Question 1

Which of the following statements is true?

Accepted Answer

A)  FIFO results in a lower net income than LIFO when costs are increasing.
B)  LIFO results in a higher net income than FIFO when costs are increasing.
C)  LIFO results in a higher net income than FIFO when costs are decreasing.
D)  LIFO results in the same net income as FIFO when costs are increasing.E) A) and D)
F) B) and C)

Question 2

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:
A.$1,046.
B.$1,482.
C.$1,516.
D.$1,528.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> If Meanmocha sells 570 switch...

Question 3

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) All of the above
F) A) and B)

Question 4

Garcia Company will buy merchandise from one of the following suppliers.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> Assume the company takes all ...

Question 5

When the lower of cost or market (LCM) rule requires an inventory adjustment:

Accepted Answer

A)  the adjustment usually,but not always,reduces the book value of inventory.
B)  the write-down is usually reported as a part of cost of goods sold.
C)  the inventory adjustment is recorded in a contra-account called merchandise allowances.
D)  the write-down does not affect any of the financial statements.E) All of the above
F) None of the above

Question 6

A merchandise company's beginning inventory plus merchandise purchases minus ending inventory equals:

Accepted Answer

A)  net sales.
B)  cost of goods sold.
C)  goods available for sale.
D)  net purchases.E) B) and C)
F) A) and C)

Question 7

Which of the following statements regarding comparisons made in managing inventory is not true?

Accepted Answer

A)  In making comparisons of financial statements,it is desirable to compare data calculated using the same inventory costing methods.
B)  The inventory turnover ratio and days to sell measure will be affected by the cost flow assumptions used,which causes problems for financial statements users.
C)  Inventory turnover and days to sell are often affected by changes in the economic climate.
D)  The inventory turnover and days to sell ratios are consistent among companies in different industries.E) A) and B)
F) A) and C)

Question 8

An overstatement of ending inventory will cause an overstatement of assets and an understatement of stockholders' equity on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 9

The specific identification method would probably be most appropriate for which of the following goods?

Accepted Answer

A)  Boxes of brass 4-inch drywall screws at Home Depot.
B)  Bottles of suntan lotion in Wal-Mart's central warehouse.
C)  Sets of tires at the Goodyear plant.
D)  Diamond necklaces at a Tiffany & Co.jewelry store.E) C) and D)
F) All of the above

Question 10

In a perpetual inventory system,paying transportation charges on goods purchased FOB shipping point would have which of the following effects?

Accepted Answer

A)  decrease operating expenses.
B)  increase selling,general,and administrative expenses.
C)  decrease cost of goods sold.
D)  increase inventory.E) B) and C)
F) All of the above

Question 11

Days to sell is calculated as:

Accepted Answer

A)  365 divided by ending inventory.
B)  Cost of goods sold divided by ending inventory.
C)  365 divided by Inventory turnover ratio.
D)  Cost of goods sold divided by Average inventory.E) A) and B)
F) A) and C)

Question 12

Garcia Company will buy merchandise from one of the following suppliers.  Assume the company takes all discounts.What is the total cost for each supplier? Which supplier should it buy from?

Accepted Answer

Cost of buying from Supplier A...

Question 13

Which of the following statements is not true about accounts payable?

Accepted Answer

A)  It is credited when merchandise is purchased on account.
B)  It is credited for transportation charges paid.
C)  It is debited when payment is made on account.
D)  It is debited when merchandise is returned by the purchaser.E) A) and D)
F) B) and C)

Question 14

Use the following information to determine the amount of purchases for the period.

Accepted Answer

A)  $632,000
B)  $453,000
C)  $316,000
D)  $674,000E) All of the above
F) C) and D)

Question 15

A company purchased $6,000 of merchandise.Transportation costs were an additional $100.The company returned $250 of the merchandise and then paid the invoice within the 2% discount period.What is the total amount of cash paid?

Accepted Answer

A)  $5,733
B)  $6,100
C)  $5,735
D)  $5,730E) None of the above
F) All of the above

Exam 7: Inventories and Cost of Goods Sold

Which of the following statements is not true about accounts payable?

Correct Answer
verified

Correct Answer
verified
If Meanmocha sells 570 switch...
View Answer

When the lower of cost or market (LCM) rule requires an inventory adjustment:

Correct Answer
verified

The specific identification method would probably be most appropriate for which of the following goods?

Correct Answer
verified

An overstatement of ending inventory will cause an overstatement of assets and an understatement of stockholders' equity on the balance sheet.

Correct Answer
verified

Garcia Company will buy merchandise from one of the following suppliers. Assume the company takes all discounts.What is the total cost for each supplier? Which supplier should it buy from?

Correct Answer
verified
Cost of buying from Supplier A...
View Answer

Days to sell is calculated as:

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

Which of the following statements is true?

Correct Answer
verified

In a perpetual inventory system,paying transportation charges on goods purchased FOB shipping point would have which of the following effects?

Correct Answer
verified

Use the following information to determine the amount of purchases for the period.

Correct Answer
verified

Which of the following statements regarding comparisons made in managing inventory is not true?

Correct Answer
verified

A company purchased $6,000 of merchandise.Transportation costs were an additional $100.The company returned $250 of the merchandise and then paid the invoice within the 2% discount period.What is the total amount of cash paid?

Correct Answer
verified

A merchandise company's beginning inventory plus merchandise purchases minus ending inventory equals:

Correct Answer
verified

Garcia Company will buy merchandise from one of the following suppliers.

Correct Answer
verified
Assume the company takes all ...
View Answer

Exam 7: Inventories and Cost of Goods Sold

Which of the following statements is not true about accounts payable?

Correct AnswerverifiedShow Answer

Correct Answerverified If Meanmocha sells 570 switch...View AnswerShow Answer

When the lower of cost or market (LCM) rule requires an inventory adjustment:

Correct AnswerverifiedShow Answer

The specific identification method would probably be most appropriate for which of the following goods?

Correct AnswerverifiedShow Answer

An overstatement of ending inventory will cause an overstatement of assets and an understatement of stockholders' equity on the balance sheet.

Correct AnswerverifiedShow Answer

Garcia Company will buy merchandise from one of the following suppliers. Assume the company takes all discounts.What is the total cost for each supplier? Which supplier should it buy from?

Correct AnswerverifiedCost of buying from Supplier A...View AnswerShow Answer

Days to sell is calculated as:

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

Which of the following statements is true?

Correct AnswerverifiedShow Answer

In a perpetual inventory system,paying transportation charges on goods purchased FOB shipping point would have which of the following effects?

Correct AnswerverifiedShow Answer

Use the following information to determine the amount of purchases for the period.

Correct AnswerverifiedShow Answer

Which of the following statements regarding comparisons made in managing inventory is not true?

Correct AnswerverifiedShow Answer

A company purchased $6,000 of merchandise.Transportation costs were an additional $100.The company returned $250 of the merchandise and then paid the invoice within the 2% discount period.What is the total amount of cash paid?

Correct AnswerverifiedShow Answer

A merchandise company's beginning inventory plus merchandise purchases minus ending inventory equals:

Correct AnswerverifiedShow Answer

Garcia Company will buy merchandise from one of the following suppliers.

Correct Answerverified Assume the company takes all ...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified
If Meanmocha sells 570 switch...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Cost of buying from Supplier A...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Assume the company takes all ...
View Answer