Question 1

Suppose Company A places an order with Company B on May 12.On May 14,Company B ships the ordered goods to Company A with terms FOB destination.The goods arrive at Company A on May 17.Company A begins selling the goods to customers on May 19 and pays Company B on May 20.When would Company B record the sale of goods to Company A?

Accepted Answer

A)  May 12.
B)  May 14.
C)  May 19.
D)  May 17.E) A) and B)
F) C) and D)

Question 2

Which inventory method is better described as having an income statement focus and why is it considered as such?

Accepted Answer

A)  FIFO;better approximates the value of ending inventory.
B)  LIFO;better approximates the value of ending inventory.
C)  LIFO;better approximates inventory cost necessary to generate revenue.
D)  FIFO;better approximates inventory cost necessary to generate revenue.E) B) and C)
F) None of the above

Question 3

Listed below are five terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term placing the letter designating the term in the space provided.
-_____ Cost of components that will become part of the finished product but have not yet been used in production.

Accepted Answer

A)  Work-in-process inventory
B)  Merchandising companies
C)  Finished goods
D)  Raw materials
E)  Manufacturing companiesF) A) and B)
G) C) and E)

Question 4

A company understated its ending inventory balance by $5,000 in 2015.What impact will this error have on total assets and retained earnings in 2015 and 2016 (ignoring tax effects)?

Accepted Answer

2015
Total assets are understa...

Question 5

Which of the following is true regarding LIFO and FIFO?

Accepted Answer

A)  In a period of decreasing costs,LIFO results in lower total assets than FIFO.
B)  In a period of decreasing costs,LIFO results in lower net income than FIFO.
C)  In a period of rising costs,LIFO results in lower net income than FIFO.
D)  The amount reported for COGS is based on market value of inventory if LIFO is used.E) C) and D)
F) B) and C)

Question 6

Listed below are five terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term placing the letter designating the term in the space provided.
-_____ Equals sales revenue minus cost of goods sold.

Accepted Answer

A)  Gross profit
B)  Net income
C)  Inventory turnover ratio
D)  Operating income
E)  Income before income taxesF) B) and D)
G) A) and B)

Question 7

Companies are free to choose FIFO,LIFO,or weighted-average cost to report inventory and cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 8

Cost of goods sold equals:

Accepted Answer

A)  Beginning inventory − net purchases + ending inventory.
B)  Beginning inventory + accounts payable − net purchases.
C)  Net purchases + ending inventory − beginning inventory.
D)  Beginning inventory + net purchases − ending inventory.E) A) and B)
F) A) and C)

Question 9

What is meant by the assertion that the lower-of-cost-or-market method is an example of conservatism in accounting?

Accepted Answer

Firms are required to report the falling...

Question 10

Listed below are five terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term placing the letter designating the term in the space provided.
-_____ Equals gross profit less operating expenses.

Accepted Answer

A)  Gross profit
B)  Net income
C)  Inventory turnover ratio
D)  Operating income
E)  Income before income taxesF) None of the above
G) All of the above

Question 11

Inventory records for Marvin Company revealed the following:  Marvin sold 2,300 units of inventory during the month.Ending inventory assuming FIFO would be:

Accepted Answer

A)  $5,140.
B)  $5,080.
C)  $5,060.
D)  $5,050.E) All of the above
F) A) and B)

Question 12

When the market value of inventory falls below its cost,no adjustment to the accounting records is needed.

Accepted Answer

A) True 
 B)False

Question 13

When inventory costs are rising,__________ generally results in a lower amount of reported cost of goods sold.

Accepted Answer

The answer of When inventory costs are rising,__________ generally results...

Question 14

The following information relates to inventory for Shoeless Joe Inc.  At what amount would Shoeless report gross profit using LIFO cost flow assumptions?

Accepted Answer

A)  $105.
B)  $80.
C)  $175.
D)  $120.E) B) and C)
F) A) and C)

Question 15

Inventory records for Dunbar Incorporated revealed the following:
Dunbar sold 700 units of inventory during the month.Cost of goods sold assuming LIFO would be:

Accepted Answer

A)  $1,730.
B)  $1,700.
C)  $1,720.
D)  $1,710.E) B) and C)
F) All of the above

Question 16

During periods when inventory costs are rising,ending inventory will most likely be:

Accepted Answer

A)  Greater under LIFO than FIFO.
B)  Less under average cost than LIFO.
C)  Greater under average cost than FIFO.
D)  Greater under FIFO than LIFO.E) C) and D)
F) A) and B)

Question 17

Anthony Corporation reported the following amounts for the year:  Anthony's inventory turnover ratio is:

Accepted Answer

A)  2.42.
B)  2.76.
C)  3.21.
D)  2.14.E) A) and B)
F) A) and C)

Question 18

When inventory costs are rising,__________ generally results in a higher amount of reported net income.

Accepted Answer

The answer of When inventory costs are rising,__________ generally results...

Question 19

Anthony Corporation reported the following amounts for the year:  Anthony's gross profit ratio is:

Accepted Answer

A)  53.4%.
B)  51.9%.
C)  50.3%.
D)  46.6%.E) B) and C)
F) All of the above

Question 20

Inventory records for Marvin Company revealed the following:  Marvin sold 2,300 units of inventory during the month.Cost of goods sold assuming weighted-average cost would be (round weighted-average unit cost to four decimals if necessary) :

Accepted Answer

A)  $16,733.
B)  $17,408.
C)  $16,713.
D)  $16,089.E) B) and C)
F) None of the above

Exam 6: Inventory and Cost of Goods Sold

Correct Answer
verified

When the market value of inventory falls below its cost,no adjustment to the accounting records is needed.

Correct Answer
verified

A company understated its ending inventory balance by $5,000 in 2015.What impact will this error have on total assets and retained earnings in 2015 and 2016 (ignoring tax effects)?

Correct Answer
verified
2015
Total assets are understa...
View Answer

Cost of goods sold equals:

Correct Answer
verified

Listed below are five terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Equals sales revenue minus cost of goods sold.

Correct Answer
verified

Which of the following is true regarding LIFO and FIFO?

Correct Answer
verified

Inventory records for Marvin Company revealed the following: Marvin sold 2,300 units of inventory during the month.Cost of goods sold assuming weighted-average cost would be (round weighted-average unit cost to four decimals if necessary) :

Correct Answer
verified

Listed below are five terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Equals gross profit less operating expenses.

Correct Answer
verified

Companies are free to choose FIFO,LIFO,or weighted-average cost to report inventory and cost of goods sold.

Correct Answer
verified

Inventory records for Marvin Company revealed the following: Marvin sold 2,300 units of inventory during the month.Ending inventory assuming FIFO would be:

Correct Answer
verified

What is meant by the assertion that the lower-of-cost-or-market method is an example of conservatism in accounting?

Correct Answer
verified
Firms are required to report the falling...
View Answer

Anthony Corporation reported the following amounts for the year: Anthony's gross profit ratio is:

Correct Answer
verified

When inventory costs are rising,__________ generally results in a higher amount of reported net income.

Correct Answer
verified

During periods when inventory costs are rising,ending inventory will most likely be:

Correct Answer
verified

The following information relates to inventory for Shoeless Joe Inc. At what amount would Shoeless report gross profit using LIFO cost flow assumptions?

Correct Answer
verified

Inventory records for Dunbar Incorporated revealed the following: Dunbar sold 700 units of inventory during the month.Cost of goods sold assuming LIFO would be:

Correct Answer
verified

When inventory costs are rising,__________ generally results in a lower amount of reported cost of goods sold.

Correct Answer
verified

Which inventory method is better described as having an income statement focus and why is it considered as such?

Correct Answer
verified

Anthony Corporation reported the following amounts for the year: Anthony's inventory turnover ratio is:

Correct Answer
verified

Correct Answer
verified

Exam 6: Inventory and Cost of Goods Sold

Correct AnswerverifiedShow Answer

When the market value of inventory falls below its cost,no adjustment to the accounting records is needed.

Correct AnswerverifiedShow Answer

A company understated its ending inventory balance by $5,000 in 2015.What impact will this error have on total assets and retained earnings in 2015 and 2016 (ignoring tax effects)?

Correct Answerverified2015Total assets are understa...View AnswerShow Answer

Cost of goods sold equals:

Correct AnswerverifiedShow Answer

Listed below are five terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Equals sales revenue minus cost of goods sold.

Correct AnswerverifiedShow Answer

Which of the following is true regarding LIFO and FIFO?

Correct AnswerverifiedShow Answer

Inventory records for Marvin Company revealed the following: Marvin sold 2,300 units of inventory during the month.Cost of goods sold assuming weighted-average cost would be (round weighted-average unit cost to four decimals if necessary) :

Correct AnswerverifiedShow Answer

Listed below are five terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Equals gross profit less operating expenses.

Correct AnswerverifiedShow Answer

Companies are free to choose FIFO,LIFO,or weighted-average cost to report inventory and cost of goods sold.

Correct AnswerverifiedShow Answer

Inventory records for Marvin Company revealed the following: Marvin sold 2,300 units of inventory during the month.Ending inventory assuming FIFO would be:

Correct AnswerverifiedShow Answer

What is meant by the assertion that the lower-of-cost-or-market method is an example of conservatism in accounting?

Correct AnswerverifiedFirms are required to report the falling...View AnswerShow Answer

Anthony Corporation reported the following amounts for the year: Anthony's gross profit ratio is:

Correct AnswerverifiedShow Answer

When inventory costs are rising,__________ generally results in a higher amount of reported net income.

Correct AnswerverifiedShow Answer

During periods when inventory costs are rising,ending inventory will most likely be:

Correct AnswerverifiedShow Answer

The following information relates to inventory for Shoeless Joe Inc. At what amount would Shoeless report gross profit using LIFO cost flow assumptions?

Correct AnswerverifiedShow Answer

Inventory records for Dunbar Incorporated revealed the following: Dunbar sold 700 units of inventory during the month.Cost of goods sold assuming LIFO would be:

Correct AnswerverifiedShow Answer

When inventory costs are rising,__________ generally results in a lower amount of reported cost of goods sold.

Correct AnswerverifiedShow Answer

Which inventory method is better described as having an income statement focus and why is it considered as such?

Correct AnswerverifiedShow Answer

Anthony Corporation reported the following amounts for the year: Anthony's inventory turnover ratio is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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2015
Total assets are understa...
View Answer

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Firms are required to report the falling...
View Answer

Correct Answer
verified

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