Question 1

The LIFO Reserve is the difference between the LIFO cost of inventory and what the cost of that inventory would be under FIFO.

Accepted Answer

A) True 
 B)False

Question 2

Thelen's inventory records show the following data at January 31:   At January 31,240 units are still on hand.What is the cost of the ending inventory at January 31 if Thelen uses the LIFO method?

Accepted Answer

A) $2,160 
B) $2,610 
C) $3,120 
D) $2,760 
A) $2,160 
B) $2,610 
C) $3,120 
D) $2,760

Question 3

Maydak Company reported the following items for the month of July:   The gross profit percentage is: (Round your final answer to the nearest percentage. )

Accepted Answer

A) 27%. 
B) 47%. 
C) 53%. 
D) 22%. 
A) 27%. 
B) 47%. 
C) 53%. 
D) 22%.

Question 4

Given the following data,calculate the cost of goods sold using the average-cost method. Round average cost per unit calculations to two decimal places.Round final answer to the nearest dollar.

Accepted Answer

A) $1,394 
B) $1,066 
C) $1,640 
D) $3,046 
A) $1,394 
B) $1,066 
C) $1,640 
D) $3,046

Question 5

When inventory is shipped from the seller to the buyer with shipping terms of FOB destination:

Accepted Answer

A) title passes from the seller to the buyer when the goods leave the seller's shipping dock. 
B) the goods will be included in the inventory of the buyer while in transit. 
C) the seller has title to the goods while they are in transit. 
D) the buyer will pay the transportation costs associated with the purchase. 
A) title passes from the seller to the buyer when the goods leave the seller's shipping dock. 
B) the goods will be included in the inventory of the buyer while in transit. 
C) the seller has title to the goods while they are in transit. 
D) the buyer will pay the transportation costs associated with the purchase.

Question 6

Sanfran Company purchased inventory for $110,000.In addition they had purchase returns of $6,000 and paid freight-in of $13,000.Sanfran Company's net cost of purchases would be:

Accepted Answer

A) $91,000. 
B) $103,000. 
C) $117,000. 
D) $129,000. 
A) $91,000. 
B) $103,000. 
C) $117,000. 
D) $129,000.

Question 7

If inventory costs are decreasing over time,the income taxes paid using FIFO will ________ the income taxes paid using LIFO.

Accepted Answer

A) exceed 
B) equal 
C) be less than 
D) none of the above 
A) exceed 
B) equal 
C) be less than 
D) none of the above

Question 8

The financial statements of a merchandising company will show:

Accepted Answer

A) the same accounts as the financial statements of a service company. 
B) gross profit after operating expenses on the income statement. 
C) inventory as a current asset on the balance sheet. 
D) cost of goods sold as a contra revenue account on the income statement. 
A) the same accounts as the financial statements of a service company. 
B) gross profit after operating expenses on the income statement. 
C) inventory as a current asset on the balance sheet. 
D) cost of goods sold as a contra revenue account on the income statement.

Question 9

A LIFO liquidation occurs when ________ fall(s)below the ending inventory quantities in the previous period.

Accepted Answer

A) beginning inventory quantities 
B) ending inventory quantities 
C) beginning inventory costs 
D) ending inventory retail value 
A) beginning inventory quantities 
B) ending inventory quantities 
C) beginning inventory costs 
D) ending inventory retail value

Question 10

Under a perpetual inventory system,the journal entry to record the purchase of inventory on account will include a:

Accepted Answer

A) debit to Inventory and a credit to Cash. 
B) debit to Inventory and a credit to Accounts Payable. 
C) debit to Accounts Payable and a credit to Inventory. 
D) debit to Purchases and a credit to Accounts Payable. 
A) debit to Inventory and a credit to Cash. 
B) debit to Inventory and a credit to Accounts Payable. 
C) debit to Accounts Payable and a credit to Inventory. 
D) debit to Purchases and a credit to Accounts Payable.

Question 11

A company can use the cost-of-goods-sold model to determine how much inventory to purchase.

Accepted Answer

A) True 
 B)False

Question 12

The gross profit method cannot be used for calculating inventory destroyed by a disaster,such as a fire.

Accepted Answer

A) True 
 B)False

Question 13

A company uses LIFO in one year,then switches to FIFO and then to average-cost.This is a violation of the:

Accepted Answer

A) disclosure principle 
B) historical cost principle. 
C) consistency principle. 
D) conservatism principle. 
A) disclosure principle 
B) historical cost principle. 
C) consistency principle. 
D) conservatism principle.

Question 14

Which inventory costing method provides the most current,up-to-date cost of inventory on the balance sheet?

Accepted Answer

A) FIFO 
B) LIFO 
C) average cost 
D) specific identification 
A) FIFO 
B) LIFO 
C) average cost 
D) specific identification

Question 15

Scott Walker Company reported the following data for the past year:   Industry Averages available are:
  How do the inventory turnover and gross profit percentage for Scott Walker Company compare to the industry averages for the same ratios? (Round inventory turnover to two decimal places.Round gross profit percentage to the nearest percent. )

Accepted Answer

A) Walker Company is superior on both measures. 
B) Walker Company is inferior on both measures. 
C) Walker Company is inferior on one measure and superior on the other measure. 
D) There is not enough information. 
A) Walker Company is superior on both measures. 
B) Walker Company is inferior on both measures. 
C) Walker Company is inferior on one measure and superior on the other measure. 
D) There is not enough information.

Question 16

A company has a beginning inventory of $20,000 and purchases during the year of $140,000.The beginning inventory consisted of 2,000 units and 7,000 units were purchased during the year.The company has 5,000 units left at year-end.Under average-cost,what is Cost of Goods Sold? (Round any intermediary calculations to two decimal places and your final answer to the nearest dollar. )

Accepted Answer

A) $124,460 
B) $71,120 
C) $140,000 
D) $160,000 
A) $124,460 
B) $71,120 
C) $140,000 
D) $160,000

Question 17

For most firms,the gross profit percentage changes significantly from year to year.

Accepted Answer

A) True 
 B)False

Question 18

Overstating ending inventory in the current year will understate the following year's net income.

Accepted Answer

A) True 
 B)False

Question 19

On June 1,Nicholson Company purchased inventory on account with a cost of $1,600.Credit terms were 2/10,net 30.On June 2,Nicholson Company returned 50 percent of the inventory.Nicholson Company uses the perpetual inventory system.What journal entry did Nicholson Company prepare on June 2?

Accepted Answer

A) debit Purchase Returns for $1,600 and credit Accounts Payable for $1,600 
B) debit Cash for $1,600 and credit Accounts Payable for $1,600 
C) debit Purchase Returns for $800 and credit Accounts Payable for $800 
D) debit Accounts Payable for $800 and credit Inventory for $800 
A) debit Purchase Returns for $1,600 and credit Accounts Payable for $1,600 
B) debit Cash for $1,600 and credit Accounts Payable for $1,600 
C) debit Purchase Returns for $800 and credit Accounts Payable for $800 
D) debit Accounts Payable for $800 and credit Inventory for $800

Question 20

Given the following data,calculate the cost of goods sold using the LIFO costing method.

Accepted Answer

A) $1,981 
B) $925 
C) $1,091 
D) $820 
A) $1,981 
B) $925 
C) $1,091 
D) $820

The LIFO Reserve is the difference between the LIFO cost of inventory and what the cost of that inventory would be under FIFO.

Thelen's inventory records show the following data at January 31: At January 31,240 units are still on hand.What is the cost of the ending inventory at January 31 if Thelen uses the LIFO method?

Maydak Company reported the following items for the month of July: The gross profit percentage is: (Round your final answer to the nearest percentage. )

Given the following data,calculate the cost of goods sold using the average-cost method. Round average cost per unit calculations to two decimal places.Round final answer to the nearest dollar.

When inventory is shipped from the seller to the buyer with shipping terms of FOB destination:

Sanfran Company purchased inventory for $110,000.In addition they had purchase returns of $6,000 and paid freight-in of $13,000.Sanfran Company's net cost of purchases would be:

If inventory costs are decreasing over time,the income taxes paid using FIFO will ________ the income taxes paid using LIFO.

The financial statements of a merchandising company will show:

A LIFO liquidation occurs when ________ fall(s)below the ending inventory quantities in the previous period.

Under a perpetual inventory system,the journal entry to record the purchase of inventory on account will include a:

A company can use the cost-of-goods-sold model to determine how much inventory to purchase.

The gross profit method cannot be used for calculating inventory destroyed by a disaster,such as a fire.

A company uses LIFO in one year,then switches to FIFO and then to average-cost.This is a violation of the:

Which inventory costing method provides the most current,up-to-date cost of inventory on the balance sheet?

For most firms,the gross profit percentage changes significantly from year to year.

Overstating ending inventory in the current year will understate the following year's net income.

On June 1,Nicholson Company purchased inventory on account with a cost of $1,600.Credit terms were 2/10,net 30.On June 2,Nicholson Company returned 50 percent of the inventory.Nicholson Company uses the perpetual inventory system.What journal entry did Nicholson Company prepare on June 2?

Given the following data,calculate the cost of goods sold using the LIFO costing method.

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Receivables and Revenue

Plant Assets, natural Resources, Intangibles

Current and Contingent Liabilities

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Investments

Time Value of Money

Filters

Exam 6: Inventory Cost of Goods Sold

The LIFO Reserve is the difference between the LIFO cost of inventory and what the cost of that inventory would be under FIFO.

Thelen's inventory records show the following data at January 31: At January 31,240 units are still on hand.What is the cost of the ending inventory at January 31 if Thelen uses the LIFO method?

Maydak Company reported the following items for the month of July: The gross profit percentage is: (Round your final answer to the nearest percentage. )

Given the following data,calculate the cost of goods sold using the average-cost method. Round average cost per unit calculations to two decimal places.Round final answer to the nearest dollar.

When inventory is shipped from the seller to the buyer with shipping terms of FOB destination:

Sanfran Company purchased inventory for $110,000.In addition they had purchase returns of $6,000 and paid freight-in of $13,000.Sanfran Company's net cost of purchases would be:

If inventory costs are decreasing over time,the income taxes paid using FIFO will ________ the income taxes paid using LIFO.

The financial statements of a merchandising company will show:

A LIFO liquidation occurs when ________ fall(s)below the ending inventory quantities in the previous period.

Under a perpetual inventory system,the journal entry to record the purchase of inventory on account will include a:

A company can use the cost-of-goods-sold model to determine how much inventory to purchase.

The gross profit method cannot be used for calculating inventory destroyed by a disaster,such as a fire.

A company uses LIFO in one year,then switches to FIFO and then to average-cost.This is a violation of the:

Which inventory costing method provides the most current,up-to-date cost of inventory on the balance sheet?

For most firms,the gross profit percentage changes significantly from year to year.

Overstating ending inventory in the current year will understate the following year's net income.

On June 1,Nicholson Company purchased inventory on account with a cost of $1,600.Credit terms were 2/10,net 30.On June 2,Nicholson Company returned 50 percent of the inventory.Nicholson Company uses the perpetual inventory system.What journal entry did Nicholson Company prepare on June 2?

Given the following data,calculate the cost of goods sold using the LIFO costing method.

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Receivables and Revenue

Plant Assets, natural Resources, Intangibles

Current and Contingent Liabilities

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Investments

Time Value of Money

Filters