1.A company had sales of $699,000 and cost of goods sold of $280,000. Its gross profit equals:

$419,000

$699,000

$280,000

$(419,000)

$979,000

2.A company had expenses other than cost of goods sold of $278,000. Determine sales and gross profit given cost of goods sold was $114,000 and net income was $178,000.

Sales: $570,000; gross profit: $456,000

Sales: $392,000; gross profit: $178,000

Sales: $570,000; gross profit: $64,000

Sales: $456,000; gross profit: $570,000

Sales: $392,000; gross profit: $64,000

3.A company's cost of goods sold was $6,400. Determine net purchases and ending inventory given goods available for sale were $14,600 and beginning inventory was $7,400.

Net Purchases: $21,000; ending inventory: $8,200

Net Purchases: $22,000; ending inventory: $28,400

Net Purchases: $13,600; ending inventory: $21,000

Net Purchases: $7,200; ending inventory: $8,200

Net Purchases: $13,800; ending inventory: $7,200

4.A company's current assets were $19,600, its quick assets were $12,500, and its current liabilities were $14,000. Its quick ratio equals:

0.89

1.57

1.40

2.29

1.12

5.A company's gross profit was $84,250 and its net sales were $342,800. Its gross margin ratio equals:

4.1%

75.4%

24.6%

$84,250

$258,550

6.A company's gross profit was $84,250 and its net sales were $342,800. Its gross margin ratio equals:

4.1%

75.4%

24.6%

$84,250

$258,550

7.A merchandising company:

Earns net income by buying and selling merchandise.

Receives fees only in exchange for services.

Earns profit from commissions only.

Earns profit from fares only.

Buys products from consumers.

8.A company purchased $8,800 worth of merchandise. Transportation costs were an additional $80. The company later returned $1,100 worth of merchandise and paid the invoice within the 2% cash discount period. The total amount paid for this merchandise is:

$7,780.00

$8,704.00

$7,626.00

$7,624.40

$8,624.00

9.Herald Company had sales of $145,000, sales discounts of $3,000 and sales returns of $4,200. Herald Company's net sales equals:

$145,000

$137,800

$7,200

$152,200

$142,000

10.A company has sales of $1,690,000, sales discounts of $121,000, sales returns and allowances of $142,000, shipping charges of $34,000, sales commissions of $53,000, net income totaled $282,500, and cost of goods sold of $439,000. What is the net sales amount for the period?

$1,669,000

$1,711,000

$1,690,000

$1,953,000

$1,427,000

11.One of the most important decisions in accounting for inventory is determining the unit costs assigned to each inventory item.

True

False

12.Expenses that support the overall operations of a business and include the expenses relating to accounting, human resource management, and financial management are called:

Cost of goods sold.

Selling expenses.

Purchasing expenses.

General and administrative expenses.

Nonoperating activities.

13.The understatement of the ending inventory balance causes:

Cost of goods sold to be overstated and net income to be understated.

Cost of goods sold to be overstated and net income to be overstated.

Cost of goods sold to be understated and net income to be understated.

Cost of goods sold to be understated and net income to be overstated.

Cost of goods sold to be overstated and net income to be correct.

14.The inventory valuation method that identifies the invoice cost of each item in ending inventory to determine the cost assigned to that inventory is the:

Weighted-average inventory method.

First-in, first-out method.

Last-in, first-out method.

Specific identification method.

Retail inventory method.
15.A company had inventory on November 1 of 5 units at a cost of $20 each. On November 2, they purchased 10 units at $22 each. On November 6, they purchased 6 units at $25 each. On November 8, 8 units were sold for $55 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale?

$304

$296

$288

$280

$276

16.Acme-Jones Corporation uses a LIFO perpetual inventory system.

August 2, 25 units were purchased at $12 per unit.

August 5, 10 units were purchased at $13 per unit.

August 15, 12 units were sold at $25 per unit.

August 18, 15 units were purchased at $14 per unit.

What was the amount of the cost of goods sold?

$184.53

$163.00

$174.43

$154.00

$144.00

17.A company has inventory of 10 units at a cost of $10 each on June 1. On June 3, they purchased 20 units at $12 each. 12 units are sold on June 5. Using the FIFO perpetual inventory method, what is the cost of the 12 units that were sold?

$120

$124

$128

$130

$140

18.Given the following information, determine the cost of ending inventory at December 31 using the LIFO perpetual inventory method.
December 2: 5 units were purchased at $7 per unit.

December 9: 10 units were purchased at $9.40 per unit.

December 11: 12 units were sold at $35 per unit.

December 15: 20 units were purchased at $10.15 per unit.

December 22: 18 units were sold at $35 per unit.

$51.75

$83.22

$41.30

$94.00

$50.75

19.Goods on consignment are goods shipped by their owner, called the consignee, to another party called the consignor.

True

False

20.If the seller is responsible for paying freight charges, then ownership of inventory passes when goods arrive at their destination.

True

False

21.Managers are able to make important decisions correctly using erroneous inventory balances because inventory errors are self-correcting and, as a result, are less serious.

True

False

22.An overstatement of ending inventory will cause an overstatement of assets and an understatement of equity on the balance sheet.

True

False

23.Three key variables determine the dollar value of inventory: (1) inventory quantity, (2) costs of inventory, and (3) cost flow assumption.

True

False

24.The assignment of costs to the cost of goods sold and to inventory under FIFO is the same for both the perpetual and periodic inventory systems.

rev: 10_21_2013_QC_37862

True

False

25.The conservatism constraint requires that when more than one estimate of the amounts that are to be received or paid in the future exist and these estimates are about equally likely, then the less optimistic amount is used.

True

False

26.A multiple-step income statement format shows detailed computations of net sales and other costs and expenses and reports subtotals for various classes of items.

True

False

27.A perpetual inventory system continually updates accounting records for inventory transactions.

True

False

28.Generally accepted accounting principles require companies to use a specific format for the financial statements.

True

False

29.The current period's ending inventory is:

The next period's beginning inventory.

The current period's cost of goods sold.

The prior period's beginning inventory.

The current period's net purchases.

The current period's beginning inventory.

30.Under the perpetual inventory system, the cost of merchandise purchased is accumulated in the Merchandise Inventory account.

True

False