FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 6: Cost of Goods Sold and Inventory

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 111

Essay

Review LaterAdd Note

Review Later

If a company overstates its ending inventory for the current year, what are the effects on assets, cost of goods sold, income before taxes, and retained earnings for the current year?

Correct Answer

verified

An overstatement of ending inventory for...

View Answer

Show Answer

Question 112

Short Answer

Review LaterAdd Note

Review Later

The understatement of ending inventories in one period leads to a(n)____________________ of cost of goods sold in the same period.

Correct Answer

verified

Show Answer

Question 113

Multiple Choice

Review LaterAdd Note

-Refer to the information provided for Klump Co. If the company uses the (moving) Average Cost inventory costing method, ending inventory at June 30th is:

An overstatement error in the inventory account in the current period will result in an understatement of ____________________ in the subsequent period.

During periods of rising prices, the ____________________ method results in the cost of goods sold expense on the income statement being a close approximation of the replacement cost of the goods sold.

Identify which inventory costing method achieves the effect listed in the following items. (Choices may be used more than once.) a.FIFO method c.Average cost method b.LIFO method d.Specific identification method -Prices are declining; gross margin is higher with this method.

The cost of goods sold for Uzzi Corp. totaled $750,000. Sales returns and purchase returns were $3,000 and $5,000, respectively. Purchases totaled $800,000. Purchase discounts totaled $7,000, while sales discounts totaled $9,000. Beginning inventory was $100,000. Determine the amount of ending inventory to be reported on the company's balance sheet.

L.A. Sports Novelties has the following information related to purchases and sales of one of its popular products, autographed photographs of the local lacrosse star, Christian Chance. Each photograph is unique, so the inventory is accounted for under the specific identification method. A review of purchase and sale information reveals that the following units remain in ending inventory at the end of the month: Description Units Sold Units Remaining Compute cost of goods sold and cost of ending inventory.

Gools, Inc. buys designer clothing to sell in its retail stores. Since much of the merchandise comes from Europe, Gools, Inc. must pay freight charges. Which of the following statements must be true?

Under the _______________ inventory system, the inventory account is updated after each purchase or sale.

Deeter Company, which sells auto parts, uses a perpetual inventory system. Identify the effects on the accounting equation. (Choices may be used more than once.) a.Increase in assets and liabilities b.Decrease in assets and liabilities c.Increase in assets and stockholders' equity d.Decrease in assets and stockholders' equity e.Increase in liabilities and decrease in stockholders' equity f.Decrease in liabilities and increase in stockholders' equity -Recorded cash sales for the day.

Which of the following best describes "cost of goods available for sale"?

Match the terms with the descriptions related to merchandise sales and purchases. a.Transportation-in e.Cost of goods available for sale b.Perpetual inventory system f.Periodic inventory system c.Net purchases g.FOB shipping point d.FOB destination h.Delivery expense -Shipping costs paid to acquire merchandise.

Match the costs that might be included as part of the cost of inventory to the listed accounting treatment. (Choices may be used more than once.) a.Add to inventory cost c.Not an inventory cost b.Subtract from inventory cost -Freight costs incurred by the seller to ship goods to its customers.

Which inventory cost flow method assigns the same cost to all units whether sold or left in ending inventory?

Harris Corp. sold merchandise to Ichay Company on December 28, 2012, with shipping terms of FOB destination. The buyer received the merchandise on January 3, 2013. Which of the following is true?

In the following information from the 2013 balance sheet of Kayla Enterprises, all amounts have been rounded to millions of dollars. Answer the following questions:

At the year-end inventory count, if goods in transit are shipped FOB shipping point, they should be included in the inventory count of:

Satoor, Inc. Satoor, Inc., which uses a periodic inventory system, purchased merchandise from Taye Company on July 7, 2013, for $15,000. The credit terms were 1/10, n/30. The goods were shipped FOB shipping point on July 7, 2013. Satoor, Inc. received the merchandise on July 10 and paid the amount due on July 15. -Refer to the information provided for Stallworth Corp. If the company uses the LIFO inventory costing method, the cost of goods sold for November would be

Match the terms with the descriptions provided. a.Manufacturers d.Wholesalers b.Merchandisers e.Service companies c.Retailers -Companies that sell to other retailers.