Question 1

On December 31,a company needed to estimate its ending inventory to prepare its annual financial statements.The following information is currently available: Inventory as of January 1: $120,500
Net sales for the year: $400,000
Net purchases for the year: $270,500
This company typically achieves a gross profit ratio of 15%.Ending Inventory under the gross profit method would be:

Accepted Answer

A)  $102,425.
B)  $10,425.
C)  $9,000.
D)  $51,000.
E)  $51,425.F) None of the above
G) C) and D)

Question 2

Some companies choose to avoid assigning incidental costs of acquiring merchandise to inventory by recording them as cost of goods sold when incurred.The principle that supports this is called:

Accepted Answer

A)  The matching principle.
B)  The materiality constraint.
C)  The cost principle.
D)  The conservation constraint principle.
E)  The lower of cost or market principle.F) B) and E)
G) B) and C)

Question 3

Hull Company reported the following income statement information for 2015:  The beginning inventory balance for Year 1 is correct.However,the ending inventory figure for Year 1 was overstated by $20,000.Given this information,the correct gross profit figure for 2015 would be:

Accepted Answer

A)  $149,000.
B)  $169,000.
C)  $129,000.
D)  $142,000.
E)  $112,000.F) B) and E)
G) B) and D)

Question 4

A company reported the following data related to its ending inventory:  Calculate the lower-of-cost-or-market on the inventory applied separately to each product.

Accepted Answer

The answer of A company reported the following data related...

Question 5

The understatement of the ending inventory balance 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 correct.F) C) and E)
G) None of the above

Question 6

Interim financial statements:

Accepted Answer

A)  Are required by the Congress.
B)  Are necessary to achieve full disclosure about a business's operations.
C)  Are statements prepared for periods of less than one year.
D)  Require the use of the perpetual method for inventories.
E)  Cannot be prepared if the company follows the conservatism principle.F) C) and D)
G) A) and E)

Question 7

A company made the following merchandise purchases and sales during the month of May:  There was no beginning inventory.If the company uses the weighted average periodic method,what would be the cost of the ending inventory?

Accepted Answer

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

Question 8

Salmone Company reported the following purchases and sales of its only product.Salmone uses a perpetual inventory system.Determine the cost assigned to ending inventory using LIFO.

Accepted Answer

A)  $2,260
B)  $3,180
C)  $1,860
D)  $3,580
E)  $2,100F) B) and E)
G) All of the above

Question 9

_______________________ is the estimated sales price of damaged goods minus the cost of making the sale.

Accepted Answer

Net realiz...

Question 10

Perfection Company had cost of goods sold of $853,000,ending inventory of $70,500,and average inventory of $71,600.Its inventory turnover equals:

Accepted Answer

A)  11.9.
B)  1.0.
C)  6.0.
D)  30.6.
E)  12.0.F) D) and E)
G) A) and B)

Question 11

A company has beginning inventory of 10 units at a cost of $10 each on February 1.On February 3,it purchases 20 units at $12 each.12 units are sold on February 5.Using the FIFO periodic inventory method,what is the cost of the 12 units that are sold?

Accepted Answer

A)  $120
B)  $124
C)  $128
D)  $130
E)  $140F) D) and E)
G) A) and E)

Question 12

Evaluate each inventory error separately and determine whether it overstates or understates cost of goods sold and net income.

Accepted Answer

The answer of Evaluate each inventory error separately and determine...

Question 13

Use the following information for Shafer Company to compute inventory turnover for 2015.

Accepted Answer

A)  9.98
B)  5.08
C)  4.99
D)  8.30
E)  8.44F) A) and B)
G) A) and C)

Exam 6: Inventories and Cost of Sales

Some companies choose to avoid assigning incidental costs of acquiring merchandise to inventory by recording them as cost of goods sold when incurred.The principle that supports this is called:

Correct Answer
verified

Evaluate each inventory error separately and determine whether it overstates or understates cost of goods sold and net income.

Correct Answer
verified

Salmone Company reported the following purchases and sales of its only product.Salmone uses a perpetual inventory system.Determine the cost assigned to ending inventory using LIFO.

Correct Answer
verified

A company made the following merchandise purchases and sales during the month of May: There was no beginning inventory.If the company uses the weighted average periodic method,what would be the cost of the ending inventory?

Correct Answer
verified

A company reported the following data related to its ending inventory: Calculate the lower-of-cost-or-market on the inventory applied separately to each product.

Correct Answer
verified

Perfection Company had cost of goods sold of $853,000,ending inventory of $70,500,and average inventory of $71,600.Its inventory turnover equals:

Correct Answer
verified

_______________________ is the estimated sales price of damaged goods minus the cost of making the sale.

Correct Answer
verified
Net realiz...
View Answer

Use the following information for Shafer Company to compute inventory turnover for 2015.

Correct Answer
verified

Hull Company reported the following income statement information for 2015: The beginning inventory balance for Year 1 is correct.However,the ending inventory figure for Year 1 was overstated by $20,000.Given this information,the correct gross profit figure for 2015 would be:

Correct Answer
verified

A company has beginning inventory of 10 units at a cost of $10 each on February 1.On February 3,it purchases 20 units at $12 each.12 units are sold on February 5.Using the FIFO periodic inventory method,what is the cost of the 12 units that are sold?

Correct Answer
verified

Correct Answer
verified

The understatement of the ending inventory balance causes:

Correct Answer
verified

Interim financial statements:

Correct Answer
verified

Exam 6: Inventories and Cost of Sales

Some companies choose to avoid assigning incidental costs of acquiring merchandise to inventory by recording them as cost of goods sold when incurred.The principle that supports this is called:

Correct AnswerverifiedShow Answer

Evaluate each inventory error separately and determine whether it overstates or understates cost of goods sold and net income.

Correct AnswerverifiedShow Answer

Salmone Company reported the following purchases and sales of its only product.Salmone uses a perpetual inventory system.Determine the cost assigned to ending inventory using LIFO.

Correct AnswerverifiedShow Answer

A company made the following merchandise purchases and sales during the month of May: There was no beginning inventory.If the company uses the weighted average periodic method,what would be the cost of the ending inventory?

Correct AnswerverifiedShow Answer

A company reported the following data related to its ending inventory: Calculate the lower-of-cost-or-market on the inventory applied separately to each product.

Correct AnswerverifiedShow Answer

Perfection Company had cost of goods sold of $853,000,ending inventory of $70,500,and average inventory of $71,600.Its inventory turnover equals:

Correct AnswerverifiedShow Answer

_______________________ is the estimated sales price of damaged goods minus the cost of making the sale.

Correct AnswerverifiedNet realiz...View AnswerShow Answer

Use the following information for Shafer Company to compute inventory turnover for 2015.

Correct AnswerverifiedShow Answer

Hull Company reported the following income statement information for 2015: The beginning inventory balance for Year 1 is correct.However,the ending inventory figure for Year 1 was overstated by $20,000.Given this information,the correct gross profit figure for 2015 would be:

Correct AnswerverifiedShow Answer

A company has beginning inventory of 10 units at a cost of $10 each on February 1.On February 3,it purchases 20 units at $12 each.12 units are sold on February 5.Using the FIFO periodic inventory method,what is the cost of the 12 units that are sold?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The understatement of the ending inventory balance causes:

Correct AnswerverifiedShow Answer

Interim financial statements:

Correct AnswerverifiedShow Answer

Correct Answer
verified

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Net realiz...
View Answer

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