Question 1

Sales Returns and Allowances is a contra-asset account.

Accepted Answer

A) True 
 B)False  False

Question 2

Federal income tax rules allow businesses to use different inventory costing methods for tax reporting and financial reporting with one exception.Which of the following situations is not allowed by federal income tax rules? Inventory Method Inventory Method
For Tax Reporting for Financial Reporting

Accepted Answer

A) LIFO LIFO 
B) LIFO FIFO 
C) Weighted Average FIFO 
D) FIFO LIFO 
A) LIFO LIFO 
B) LIFO FIFO 
C) Weighted Average FIFO 
D) FIFO LIFO B

Question 3

Givens Corp. Givens Corp.is a merchandising company that uses the periodic inventory system.Selected account balances are listed below:
  Refer to the information for Givens Corp.
Calculate net income.

Accepted Answer

A) $289,000 
B) $141,000 
C) $131,000 
D) $116,000 
A) $289,000 
B) $141,000 
C) $131,000 
D) $116,000 C

Question 4

Learning Tree,Inc.
The following data is available for one of the products sold by Learning Tree,Inc. ,which uses the perpetual inventory system:
   Refer to the data for Learning Tree,Inc.
If the LIFO method is used,what is the amount assigned to the ending inventory on May 30?

Accepted Answer

$3,000
(50

Question 5

Under the ____________________ inventory system,the inventory account is updated after each purchase or sale.

Accepted Answer

The answer of Under the ____________________ inventory system,the inventory account...

Question 6

Share,Inc.
The following data is available for one of the products sold by Share,Inc. ,which uses a perpetual inventory system.
   Refer to the data for Share,Inc.
If the LIFO method is used,how much is cost of goods sold for May?

Accepted Answer

$84.00
(6

Question 7

Describe how the inventories of manufacturers differ from the inventories of retailers.

Accepted Answer

Manufacturers have to produce the produc

Question 8

If an entity overstates its ending inventory for the current year,what are the effects on assets,cost of goods sold,income before taxes,and retained earnings for the current year?

Accepted Answer

An overstatement of ending inventory for

Question 9

Which inventory costing method results in the lowest income tax expense during a period of decreasing prices?

Accepted Answer

A) FIFO 
B) LIFO 
C) Specific Identification 
D) Weighted Average Cost 
A) FIFO 
B) LIFO 
C) Specific Identification 
D) Weighted Average Cost

Question 10

A LIFO liquidation occurs when a company sells fewer units than it buys during the period.

Accepted Answer

A) True 
 B)False

Question 11

A company using the periodic inventory system must total the selling prices of the units on hand at the end of the period to value the ending inventory.

Accepted Answer

A) True 
 B)False

Question 12

Which method assigns the same cost to all units whether sold or left in ending inventory?

Accepted Answer

A) Specific identification 
B) Weighted average cost 
C) FIFO 
D) LIFO 
A) Specific identification 
B) Weighted average cost 
C) FIFO 
D) LIFO

Question 13

Gross margin as a percentage of sales is a common analytical tool for service companies.

Accepted Answer

A) True 
 B)False

Question 14

When inventories are written down due to the application of the lower of cost or market (LCM)rule,the account that is usually increased is

Accepted Answer

A) Cost of Goods Sold 
B) Inventories 
C) Loss on Decline in Inventory Value 
D) Accumulated Depreciation - Inventory 
A) Cost of Goods Sold 
B) Inventories 
C) Loss on Decline in Inventory Value 
D) Accumulated Depreciation - Inventory

Question 15

Under the perpetual inventory system,each time goods are purchased,the inventory account is transferred to sales revenue.

Accepted Answer

A) True 
 B)False

Question 16

All of the following statements regarding the gross profit ratio are true except:

Accepted Answer

A) The gross profit ratio alone is sufficient to determine a company's profitability. 
B) Managers,investors,and creditors use the gross profit ratio to measure one aspect of profitability. 
C) The gross profit ratio explains how many cents on every dollar are available to cover expenses other than cost of goods sold and to earn a profit. 
D) If a company's net sales were $200,000 and cost of goods sold were $120,000,its gross profit ratio would be 40%. 
A) The gross profit ratio alone is sufficient to determine a company's profitability. 
B) Managers,investors,and creditors use the gross profit ratio to measure one aspect of profitability. 
C) The gross profit ratio explains how many cents on every dollar are available to cover expenses other than cost of goods sold and to earn a profit. 
D) If a company's net sales were $200,000 and cost of goods sold were $120,000,its gross profit ratio would be 40%.

Question 17

Ending inventory is equal to the cost of items on hand plus

Accepted Answer

A) Merchandise in transit sold to customers FOB shipping point 
B) Merchandise in transit sold to customers FOB destination 
C) The cost of all inventory purchased during the period 
D) Merchandise purchased in transit with terms FOB destination 
A) Merchandise in transit sold to customers FOB shipping point 
B) Merchandise in transit sold to customers FOB destination 
C) The cost of all inventory purchased during the period 
D) Merchandise purchased in transit with terms FOB destination

Question 18

Giant-Mart purchased a large shipment of shoes from Primus,Inc.on credit near the end of its accounting period.Primus shipped the shoes in January and Giant-Mart received the shoes in February.Assume that Giant-Mart's accounting period ends on January 31,while Primus' accounting period ends on May 31.Answer each independent question in the set that follows.
REQUIRED: If the shoes are shipped FOB destination,when should Giant-Mart record the purchase? If the shoes are shipped FOB shipping point,when should Giant-Mart record the purchase?

Accepted Answer

If the shoes are shipped FOB destination

Question 19

What effects on a retail store's accounting equation occur when merchandise returned by customers is recorded?

Accepted Answer

A) Assets and stockholders' equity decrease. 
B) Assets and stockholders' equity increase. 
C) Assets decrease and liabilities increase. 
D) Stockholders' equity decreases and liabilities increase. 
A) Assets and stockholders' equity decrease. 
B) Assets and stockholders' equity increase. 
C) Assets decrease and liabilities increase. 
D) Stockholders' equity decreases and liabilities increase.

Question 20

Under the periodic inventory system,a physical inventory must be taken at the end of the period to determine cost of goods sold.

Accepted Answer

A) True 
 B)False

Sales Returns and Allowances is a contra-asset account.

Federal income tax rules allow businesses to use different inventory costing methods for tax reporting and financial reporting with one exception.Which of the following situations is not allowed by federal income tax rules? Inventory Method Inventory Method For Tax Reporting for Financial Reporting

Givens Corp. Givens Corp.is a merchandising company that uses the periodic inventory system.Selected account balances are listed below: Refer to the information for Givens Corp. Calculate net income.

Learning Tree,Inc. The following data is available for one of the products sold by Learning Tree,Inc. ,which uses the perpetual inventory system: Refer to the data for Learning Tree,Inc. If the LIFO method is used,what is the amount assigned to the ending inventory on May 30?

Under the ____________________ inventory system,the inventory account is updated after each purchase or sale.

Share,Inc. The following data is available for one of the products sold by Share,Inc. ,which uses a perpetual inventory system. Refer to the data for Share,Inc. If the LIFO method is used,how much is cost of goods sold for May?

Describe how the inventories of manufacturers differ from the inventories of retailers.

If an entity overstates its ending inventory for the current year,what are the effects on assets,cost of goods sold,income before taxes,and retained earnings for the current year?

Which inventory costing method results in the lowest income tax expense during a period of decreasing prices?

A LIFO liquidation occurs when a company sells fewer units than it buys during the period.

A company using the periodic inventory system must total the selling prices of the units on hand at the end of the period to value the ending inventory.

Which method assigns the same cost to all units whether sold or left in ending inventory?

Gross margin as a percentage of sales is a common analytical tool for service companies.

When inventories are written down due to the application of the lower of cost or market (LCM)rule,the account that is usually increased is

Under the perpetual inventory system,each time goods are purchased,the inventory account is transferred to sales revenue.

All of the following statements regarding the gross profit ratio are true except:

Ending inventory is equal to the cost of items on hand plus

What effects on a retail store's accounting equation occur when merchandise returned by customers is recorded?

Under the periodic inventory system,a physical inventory must be taken at the end of the period to determine cost of goods sold.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, plant, and Equipment, and Intangibles

Current Liabilities, contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

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Exam 5: Inventories and Cost of Goods Sold

Sales Returns and Allowances is a contra-asset account.

Federal income tax rules allow businesses to use different inventory costing methods for tax reporting and financial reporting with one exception.Which of the following situations is not allowed by federal income tax rules? Inventory Method Inventory Method For Tax Reporting for Financial Reporting

Givens Corp. Givens Corp.is a merchandising company that uses the periodic inventory system.Selected account balances are listed below: Refer to the information for Givens Corp. Calculate net income.

Learning Tree,Inc. The following data is available for one of the products sold by Learning Tree,Inc. ,which uses the perpetual inventory system: Refer to the data for Learning Tree,Inc. If the LIFO method is used,what is the amount assigned to the ending inventory on May 30?

Under the ____________________ inventory system,the inventory account is updated after each purchase or sale.

Share,Inc. The following data is available for one of the products sold by Share,Inc. ,which uses a perpetual inventory system. Refer to the data for Share,Inc. If the LIFO method is used,how much is cost of goods sold for May?

Describe how the inventories of manufacturers differ from the inventories of retailers.

If an entity overstates its ending inventory for the current year,what are the effects on assets,cost of goods sold,income before taxes,and retained earnings for the current year?

Which inventory costing method results in the lowest income tax expense during a period of decreasing prices?

A LIFO liquidation occurs when a company sells fewer units than it buys during the period.

A company using the periodic inventory system must total the selling prices of the units on hand at the end of the period to value the ending inventory.

Which method assigns the same cost to all units whether sold or left in ending inventory?

Gross margin as a percentage of sales is a common analytical tool for service companies.

When inventories are written down due to the application of the lower of cost or market (LCM)rule,the account that is usually increased is

Under the perpetual inventory system,each time goods are purchased,the inventory account is transferred to sales revenue.

All of the following statements regarding the gross profit ratio are true except:

Ending inventory is equal to the cost of items on hand plus

What effects on a retail store's accounting equation occur when merchandise returned by customers is recorded?

Under the periodic inventory system,a physical inventory must be taken at the end of the period to determine cost of goods sold.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, plant, and Equipment, and Intangibles

Current Liabilities, contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters