C) a debit to Accounts Receivable or Cash and a credit to Sales. 
D) both A and C. 
A) a debit to Cost of Goods Sold and a credit to Merchandise Inventory. 
B) a debit to Cost of Goods Sold and a debit to Merchandise Inventory. 
C) a debit to Accounts Receivable or Cash and a credit to Sales. 
D) both A and C.

Question 19

The advantage of the weighted-average method is:

Accepted Answer

A) an equal cost is assigned to each unit so net income does not fluctuate as much as with other methods. 
B) flow of goods and flow of costs are the same. 
C) it matches current selling prices and current costs. 
D) old costs are matched against current income. 
A) an equal cost is assigned to each unit so net income does not fluctuate as much as with other methods. 
B) flow of goods and flow of costs are the same. 
C) it matches current selling prices and current costs. 
D) old costs are matched against current income.

Question 20

Calculate the cost of goods sold under each of the following methods given the information below about purchases and sales during the year. Assume a periodic inventory system.
   Sales for April: 115 units
a)________ FIFO
b)________ LIFO
c)________ Weighted-average

Accepted Answer

a)FIFO (20 × $30)+ (70 × $32)+

Exam 15: Accounting for Merchandise Inventory

In a perpetual inventory system:

Under the ________ inventory system, cost of goods sold and the amount of merchandise inventory on hand are updated when merchandise is bought and sold.

Inventory becomes part of Cost of Goods Sold when a company:

LIFO reflects most recent costs for inventory on the balance sheet.

Under the perpetual inventory system, in addition to making the entry to record a return of goods from a customer, a company would:

Under the ________ inventory system, no entries are made to the merchandise inventory or cost of goods sold account during the year.

The company returned $200 of damaged merchandise. The entry to record this under the periodic inventory method is:

The retail method is used by many merchandising businesses to estimate the amount of inventory.

If goods are shipped FOB destination point by the seller, when does title pass?

FIFO provides an up-to-date ending inventory on the balance sheet because it uses the latest purchases to calculate ending inventory.

If the ending inventory is overstated in period 1:

Under the perpetual inventory method, purchase returns are credited to ________.

Under the average-cost method, costs are matched with individual sale items.

Given the following accounts: Indicate the account(s)to be debited and credited to record the following transactions. -Sold merchandise on account. - Perpetual Debit ________ & ________ Credit ________ & ________

The perpetual inventory system is a system which:

Hawkeye Tack uses a periodic inventory system. Hawkeye Tack sold 80 sweaters during September. Other data for September includes: Cost of goods sold under the FIFO method is:

An incorrect inventory figure will affect only the income statement.

The journal entry to record a sale of inventory under the perpetual system includes:

The advantage of the weighted-average method is:

Calculate the cost of goods sold under each of the following methods given the information below about purchases and sales during the year. Assume a periodic inventory system. Sales for April: 115 units a)________ FIFO b)________ LIFO c)________ Weighted-average

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: the Conclusion of the Payroll Process

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, and Retained Earnings

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

Filters

Given the following accounts: Indicate the account(s)to be debited and credited to record the following transactions. -Sold merchandise on account. - Perpetual Debit & Credit &

Calculate the cost of goods sold under each of the following methods given the information below about purchases and sales during the year. Assume a periodic inventory system. Sales for April: 115 units a) FIFO b) LIFO c) Weighted-average