Question 1

Williston Cattle Company uses a perpetual inventory system. Williston purchased sheep from Little H Ranch at a cost of $39,000, payable at time of delivery. The entry to record the delivery would be

Accepted Answer

A)   
B)  
C)   
D)

Question 2

Company D makes the following entry in its accounting records: This entry would be made when

Accepted Answer

A)   Merchandise is sold and the periodic inventory method is used
B)   Merchandise is sold and the perpetual inventory method is used
C)   Merchandise is returned and the perpetual inventory method is used
D)   Merchandise is returned and the periodic inventory method is used

Question 3

When products are sold, their costs are removed from inventory and reported on the income statement as an expense called

Accepted Answer

A)   Operating expenses
B)   Cost of goods sold
C)   Cost of goods manufactured
D)   Inventory expenses

Question 4

The following information is available for Lendo Company:

Lendo's inventory turnover for 2012 is computed by

Accepted Answer

A)   $2,000,000 / $575,000
B)   $2,350,000 / $600,000
C)   $2,800,000 / $575,000
D)   $3,000,000 / $575,000

Question 5

Warren Clothing Store sells jeans. During January, its inventory records of one brand of designer jeans were as follows:
 
-Refer to Exhibit 7-5. Using the information above, average (periodic)  cost of goods sold is

Accepted Answer

A)   $450
B)   $390
C)   $375
D)   $330

Question 6

The following information is provided:

- Refer to Exhibit 7-3. Given the information above, determine the amount of ending inventory.

Accepted Answer

A)   $73,600
B)   $105,600
C)   $70,400
D)   $102,400

Question 7

A firm using the periodic inventory method purchased $2,000 of inventory on terms 2/10, n/30. The journal entry to record this transaction would include a debit to

Accepted Answer

A)   Purchases
B)   Purchase Discounts
C)   Inventory
D)   Accounts Payable

Question 8

A firm using the perpetual inventory method returned defective merchandise costing $2,000 to one of its suppliers. The entry to record this transaction will include a credit to

Accepted Answer

A)   Accounts Receivable
B)   Inventory
C)   Purchase Returns
D)   Accounts Payable

Question 9

The following information was taken from the records of Colfax Company:
 
Given this information, compute the following ratios for Colfax Company.

Accepted Answer

Given this informati...

Question 10

A physical count would be necessary at the end of the accounting period under which inventory system?

Accepted Answer

A)   Periodic inventory system
B)   Perpetual inventory system
C)   Both periodic and perpetual inventory systems
D)   Neither periodic nor perpetual inventory systems

Question 11

ACE Manufacturing pays a freight bill of $54 to United Trucking Company for merchandise purchased from Jackson Sales, terms FOB shipping point. When recording the payment with the perpetual inventory method, ACE would debit the $54 cost of the freight to

Accepted Answer

A)   Inventory
B)   Freight-In
C)   Prepaid Freight
D)   Freight-Out

Question 12

An understatement of purchases results in cost of goods sold being

Accepted Answer

A)   Overstated
B)   Understated
C)   Stated correctly
D)   None of these are correct

Question 13

Which ratio tells how many times a year a company is replenishing its inventory?

Accepted Answer

A)   Number of days' sales in inventory
B)   Accounts receivable turnover
C)   Number of days' purchases in accounts payable
D)   Inventory turnover

Question 14

Conner Company's accounts payable balance on December 31, 2012 was $1,400,000 before considering the following transactions:  Given the above information, on December 31, 2012, Conner should report an accounts payable balance of

Accepted Answer

A)   $1,400,000
B)   $1,150,000
C)   $1,775,000
D)   $1,650,000

Question 15

Under which inventory system would a company NOT be able to specifically determine the amount of inventory lost or stolen?

Accepted Answer

A)   Periodic inventory system
B)   Perpetual inventory system
C)   Both periodic and perpetual inventory systems
D)   Neither periodic nor perpetual inventory systems

Question 16

A periodic inventory system is most often used when

Accepted Answer

A)   Inventory has a small number of items with relatively high value
B)   Inventory has a small number of items with relatively low value
C)   Inventory has a large number of items with relatively low value
D)   Inventory has a large number of items with relatively high value

Question 17

Inventories are carried in the accounting records at cost, EXCEPT when

Accepted Answer

A)   The inventory is damaged
B)   The market value of the inventory falls below its acquisition cost
C)   Either the inventory is damaged or the market value of the inventory falls below its acquisition cost
D)   The market price rises above cost

Question 18

Under the periodic inventory method, if merchandise is sold for cash on December 31 and is recorded as a sale but is NOT shipped (and thus is included in the ending inventory count) , the financial statements will

Accepted Answer

A)   Overstate assets
B)   Understate net income
C)   Understate liabilities
D)   Understate assets

Question 19

Garfunkle Company had the following four transactions during January 2012:
 
-Refer to Exhibit 7-1.Given the information above,with the perpetual inventory method,the entry to record the January 5 transaction would include

Accepted Answer

A)  A debit to Cost of Goods Sold of $1,500
B)  A debit to Accounts Receivable of $2,500
C)  A credit to Inventory of $1,500
D)  All of these

Question 20

A perpetual inventory system is most often used when

Accepted Answer

A)   Inventory has a small number of items with relatively high value
B)   Inventory has a small number of items with relatively low value
C)   Inventory has a large number of items with relatively low value
D)   Inventory has a large number of items with relatively high value

Exam 7: Inventory and the Cost of Sales

A firm using the perpetual inventory method returned defective merchandise costing $2,000 to one of its suppliers. The entry to record this transaction will include a credit to

Correct AnswerverifiedShow Answer

Inventories are carried in the accounting records at cost, EXCEPT when

Correct AnswerverifiedShow Answer

Company D makes the following entry in its accounting records: This entry would be made when

Correct AnswerverifiedShow Answer

A perpetual inventory system is most often used when

Correct AnswerverifiedShow Answer

Which ratio tells how many times a year a company is replenishing its inventory?

Correct AnswerverifiedShow Answer

An understatement of purchases results in cost of goods sold being

Correct AnswerverifiedShow Answer

A firm using the periodic inventory method purchased $2,000 of inventory on terms 2/10, n/30. The journal entry to record this transaction would include a debit to

Correct AnswerverifiedShow Answer

A periodic inventory system is most often used when

Correct AnswerverifiedShow Answer

A physical count would be necessary at the end of the accounting period under which inventory system?

Correct AnswerverifiedShow Answer

Garfunkle Company had the following four transactions during January 2012: -Refer to Exhibit 7-1.Given the information above,with the perpetual inventory method,the entry to record the January 5 transaction would include

Correct AnswerverifiedShow Answer

Warren Clothing Store sells jeans. During January, its inventory records of one brand of designer jeans were as follows: -Refer to Exhibit 7-5. Using the information above, average (periodic) cost of goods sold is

Correct AnswerverifiedShow Answer

The following information is available for Lendo Company: Lendo's inventory turnover for 2012 is computed by

Correct AnswerverifiedShow Answer

Williston Cattle Company uses a perpetual inventory system. Williston purchased sheep from Little H Ranch at a cost of $39,000, payable at time of delivery. The entry to record the delivery would be

Correct AnswerverifiedShow Answer

The following information is provided: - Refer to Exhibit 7-3. Given the information above, determine the amount of ending inventory.

Correct AnswerverifiedShow Answer

ACE Manufacturing pays a freight bill of $54 to United Trucking Company for merchandise purchased from Jackson Sales, terms FOB shipping point. When recording the payment with the perpetual inventory method, ACE would debit the $54 cost of the freight to

Correct AnswerverifiedShow Answer

Under which inventory system would a company NOT be able to specifically determine the amount of inventory lost or stolen?

Correct AnswerverifiedShow Answer

Conner Company's accounts payable balance on December 31, 2012 was $1,400,000 before considering the following transactions: Given the above information, on December 31, 2012, Conner should report an accounts payable balance of

Correct AnswerverifiedShow Answer

The following information was taken from the records of Colfax Company: Given this information, compute the following ratios for Colfax Company.

Correct AnswerverifiedGiven this informati...View AnswerShow Answer

Under the periodic inventory method, if merchandise is sold for cash on December 31 and is recorded as a sale but is NOT shipped (and thus is included in the ending inventory count) , the financial statements will

Correct AnswerverifiedShow Answer

When products are sold, their costs are removed from inventory and reported on the income statement as an expense called

Correct AnswerverifiedShow Answer

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Given this informati...
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