Question 1

The necessary financial statement disclosure is accomplished if the amount disclosed is properly calculated and the costing method used is stated.

Accepted Answer

A) True 
 B)False

Question 2

Trekking Company's inventory in its River Oaks store was destroyed by a flood.Its gross profit ratio was 65% and net sales were $30,000.The estimated cost of goods available for sale was $32,500.The estimated value of the lost inventory was $18,000.

Accepted Answer

A) True 
 B)False

Question 3

The principle of faithful representation:

Accepted Answer

A)  Requires that information be complete,neutral and free from error so assets and income are not overstated and liabilities and expenses are not understated. 
B)  Requires that a company use the same accounting methods period after period. 
C)  Requires that revenues and costs be reported in the period in which they are earned or incurred. 
D)  Requires that all items of a material nature be included in financial statements. 
E)  Requires that all inventory items be reported at full cost. 
A)  Requires that information be complete,neutral and free from error so assets and income are not overstated and liabilities and expenses are not understated. 
B)  Requires that a company use the same accounting methods period after period. 
C)  Requires that revenues and costs be reported in the period in which they are earned or incurred. 
D)  Requires that all items of a material nature be included in financial statements. 
E)  Requires that all inventory items be reported at full cost.

Question 4

Trekking Company has inventory with a net realizable value of $217,000 and a cost of $241,000.According to the guidance provided by the principle of faithful representation,the inventory should be written down to $217,000.

Accepted Answer

A) True 
 B)False

Question 5

Understatement of ending inventory causes:

Accepted Answer

A)  Cost of goods sold to be overstated and net income to be understated. 
B)  Cost of goods sold to be overstated and net income to be overstated. 
C)  Cost of goods sold to be understated and net income to be understated. 
D)  Cost of goods sold to be understated and net income to be overstated. 
E)  Cost of goods sold to be overstated and net income to be accurate. 
A)  Cost of goods sold to be overstated and net income to be understated. 
B)  Cost of goods sold to be overstated and net income to be overstated. 
C)  Cost of goods sold to be understated and net income to be understated. 
D)  Cost of goods sold to be understated and net income to be overstated. 
E)  Cost of goods sold to be overstated and net income to be accurate.

Question 6

All material incidental costs of inventory acquisition and handling are assigned to inventory.

Accepted Answer

A) True 
 B)False

Question 7

What special cases are sometimes seen when dealing with ownership of merchandise inventory?

Accepted Answer

Three special cases involving ownership

Question 8

Understatement of beginning inventory causes:

Accepted Answer

A)  Cost of goods sold to be understated and net income to be understated. 
B)  Cost of goods sold to be understated and net income to be overstated. 
C)  Cost of goods sold to be overstated and net income to be overstated. 
D)  Cost of goods sold to be overstated and net income to be understated. 
E)  Cost of goods sold to be overstated and net income to be accurate. 
A)  Cost of goods sold to be understated and net income to be understated. 
B)  Cost of goods sold to be understated and net income to be overstated. 
C)  Cost of goods sold to be overstated and net income to be overstated. 
D)  Cost of goods sold to be overstated and net income to be understated. 
E)  Cost of goods sold to be overstated and net income to be accurate.

Question 9

A company made the following purchases during the year:   On December 31,there were 32 units in ending inventory.These 32 units consisted of 3 from the January 10 shipment,4 from the March 15 shipment,5 from the April 25 shipment,15 from the July 30 shipment,and 5 from the October 10 shipment.Using specific identification,calculate the cost of the ending inventory.

Accepted Answer

The answer of A company made the following purchases during...

Question 10

If an inventory amount is reported in error,it can cause a misstatement in:

Accepted Answer

A)  Cost of goods sold. 
B)  Gross profit. 
C)  Net income. 
D)  Current assets. 
E)  All of these answers are correct. 
A)  Cost of goods sold. 
B)  Gross profit. 
C)  Net income. 
D)  Current assets. 
E)  All of these answers are correct.

The necessary financial statement disclosure is accomplished if the amount disclosed is properly calculated and the costing method used is stated.

Trekking Company's inventory in its River Oaks store was destroyed by a flood.Its gross profit ratio was 65% and net sales were $30,000.The estimated cost of goods available for sale was $32,500.The estimated value of the lost inventory was $18,000.

The principle of faithful representation:

Trekking Company has inventory with a net realizable value of $217,000 and a cost of $241,000.According to the guidance provided by the principle of faithful representation,the inventory should be written down to $217,000.

Understatement of ending inventory causes:

All material incidental costs of inventory acquisition and handling are assigned to inventory.

What special cases are sometimes seen when dealing with ownership of merchandise inventory?

Understatement of beginning inventory causes:

If an inventory amount is reported in error,it can cause a misstatement in:

Accounting in Business

Analyzing and Reporting Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Accounting Information Systems

Internal Control and Cash

Receivables

Filters

Exam 6: Merchandise Inventory and Cost of Sales

The necessary financial statement disclosure is accomplished if the amount disclosed is properly calculated and the costing method used is stated.

Trekking Company's inventory in its River Oaks store was destroyed by a flood.Its gross profit ratio was 65% and net sales were $30,000.The estimated cost of goods available for sale was $32,500.The estimated value of the lost inventory was $18,000.

The principle of faithful representation:

Trekking Company has inventory with a net realizable value of $217,000 and a cost of $241,000.According to the guidance provided by the principle of faithful representation,the inventory should be written down to $217,000.

Understatement of ending inventory causes:

All material incidental costs of inventory acquisition and handling are assigned to inventory.

What special cases are sometimes seen when dealing with ownership of merchandise inventory?

Understatement of beginning inventory causes:

If an inventory amount is reported in error,it can cause a misstatement in:

Accounting in Business

Analyzing and Reporting Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Accounting Information Systems

Internal Control and Cash

Receivables

Filters