Question 1

The disclosure principle holds that a company's financial statements should report enough information for outsiders to make informed decisions about the company.

Accepted Answer

A) True 
 B)False

Question 2

How do purchase returns and allowances and purchase discounts affect gross purchases?

Accepted Answer

A) Both are added to purchases. 
B) Both are subtracted from purchases. 
C) Purchase returns and allowances are added to purchases;purchase discounts are subtracted from purchases. 
D) Purchase returns and allowances are subtracted from purchases;purchase discounts are added to purchases. 
A) Both are added to purchases. 
B) Both are subtracted from purchases. 
C) Purchase returns and allowances are added to purchases;purchase discounts are subtracted from purchases. 
D) Purchase returns and allowances are subtracted from purchases;purchase discounts are added to purchases.

Question 3

When comparing the results of LIFO and FIFO when inventory costs are decreasing:

Accepted Answer

A) cost of goods sold will be lower using FIFO. 
B) ending inventory will be higher using FIFO. 
C) cost of goods sold will be higher using LIFO. 
D) ending inventory will be higher using LIFO. 
A) cost of goods sold will be lower using FIFO. 
B) ending inventory will be higher using FIFO. 
C) cost of goods sold will be higher using LIFO. 
D) ending inventory will be higher using LIFO.

Question 4

Uptown Department Store uses the perpetual inventory system and has ending inventory with a historical cost of $610,000.The current replacement cost of the inventory is $598,000.The net realizable value is $670,000.The company uses LIFO.Before any adjustments at the end of the period,the cost of goods sold account has a balance of $930,000.Which journal entry is required under U.S.GAAP?

Accepted Answer

A) debit Cost of Goods Sold for $60,000 and credit Inventory for $60,000 
B) debit Inventory for $60,000 and credit Cost of Goods Sold for $60,000 
C) debit Cost of Goods Sold for $12,000 and credit Inventory for $12,000 
D) debit Inventory for $12,000 and credit Cost of Goods Sold for $12,000 
A) debit Cost of Goods Sold for $60,000 and credit Inventory for $60,000 
B) debit Inventory for $60,000 and credit Cost of Goods Sold for $60,000 
C) debit Cost of Goods Sold for $12,000 and credit Inventory for $12,000 
D) debit Inventory for $12,000 and credit Cost of Goods Sold for $12,000

Question 5

When applying the lower-of-cost-or-market rule to inventory valuation in the United States,market value generally refers to the selling price of the inventory.

Accepted Answer

A) True 
 B)False

The disclosure principle holds that a company's financial statements should report enough information for outsiders to make informed decisions about the company.

How do purchase returns and allowances and purchase discounts affect gross purchases?

When comparing the results of LIFO and FIFO when inventory costs are decreasing:

When applying the lower-of-cost-or-market rule to inventory valuation in the United States,market value generally refers to the selling price of the inventory.

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 disclosure principle holds that a company's financial statements should report enough information for outsiders to make informed decisions about the company.

How do purchase returns and allowances and purchase discounts affect gross purchases?

When comparing the results of LIFO and FIFO when inventory costs are decreasing:

When applying the lower-of-cost-or-market rule to inventory valuation in the United States,market value generally refers to the selling price of the inventory.

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