Exam 5: Inventories and Cost of Goods Sold

Adam Inc.uses a perpetual inventory system. If Adam uses the LIFO method,how much is cost of goods sold for the sale of January 15?

A company using the periodic inventory system has the following account balances: Merchandise Inventory at the beginning of the year,$3,600;Freight-In,$650;Purchases,$10,700;Purchases Returns and Allowances,$1,950;Purchases Discounts,$330.The cost of merchandise purchased is equal to

The ending inventory balance represents

Many countries prohibit the use of LIFO for tax or financial reporting purposes.

Ling Corp.started business at the beginning of 2013.Ling selected the FIFO method for its inventory.In order to maximize its profits for 2013 under this method,prices must be

At the year end inventory count,if goods in transit are shipped FOB destination,they should be included in the inventory count of

In a periodic inventory system,the cost of purchases is recognized as

Which of the following statements is true when using the indirect method of preparing the operating activities section of the statement of cash flows?

A _________________________ is an amount deducted by customers for payment within the discount period.

Digital Marvels Selected data from the financial statements for Digital Marvels is presented below. Refer to the financial statement information for Digital Marvels. Determine the dollar amount of cost of goods purchased for Digital Marvels for 2014.

In the following information from the 2014 annual reports of Technic Industries all figures have been rounded to millions of dollars. REQUIRED: (1)Describe what costs are included in each of the three types of inventories listed above for Technic Industries. (2)Even though the footnote describing the inventory costing method(s)used by Technic Industries is not provided above,what can you conclude about the inventory costing method(s)used by the company?

When a company using LIFO experiences a partial or complete liquidation of its older,lower-priced inventory,its gross margin will be ____________________ (higher,lower,or unchanged)for the period.

Cost of goods sold represents an outflow of an asset,inventory,from the sale of products.

Which method assigns the cost of the most recent items purchased to ending inventory?

Using the following information,what is the amount of cost of goods sold?

With the periodic inventory system,the inventory account is updated after each sale or purchase.

Giant-Mart purchased a big shipment of shoes from Right Balance,Inc.on credit near the end of its accounting period.Right Balance 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 Right Balance's accounting period ends on May 31. REQUIRED: If the shoes are shipped FOB destination,who will pay the freight costs? If the shoes are shipped FOB shipping point,who will pay the freight costs?

Many companies assign only the net invoice price for merchandise to inventory and cost of goods sold.All other costs,including transportation and other costs of bringing merchandise to the place of business,are charged to expense of the period in which they are incurred.Which accounting principle or concept is applied in this example?

According to the IRS's LIFO conformity rule,a company that chooses LIFO to report net income to its shareholders may not use LIFO in preparing its income tax return.

Which one of the following accounts most likely would appear on the income statement of a merchandise company,but not on the income statement of a service company?