ACCT 6

15 October 2022
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34 test answers

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question
The primary difference between the periodic and perpetual inventory systems is:
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The perpetual system maintains a continual record of inventory transactions, whereas the periodic system records these transactions only at the end of the period.
question
The inventory method that will always produce the same amount for cost of goods sold in a periodic inventory system as in a perpetual inventory system would be:
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FIFO.
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After applying the lower-of-cost-or-market method, the accountant prepares a year-end adjustment. That adjustment would:
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Reduce the company's stockholders' equity.
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The practice of using the lower-of-cost-or-market to evaluate inventory reflects which of the following accounting principles?
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Conservatism.
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What effect would an adjustment to record inventory at the lower-of-cost-or-market have on the company's financial statements?
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An increase to expense.
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At the end of a reporting period, Gamble Corporation determines that its ending inventory has a cost of $300,000 and a market value of $230,000. What would be the effect(s) of the adjustment to write down inventory to market value?
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Decrease total assets and net income.
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Under the principle of lower-of-cost-or-market, when a company has 10 units of inventory A with market value of $50 and a cost of $60, what is the adjustment?
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Debit Cost of Goods Sold $100; credit Inventory $100.
question
Suppose Company A places an order with Company B on May 12. On May 14, Company B ships the ordered goods to Company A with terms FOB destination. The goods arrive at Company A on May 17. Company A begins selling the goods to customers on May 19 and pays Company B on May 20. When would Company B record the sale of goods to Company A?
answer
may 17, pq fue cuando llegaron
question
Ending inventory is equal to the cost of items on hand plus:
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Items in transit sold FOB destination.
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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 _______.
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FOB shipping point; FOB destination.
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Merchandise sold FOB shipping point indicates that:
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The seller transfers title to the buyer once the merchandise is shipped.
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Merchandise sold FOB destination indicates that:
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The seller holds title until the merchandise is received at the buyer's location.
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Ace Bonding Company purchased inventory on account. The inventory costs $2,000 and is expected to sell for $3,000. How should Ace record the purchase using a perpetual inventory system?
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inventory 2k acct pay 2k EXPECTED to sell ASI Q NO
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Davis Hardware Company uses a perpetual inventory system. How should Davis record the sale of inventory costing $620 for $960 on account?
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acct recivable 960 sales recivable 960 COGD 620 invenotry 620
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Good, Inc. sold inventory for $1,200 that was purchased for $700. Good records which of the following when it sells inventory using a perpetual inventory system?
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Debit Cost of Goods Sold $700; credit Inventory $700.
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In a perpetual inventory system, at the time of a sale the cost of inventory sold is:
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Debited to Cost of Goods Sold.
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In a perpetual inventory system, the purchase of inventory is debited to:
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inventory
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On May 1, Ace Bonding Company purchased inventory costing $2,000 on account with terms 2/10, n/30. On May 8, Ace pays for this inventory and records which of the following using a perpetual inventory system?
answer
ACCTS PAY 2K INVENTORY 40 CASH 1960
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Davis Hardware Company uses a perpetual inventory system. How should Davis record the return of inventory previously purchased on account for $200?
answer
ACCT PAY 200 INVENTORY 200
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On May 1, Ace Bonding Company purchased inventory costing $2,000 on account with terms 2/10, n/30. On May 18, Ace pays for this inventory and records which of the following using a perpetual inventory system?
answer
ACCTS PAY 2K CASH 2K
question
Which inventory cost flow assumption generally results in the highest reported amount for cost of goods sold when inventory costs are falling?
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FIFO.
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Which of the following is incorrect regarding LIFO and FIFO?
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In a period of increasing costs, assets will be greater for LIFO than FIFO.
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Which of the following is true concerning inventory cost flow assumptions?
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NONE
question
Which inventory method is better described as having a balance sheet focus and why is it considered as such?
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FIFO; better approximates the value of ending inventory.
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Which inventory method is better described as having an income statement focus and why is it considered as such?
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LIFO; better approximates inventory cost necessary to generate revenue.
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The primary reason for the popularity of LIFO is that it gives:
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A lower income tax obligation when inventory costs are rising.
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The LIFO conformity rule states that if LIFO is used for: One
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Tax purposes, it must be used for financial reporting.
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During periods when inventory costs are rising, ending inventory will most likely be:
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Greater under FIFO than LIFO.
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In a period of rising costs, which inventory valuation method would a company likely choose if they want to have the highest possible balance of inventory on the balance sheet?
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FIFO.
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During periods when inventory costs are rising, cost of goods sold will most likely be:
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Lower under average cost than LIFO.
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Which of the following is true regarding LIFO and FIFO?
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In a period of rising costs, LIFO results in lower net income than FIFO.
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In a period when inventory costs are falling, the lowest taxable income is most likely reported by using the inventory method of:
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fifo
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In a period when inventory costs are rising, the inventory method that most likely results in the highest ending inventory is:
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fifo
question
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 ending inventory balance for Julia & Company assuming that it uses FIFO?
answer
Ending inventory = (15 x $4) + (5 x $5) = $85.