Take Test: Unit V Assessment Test Information Description Instructions Multiple Attempts Not allowed. This test can only be taken once. Force Completion This test can be saved and resumed later.

Take Test: Unit V Assessment

Test Information Description Instructions Multiple Attempts Not allowed. This test can only be taken once. Force Completion This test can be saved and resumed later.

Assessment Instructions

QUESTION 1

Which of the following is not recorded in a modern perpetual inventory system? Units purchased and cost amount Units sold and sales and cost amounts Customer account numbers and balances owed from the sale of merchandise inventory The quantity of merchandise inventory on hand and its cost

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QUESTION 2

Which of the following statements is FALSE? In a perpetual inventory system, the “cash register” at the store is a computer terminal that records sales and updates inventory records. Even in a perpetual inventory system, a business must count inventory at least one a year. Restaurants and small retail stores often use the periodic inventory system. In a periodic inventory system, merchandise inventory and purchasing systems are integrated with the records for Accounts Receivable and Sales Revenue.

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QUESTION 3

The term “freight out” refers to __________. transportation costs on purchases cost of inventory purchased costs that are not actually paid in cash transportation costs on sales

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Question Completion

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QUESTION 4

If goods are sold on terms free on board (FOB) shipping point, the __________. seller normally pays the transportation costs buyer normally pays the transportation costs buyer and the seller split the transportation costs shipping company bears the transportation cost

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QUESTION 5

Changing from the LIFO (Last-In, First-Out) to the specific identification method of valuing inventory ignores the principle of __________.

conservatism consistency disclosure materiality

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QUESTION 6

A company that uses the perpetual inventory system purchases inventory for $61,000 on account, with terms of 3/10, n/30. Which of the following is the journal entry to record the payment made within 10 days?

A debit to Accounts Payable for $61,000, a credit to Cash for $59,170, and a debit to Merchandise Inventory for $1,830 A debit to Accounts Payable for $61,000, a credit to Merchandise Inventory for $1,830, and a credit to Cash for $59,170 A debit to Merchandise Inventory for $1,830, a debit to Accounts Payable for $61,000, and a credit to Cash for $62,830 A debit to Accounts Payable for $59,170, a debit to Merchandise Inventory for $1,830, and a credit to Cash for $61,000

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QUESTION 7

What does “2/10” mean, with respect to “credit terms of 2/10, n/30”? A discount of 2 percent will be allowed if the invoice is paid within 10 days of the invoice date. Interest of 2 percent will be charged if the invoice is paid after 10 days from the date on the invoice. A discount of 10 percent will be allowed if the invoice is paid within two days of the invoice date. Interest of 10 percent will be charged if invoice is paid after two days.

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QUESTION 8

Which of the following is subtracted from net sales revenue to arrive at gross profit on a multi-step income statement?

Cost of goods available for sale

Cost of goods sold

Sales discounts and sales returns and allowances

Operating expenses

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QUESTION 9

Which of the following is true of freight in? It is an administrative expense. It is a selling expense. It is the transportation cost on purchases. It is the transportation cost on sales.

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QUESTION 10

A company decides to ignore a very small error in its inventory balance. This is an example of the application of the __________.

conservatism materiality concept disclosure principle consistency principle

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QUESTION 11

A company that uses the perpetual inventory system purchased 500 pallets of industrial soap for $10,000 and paid $750 for the freight-in. The company sold the whole lot to a supermarket chain for $14,000 on account. The company uses the specific-identification method of inventory costing. Which of the following entries correctly records the cost of goods sold?

Cost of Goods Sold 10,750 Merchandise Inventory 10,750

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Merchandise Inventory 10,750 Cost of Goods Sold 10,750

Cost of Goods Sold 10,000 Sales Revenue 10,000

Cost of Goods Sold 10,000 Merchandise Inventory 10,000

QUESTION 12

Which of the following is the correct formula to calculate inventory turnover?

Inventory turnover = Cost of goods sold / Average merchandise inventory

Inventory turnover = Cost of goods sold × Average merchandise inventory

Inventory turnover = Cost of goods sold + Average merchandise inventory

Inventory turnover = Cost of goods sold – Average merchandise inventory

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QUESTION 13

Misty, Inc. had 24,000 units of ending inventory that were recorded at the cost of $8.00 per unit using the FIFO method. The current replacement cost is $4.50 per unit. Which of the following amounts would be reported as Ending Merchandise Inventory on the balance sheet using the lower-of-cost-or-market rule?

$192,000

$300,000

$216,000

$108,000

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QUESTION 14

A company purchased 100 units for $30 each on January 31. It purchased 400 units for $20 each on February 28. It sold a total of 470 units for $110 each from March 1 through December 31. If the company uses the last-in, first-out inventory costing method, calculate the amount of ending inventory on December 31. (Assume that the company uses a perpetual inventory system.)

$600

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$2,400

$900

$30

QUESTION 15

Which of the following inventory costing methods uses the costs of the oldest purchases to calculate the value of the ending inventory?

Specific identification

Weighted-average

Last-in, first-out

First-in, first-out

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QUESTION 16

Which of the following is the correct formula to calculate weighted-average unit cost for merchandise inventory?

Weighted-average unit cost = Cost of goods available for sale + Number of units available

Weighted-average unit cost = Cost of goods available for sale × Number of units available

Weighted-average unit cost = Cost of goods available for sale – Number of units available

Weighted-average unit cost = Cost of goods available for sale / Number of units available

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QUESTION 17

A company purchased 400 units for $20 each on January 31. It purchased 520 units for $26 each on February 28. It sold a total of 560 units for $40 each from March 1 through December 31. What is the amount of ending inventory on December 31 if the company uses the first-in, first-out (FIFO) inventory costing method? (Assume that the company uses a perpetual inventory system.)

$9,360 $4,960 $7,200 $2,240

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QUESTION 18

A company that uses the perpetual inventory system sold goods to a customer on account for $4,000. The cost of the goods sold was $2,000. Which of the following journal entries correctly records this transaction?

Cost of Goods Sold 4,000 Sales Revenue 4,000

Merchandise Inventory 4,000 Costs of Goods Sold 4,000

Accounts Receivable 4,000 Cash 4,000

Cost of Goods Sold 2,000 Merchandise Inventory 2,000

Accounts Receivable 4,000 Sales Revenue 4,000

Cost of Goods Sold 2,000 Merchandise Inventory 2,000

5 points Save Answer

QUESTION 19

A company that uses the perpetual inventory system sold goods for $2,500 to a customer on account. The company had purchased the inventory for $500. Which of the following journal entries correctly records the cost of goods sold?

Cost of Goods Sold 500 Sales Revenue 500

Merchandise Inventory 500 Cost of Goods Sold 500

Cost of Goods Sold 500 Merchandise Inventory 500

Accounts Receivable 500 Sales Revenue 500

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QUESTION 20

Under the weighted-average method for inventory costing, the cost per unit is determined by __________.

dividing the cost of goods available for sale by the number of units available

dividing the cost of goods available for sale by the number of units in beginning inventory

multiplying the number of units purchased with the weighted-average cost

multiplying the cost of goods available for sale by the ending weighted-average cost of the previous accounting period

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