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Exam 6: Inventory and Cost of Goods Sold

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Question 21

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Listed below are four 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. -_____ Indicates that title to inventory transfers from the seller to the buyer at the point it is shipped.

A) FOB shipping point
B) FOB destination
C) Periodic inventory system
D) Perpetual inventory system

E) A) and D)
F) C) and D)

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Question 22

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Using the information below,determine the ending inventory value applying the lower-of-cost-or-market method.

A) $13,300.
B) $12,000.
C) $11,600.
D) $13,700.

E) A) and D)
F) B) and C)

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Question 23

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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 operating income plus nonoperating revenues less nonoperating expenses.

If a company understates its count of ending inventory in Year 1,which of the following is true?

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Cost of freight included in inventory.

After applying the lower-of-cost-or-market method,the accountant prepares a year-end adjustment.That adjustment would:

Gross profit equals net sales of inventory less cost of goods sold.

If A sells to B,and B obtains title while goods are in transit,the goods were shipped .If C sells to D,and C maintains title until the goods arrive at D's door then the goods were shipped _______.

Northern Town Equipment has four types of products in its inventory.Northern applies the rules under lower-of-cost or market (LCM) to its inventory at the end of each year as shown below: The year-end adjustment based upon the information above would include a:

In a periodic inventory system,the purchase of inventory is debited to:

If a company has beginning inventory of $15,000,purchases during the year of $75,000,and ending inventory of $20,000,cost of goods sold equals $70,000.

The following information pertains to Julia & Company: March 1 Beginning inventory = 30 units @ $5 March 3 Purchased 15 units @ $4 March 9 Sold 25 units @ $8 What is the cost of goods sold for Julia & Company assuming it uses LIFO?

Merchandise sold FOB shipping point indicates that:

During periods of rising costs,FIFO generally results in a higher ending inventory balance.

Which of the following is true concerning inventory cost flow assumptions?

The gross profit ratio measures the amount by which the sale price of inventory exceeds its cost per dollar of sales.

A company reports inventory using lower-of-cost-or-market.Below is information related to its year-end inventory: Calculate ending inventory under lower-of-cost-or-market and record any necessary adjustment to inventory.

Overstating ending inventory in the current year causes net income in the current year to be overstated.

Accountants often call FIFO the balance sheet approach because the amount it reports for ending inventory better approximates the current cost of inventory.

The LIFO conformity rule states that if LIFO is used for: