Question 1

The journal entry necessary at the end of the period to adjust cost of goods sold for the ending inventory still on hand will include which of the following?

Accepted Answer

A)   Debit Inventory, $6,250.
B)   Credit Cost of goods sold, $11,250.
C)   Credit Purchases, $10,200
D)   Credit Inventory, $5,000.E) A) and B)
F) All of the above

Question 2

Which of the following statements is true?

Accepted Answer

A)   When unit costs are steadily rising or falling, the weighted average cost method yields a cost of goods sold between that of FIFO and LIFO.
B)   FIFO will lead to the highest net income if unit costs are falling.
C)   LIFO will always yield a smaller net income than FIFO.
D)   Specific identification is the most practical, but least accurate, measure of cost and net income.E) B) and D)
F) All of the above

Question 3

Which of the following accounts would normally have a credit balance?

Accepted Answer

A)   Inventory
B)   Cost of goods sold
C)   Sales
D)   Sales returns & allowancesE) B) and D)
F) All of the above

Question 4

What is the journal entry to be recorded by

Accepted Answer

A)   Option A
B)   Option B
C)   Option C
D)   Option D
E)   Flynn Company on November 8?F) A) and C)
G) C) and D)

Question 5

What is the inventory turnover for 2010?

Accepted Answer

A)   3.87
B)   4
C)   4.14
D)   2E) None of the above
F) All of the above

Question 6

In a period of rising prices, the inventory costing method that will tend to smooth out erratic changes in costs is

Accepted Answer

A)   FIFO.
B)   LIFO.
C)   Weighted average.
D)   Specific identification.E) A) and B)
F) A) and C)

Question 7

The process of buying and selling inventory is known as inventory:

Accepted Answer

A)   circulation.
B)   cost management.
C)   turnover.
D)   asset allocation.E) B) and D)
F) B) and C)

Question 8

Errors in the ending inventory balance only affect the current period's records and financial statements.

Accepted Answer

A) True 
 B)False

Question 9

The net sales of a company is $300,000. The cost of goods available for sale is $280,000 and the gross profit percentage is 35%. What is the amount of ending inventory?

Accepted Answer

A)   $105,000
B)   $195,000
C)   $85,000
D)   $70,000E) A) and C)
F) A) and B)

Question 10

On July 1,B. Darin Company sold merchandise costing $4,500 to S. Dee Company for $6,000, terms 2/10, n/30. Both companies use a periodic inventory system. What is the journal entry that S. Dee Company will make on July 1?

Accepted Answer

A)   Option A
B)   Option B
C)   Option C
D)   Option DE) A) and D)
F) All of the above

Question 11

The Acme Corporation buys 300 units of merchandise in January at $5 each. In February, Acme buys 500 units at $4 each and in March it buys 200 units at $6 each. Acme sells 150 units during this quarter. What is the cost of goods sold under the FIFO method?

Accepted Answer

A)   $600
B)   $934
C)   $750
D)   $900E) A) and C)
F) A) and B)

Question 12

The cost assigned to cost of goods sold and to inventory under the FIFO method will be the same whether the perpetual or the periodic inventory system is used.

Accepted Answer

A) True 
 B)False

Question 13

Merchandisers have inventories of finished goods only; manufacturers have inventories of raw materials only.

Accepted Answer

A) True 
 B)False

Question 14

In applying the lower of cost or market method to inventory, market is defined as

Accepted Answer

A)   historical cost.
B)   current replacement cost.
C)   current sales price.
D)   weighted-average cost.E) A) and C)
F) A) and D)

Question 15

Which of the following statements regarding inventory measures is not true?

Accepted Answer

A)   If the inventory turnover ratio increases, the days to sell measure decreases.
B)   The days to sell measure can help managers make pricing and ordering decisions for inventory.
C)   A higher inventory turnover ratio indicates that inventory is moving more quickly from purchase to sale.
D)   It is rare for a company with a lower gross profit percentage to have a faster inventory turnover.E) None of the above
F) All of the above

Question 16

If the company uses the LIFO costing method, what is the cost of its ending inventory?

Accepted Answer

A)   $1,365.
B)   $1,494.
C)   $1,620.
D)   $2,835.E) B) and C)
F) C) and D)

Question 17

Meanmocha Hardware has a periodic inventory system and uses the weighted average method. The company began the month of November with 150 large brass switch plates on hand at a cost of $4.00 each. These switch plates sell for $7.00 each. The following schedule sets forth the purchases of switch plates during November:  If Meanmocha sells 570 switch plates for $7.00 each during November, what is the company's gross profit for November (rounded to the nearest dollar) ?

Accepted Answer

A)   $1,046.
B)   $1,482.
C)   $1,516.
D)   $1,528.E) None of the above
F) B) and D)

Question 18

Which of the following statements is true?

Accepted Answer

A)   The sales revenue is $2,500.
B)   The gross profit is $2,500.
C)   The cost of goods sold is $2,500.
D)   The net income is $2,500.E) A) and B)
F) B) and C)

Exam 7: Reporting and Interpreting Inventories and Cost of Goods Sold

In applying the lower of cost or market method to inventory, market is defined as

Correct Answer
verified

Merchandisers have inventories of finished goods only; manufacturers have inventories of raw materials only.

Correct Answer
verified

The net sales of a company is $300,000. The cost of goods available for sale is $280,000 and the gross profit percentage is 35%. What is the amount of ending inventory?

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

Which of the following statements regarding inventory measures is not true?

Correct Answer
verified

The cost assigned to cost of goods sold and to inventory under the FIFO method will be the same whether the perpetual or the periodic inventory system is used.

Correct Answer
verified

What is the inventory turnover for 2010?

Correct Answer
verified

If the company uses the LIFO costing method, what is the cost of its ending inventory?

Correct Answer
verified

Which of the following accounts would normally have a credit balance?

Correct Answer
verified

The Acme Corporation buys 300 units of merchandise in January at $5 each. In February, Acme buys 500 units at $4 each and in March it buys 200 units at $6 each. Acme sells 150 units during this quarter. What is the cost of goods sold under the FIFO method?

Correct Answer
verified

The journal entry necessary at the end of the period to adjust cost of goods sold for the ending inventory still on hand will include which of the following?

Correct Answer
verified

On July 1,B. Darin Company sold merchandise costing $4,500 to S. Dee Company for $6,000, terms 2/10, n/30. Both companies use a periodic inventory system. What is the journal entry that S. Dee Company will make on July 1?

Correct Answer
verified

The process of buying and selling inventory is known as inventory:

Correct Answer
verified

In a period of rising prices, the inventory costing method that will tend to smooth out erratic changes in costs is

Correct Answer
verified

What is the journal entry to be recorded by

Correct Answer
verified

Errors in the ending inventory balance only affect the current period's records and financial statements.

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

Correct Answer
verified

Exam 7: Reporting and Interpreting Inventories and Cost of Goods Sold

In applying the lower of cost or market method to inventory, market is defined as

Correct AnswerverifiedShow Answer

Merchandisers have inventories of finished goods only; manufacturers have inventories of raw materials only.

Correct AnswerverifiedShow Answer

The net sales of a company is $300,000. The cost of goods available for sale is $280,000 and the gross profit percentage is 35%. What is the amount of ending inventory?

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

Which of the following statements regarding inventory measures is not true?

Correct AnswerverifiedShow Answer

The cost assigned to cost of goods sold and to inventory under the FIFO method will be the same whether the perpetual or the periodic inventory system is used.

Correct AnswerverifiedShow Answer

What is the inventory turnover for 2010?

Correct AnswerverifiedShow Answer

If the company uses the LIFO costing method, what is the cost of its ending inventory?

Correct AnswerverifiedShow Answer

Which of the following accounts would normally have a credit balance?

Correct AnswerverifiedShow Answer

The Acme Corporation buys 300 units of merchandise in January at $5 each. In February, Acme buys 500 units at $4 each and in March it buys 200 units at $6 each. Acme sells 150 units during this quarter. What is the cost of goods sold under the FIFO method?

Correct AnswerverifiedShow Answer

The journal entry necessary at the end of the period to adjust cost of goods sold for the ending inventory still on hand will include which of the following?

Correct AnswerverifiedShow Answer

On July 1,B. Darin Company sold merchandise costing $4,500 to S. Dee Company for $6,000, terms 2/10, n/30. Both companies use a periodic inventory system. What is the journal entry that S. Dee Company will make on July 1?

Correct AnswerverifiedShow Answer

The process of buying and selling inventory is known as inventory:

Correct AnswerverifiedShow Answer

In a period of rising prices, the inventory costing method that will tend to smooth out erratic changes in costs is

Correct AnswerverifiedShow Answer

What is the journal entry to be recorded by

Correct AnswerverifiedShow Answer

Errors in the ending inventory balance only affect the current period's records and financial statements.

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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