Question 1

The gross profit ratio is computed by dividing net sales by gross profit.

Accepted Answer

A) True 
 B)False

Question 2

Quan uses a periodic inventory system.At the end of April,Quan had 20 units on hand.   If Quan uses the LIFO inventory method,how much is inventory on the balance sheet as of April 30?

Accepted Answer

A) $40 
B) $50 
C) $58 
D) $60 
A) $40 
B) $50 
C) $58 
D) $60

Question 3

The ____________________ method results in the best approximation of replacement cost of goods sold on the income statement during periods of rising prices.

Accepted Answer

The answer of The ____________________ method results in the best...

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.
Explain why the amounts for ending inventory are different under the two average cost methods--weighted average(periodic)and moving average(perpetual).

Accepted Answer

The amounts for ending inventory and cos

Question 5

Sunset Band,Inc.purchased merchandise from Rumble Music Company on June 5,2014.The goods were shipped the same day.The merchandise's selling price was $15,000.The credit terms were 1/10,n/30.The shipping terms were FOB shipping point.Sunset received the merchandise on June 10,2014.Sunset paid the amount due on June 13,2014. Who is responsible for payment of the transportation costs on the merchandise sold by Rumble Music to Sunset?

Accepted Answer

A) Rumble Music Company 
B) Sunset,Inc. 
C) Split equally between the two companies. 
D) Cannot be determined from the information provided. 
A) Rumble Music Company 
B) Sunset,Inc. 
C) Split equally between the two companies. 
D) Cannot be determined from the information provided.

Question 6

Items should be reported as part of the company's "inventory" if they are

Accepted Answer

A) Purchased from a creditor,although not paid for by year end 
B) Held in anticipation of an increase in market value. 
C) Determined to be part of cost of goods sold. 
D) Sold during the period. 
A) Purchased from a creditor,although not paid for by year end 
B) Held in anticipation of an increase in market value. 
C) Determined to be part of cost of goods sold. 
D) Sold during the period.

Question 7

Cost of goods sold represents

Accepted Answer

A) Expired costs during a period and is reported on the income statement. 
B) Unexpired costs and is reported on the balance sheet as an asset. 
C) The cost of goods that will be purchased during the next operating cycle and is reported on the balance sheet as an asset. 
D) Expired costs and is reported on the balance sheet as an expense. 
A) Expired costs during a period and is reported on the income statement. 
B) Unexpired costs and is reported on the balance sheet as an asset. 
C) The cost of goods that will be purchased during the next operating cycle and is reported on the balance sheet as an asset. 
D) Expired costs and is reported on the balance sheet as an expense.

Question 8

The following information is reported in the operating activities section of Gateway's statement of cash flows for 2014:   Which one of the following conclusions can be assumed from the information provided?

Accepted Answer

A) Gateway used the direct method to determine cash flows from operating activities. 
B) Gateway purchased more merchandise than it sold in 2014. 
C) Cash payments for merchandise purchases were less than the amount of merchandise purchased on credit during 2014. 
D) Cash payments for merchandise exceeded cost of goods sold by $200,000. 
A) Gateway used the direct method to determine cash flows from operating activities. 
B) Gateway purchased more merchandise than it sold in 2014. 
C) Cash payments for merchandise purchases were less than the amount of merchandise purchased on credit during 2014. 
D) Cash payments for merchandise exceeded cost of goods sold by $200,000.

Question 9

Eversoll Inc.uses the periodic inventory system.   If Eversoll uses the weighted average cost inventory method,the amount assigned to the June 30th inventory would be

Accepted Answer

A) $1,359.90 
B) $1,486.50 
C) $1,549.00 
D) $1,591.50 
A) $1,359.90 
B) $1,486.50 
C) $1,549.00 
D) $1,591.50

Question 10

Eversoll Inc.uses the periodic inventory system.   How many units did Eversoll,Inc.sell during June?

Accepted Answer

A) 50 
B) 90 
C) 100 
D) 150 
A) 50 
B) 90 
C) 100 
D) 150

Question 11

Blenham,Inc.sells merchandise on credit.If a customer pays its balance due after the discount period has passed,what is the effect of the payment on Blenham's accounting equation?

Accepted Answer

A) Assets and stockholders' equity decrease 
B) Assets and stockholders' equity increase 
C) Assets decrease and liabilities increase 
D) No net effect 
A) Assets and stockholders' equity decrease 
B) Assets and stockholders' equity increase 
C) Assets decrease and liabilities increase 
D) No net effect

Question 12

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 moving average method is used,what is the amount assigned to the ending inventory on May 30?

Accepted Answer

$3,700
Ending inventory on May

Question 13

A counterbalancing inventory error is one where the error on the balance sheet is offset by the same amount of error on the income statement.

Accepted Answer

A) True 
 B)False

Question 14

The inventory account a manufacturer uses to record the cost of products completed and available for sale is called

Accepted Answer

A) Raw materials inventory 
B) Work in process inventory 
C) Finished goods inventory 
D) Merchandise inventory 
A) Raw materials inventory 
B) Work in process inventory 
C) Finished goods inventory 
D) Merchandise inventory

Question 15

Selected data for Sorenta,Inc.and New World Corp. ,two companies in the same industry,are presented below:   Based on this data,which statement below is true?

Accepted Answer

A) Sorenta,Inc.has a lower gross profit ratio than New World Corp. 
B) New World Corp has a higher net income than Sorenta,Inc. 
C) New World Corp sells its inventory faster than Sorenta,Inc. 
D) Sorenta,Inc.has lower storage costs and a lower investment in inventory than New World Corp. 
A) Sorenta,Inc.has a lower gross profit ratio than New World Corp. 
B) New World Corp has a higher net income than Sorenta,Inc. 
C) New World Corp sells its inventory faster than Sorenta,Inc. 
D) Sorenta,Inc.has lower storage costs and a lower investment in inventory than New World Corp.

Question 16

In the following information from the 2014 annual reports of Technic Industries all figures have been rounded to millions of dollars.
     REQUIRED:
(1)Explain what the amount "adjustment to LIFO" represents.What effects has this "adjustment" had on Technic Industries' net earnings in 2013 and 2014?
(2)What method of determining cash flows from operating activities has Technic Industries used in preparing its statement of cash flows? Explain your answer.
(3)From 2013 to 2014,what change in the inventory balance (increase or decrease)occurred in each year as a result of operating activities? What was the effect on the company's cash flow each year as a result of the inventory change?

Accepted Answer

(1)The "adjustment to LIFO" of inventori

Question 17

If a company overstates its ending inventory balance for 2012 by $10,000,and understates its ending inventory balance for 2011 by $5,000 what are the effects on its net income for 2012 and 2011? Effect on 2012 Net Income Effect on 2011 Net Income

Accepted Answer

A) Overstated by $15,000 Understated by $10,000 
B) Understated by $5,000 Overstated by $10,000 
C) Overstated by $15,000 Understated by $5,000 
D) Overstated by $10,000 Understated by$5,000 
A) Overstated by $15,000 Understated by $10,000 
B) Understated by $5,000 Overstated by $10,000 
C) Overstated by $15,000 Understated by $5,000 
D) Overstated by $10,000 Understated by$5,000

Question 18

The ratio of a company's cost of goods sold to its average inventory is called its ________________________________________.

Accepted Answer

inventory

Question 19

Which method of inventory costing is not acceptable for financial accounting purposes?

Accepted Answer

A) Specific Identification 
B) FIFO 
C) LIFO 
D) Replacement Cost 
A) Specific Identification 
B) FIFO 
C) LIFO 
D) Replacement Cost

The gross profit ratio is computed by dividing net sales by gross profit.

Quan uses a periodic inventory system.At the end of April,Quan had 20 units on hand. If Quan uses the LIFO inventory method,how much is inventory on the balance sheet as of April 30?

The ____________________ method results in the best approximation of replacement cost of goods sold on the income statement during periods of rising prices.

Items should be reported as part of the company's "inventory" if they are

Cost of goods sold represents

The following information is reported in the operating activities section of Gateway's statement of cash flows for 2014: Which one of the following conclusions can be assumed from the information provided?

Eversoll Inc.uses the periodic inventory system. If Eversoll uses the weighted average cost inventory method,the amount assigned to the June 30th inventory would be

Eversoll Inc.uses the periodic inventory system. How many units did Eversoll,Inc.sell during June?

Blenham,Inc.sells merchandise on credit.If a customer pays its balance due after the discount period has passed,what is the effect of the payment on Blenham's accounting equation?

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 moving average method is used,what is the amount assigned to the ending inventory on May 30?

A counterbalancing inventory error is one where the error on the balance sheet is offset by the same amount of error on the income statement.

The inventory account a manufacturer uses to record the cost of products completed and available for sale is called

Selected data for Sorenta,Inc.and New World Corp. ,two companies in the same industry,are presented below: Based on this data,which statement below is true?

If a company overstates its ending inventory balance for 2012 by $10,000,and understates its ending inventory balance for 2011 by $5,000 what are the effects on its net income for 2012 and 2011? Effect on 2012 Net Income Effect on 2011 Net Income

The ratio of a company's cost of goods sold to its average inventory is called its ________________________________________.

Which method of inventory costing is not acceptable for financial accounting purposes?

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

Exam 5: Inventories and Cost of Goods Sold

The gross profit ratio is computed by dividing net sales by gross profit.

Quan uses a periodic inventory system.At the end of April,Quan had 20 units on hand. If Quan uses the LIFO inventory method,how much is inventory on the balance sheet as of April 30?

The ____________________ method results in the best approximation of replacement cost of goods sold on the income statement during periods of rising prices.

Items should be reported as part of the company's "inventory" if they are

Cost of goods sold represents

The following information is reported in the operating activities section of Gateway's statement of cash flows for 2014: Which one of the following conclusions can be assumed from the information provided?

Eversoll Inc.uses the periodic inventory system. If Eversoll uses the weighted average cost inventory method,the amount assigned to the June 30th inventory would be

Eversoll Inc.uses the periodic inventory system. How many units did Eversoll,Inc.sell during June?

Blenham,Inc.sells merchandise on credit.If a customer pays its balance due after the discount period has passed,what is the effect of the payment on Blenham's accounting equation?

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 moving average method is used,what is the amount assigned to the ending inventory on May 30?

A counterbalancing inventory error is one where the error on the balance sheet is offset by the same amount of error on the income statement.

The inventory account a manufacturer uses to record the cost of products completed and available for sale is called

Selected data for Sorenta,Inc.and New World Corp. ,two companies in the same industry,are presented below: Based on this data,which statement below is true?

If a company overstates its ending inventory balance for 2012 by $10,000,and understates its ending inventory balance for 2011 by $5,000 what are the effects on its net income for 2012 and 2011? Effect on 2012 Net Income Effect on 2011 Net Income

The ratio of a company's cost of goods sold to its average inventory is called its ________________________________________.

Which method of inventory costing is not acceptable for financial accounting purposes?

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