Question 1

A multiple-step income statement reports multiple levels of profitability, such as gross profit, operating income, income before income taxes, and net income.

Accepted Answer

A) True 
 B)False

Question 2

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.
Terms:
-_____ Equals operating income plus nonoperating revenues less nonoperating expenses.

Accepted Answer

A)  Gross profit
B)  Net income
C)  Inventory turnover ratio
D)  Operating income
E)  Income before income taxes

Question 3

A company reports the following amounts for 2012: $$\begin{array} { l r } 
\text { Inventory (beginning) } & \$ 20,000 \
\text { Inventory (ending) } & 30,000 \
\text { Purchases } & 160,000 \
\text { Purchase returns } & 10,000
\end{array}$$ Calculate cost of goods sold, the inventory turnover ratio, and the average days in inventory for 2012.

Accepted Answer

Cost of goods sold = $20,000...

Question 4

Davis Hardware Company uses a perpetual inventory system. How should Davis record the return of inventory previously purchased on account for $200?

Accepted Answer

A)     Inventory 200 Accounts Payable 200\begin{array} { l c } 	ext { Inventory } & 200 \	ext { Accounts Payable } & 200\end{array} Inventory  Accounts Payable ​200200​ 
B)     Accounts Payable 200\begin{array} { l l } 	ext { Accounts Payable } & 200 \end{array} Accounts Payable ​200​ Inventory200
C)     Purchase Returns 200\begin{array} { l l } 	ext { Purchase Returns } & 200 \end{array} Purchase Returns ​200​ Accounts Payable 200\quad 200200 
D)   Accounts Payable 200\quad 200200 Purchase Returns 200\quad 200200

Question 5

If a company overstates its ending balance of inventory in year 1 and it records inventory correctly in year 2, which one of the following is true?

Accepted Answer

A)   Net income is overstated in year 2.
B)   Cost of goods sold is overstated in year 1.
C)   Net income is understated in year 1.
D)   Retained earnings is overstated in year 1.

Question 6

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

Accepted Answer

A)   Decrease the company's cost of goods sold.
B)   Reduce the company's stockholders' equity.
C)   Increase the company's inventory.
D)   Increase the company's total assets.

Question 7

Suppose that Hastings Corporation overstates its ending inventory for 2012. What effect will this have on the reported amount of cost of goods sold for 2012?

Accepted Answer

A)   Overstate cost of goods sold.
B)   Understate cost of goods sold.
C)   Have no effect on cost of goods sold.
D)   Cannot be determined given the information provided.

Question 8

A company reports inventory using lower-of-cost-or-market. Below is information related to its year-end inventory. Calculate the amount to be reported for ending inventory.

Accepted Answer

The answer of A company reports inventory using lower-of-cost-or-market. Below...

Question 9

Merchandise sold FOB shipping point indicates that:

Accepted Answer

A)   The seller holds title until the merchandise is received at the buyer's location.
B)   The merchandise has not yet been shipped.
C)   The merchandise will not be shipped until payment has been received.
D)   The seller transfers title to the buyer once the merchandise is shipped.

Exam 6: Inventory and Cost of Goods Sold

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. Terms: -_____ Equals operating income plus nonoperating revenues less nonoperating expenses.

Correct Answer
verified

Correct Answer
verified

Cost of goods sold = $20,000...
View Answer

If a company overstates its ending balance of inventory in year 1 and it records inventory correctly in year 2, which one of the following is true?

Correct Answer
verified

Suppose that Hastings Corporation overstates its ending inventory for 2012. What effect will this have on the reported amount of cost of goods sold for 2012?

Correct Answer
verified

Merchandise sold FOB shipping point indicates that:

Correct Answer
verified

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

Correct Answer
verified

A company reports inventory using lower-of-cost-or-market. Below is information related to its year-end inventory. Calculate the amount to be reported for ending inventory.

Correct Answer
verified

Davis Hardware Company uses a perpetual inventory system. How should Davis record the return of inventory previously purchased on account for $200?

Correct Answer
verified

A multiple-step income statement reports multiple levels of profitability, such as gross profit, operating income, income before income taxes, and net income.

Correct Answer
verified

Exam 6: Inventory and Cost of Goods Sold

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. Terms: -_____ Equals operating income plus nonoperating revenues less nonoperating expenses.

Correct AnswerverifiedShow Answer

Correct Answerverified Cost of goods sold = $20,000...View AnswerShow Answer

If a company overstates its ending balance of inventory in year 1 and it records inventory correctly in year 2, which one of the following is true?

Correct AnswerverifiedShow Answer

Suppose that Hastings Corporation overstates its ending inventory for 2012. What effect will this have on the reported amount of cost of goods sold for 2012?

Correct AnswerverifiedShow Answer

Merchandise sold FOB shipping point indicates that:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A company reports inventory using lower-of-cost-or-market. Below is information related to its year-end inventory. Calculate the amount to be reported for ending inventory.

Correct AnswerverifiedShow Answer

Davis Hardware Company uses a perpetual inventory system. How should Davis record the return of inventory previously purchased on account for $200?

Correct AnswerverifiedShow Answer

A multiple-step income statement reports multiple levels of profitability, such as gross profit, operating income, income before income taxes, and net income.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Cost of goods sold = $20,000...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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