Question 1

LIFO reflects most recent costs for inventory on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 2

Given the following accounts:
  Indicate the account(s)to be debited and credited to record the following transactions.
-Sold merchandise on account. - Perpetual
Debit ________ & ________ Credit ________ & ________

Accepted Answer

Debit 2 & ...

Question 3

Hawkeye Tack uses a periodic inventory system. Hawkeye Tack sold 80 sweaters during September. Other data for September includes:  Cost of goods sold under the FIFO method is:

Accepted Answer

A)  $800.
B)  $2,406.
C)  $1,024.
D)  $2,182.

Question 4

If goods are shipped FOB destination point by the seller, when does title pass?

Accepted Answer

A)  When the goods arrive at the buyer's location
B)  When they leave the seller's location
C)  When they are signed for
D)  None of the above

Question 5

If the ending inventory is overstated in period 1:

Accepted Answer

A)  beginning inventory in period 2 is overstated.
B)  goods available for sale in period 2 are overstated.
C)  cost of goods sold in period 2 is overstated.
D)  All of these answers are correct.

Question 6

The retail method is used by many merchandising businesses to estimate the amount of inventory.

Accepted Answer

A) True 
 B)False

Question 7

Under the ________ inventory system, no entries are made to the merchandise inventory or cost of goods sold account during the year.

Accepted Answer

The answer of Under the ________ inventory system, no entries...

Question 8

The advantage of the weighted-average method is:

Accepted Answer

A)  an equal cost is assigned to each unit so net income does not fluctuate as much as with other methods.
B)  flow of goods and flow of costs are the same.
C)  it matches current selling prices and current costs.
D)  old costs are matched against current income.

Question 9

In a perpetual inventory system:

Accepted Answer

A)  Merchandise Inventory is debited every time inventory is purchased.
B)  Cost of Goods Sold is debited every time inventory is sold.
C)  a physical inventory is taken at least annually.
D)  all of the above take place.

Question 10

The company returned $200 of damaged merchandise. The entry to record this under the periodic inventory method is:

Accepted Answer

A)  debit Merchandise Inventory $200; credit Accounts Payable $200.
B)  debit Cost of Goods Sold $200; credit Accounts Payable $200.
C)  debit Accounts Payable $200; credit Purchases Returns and Allowances $200.
D)  debit Accounts Payable $200; credit Merchandise Inventory $200.

Question 11

An incorrect inventory figure will affect only the income statement.

Accepted Answer

A) True 
 B)False

Question 12

Under the average-cost method, costs are matched with individual sale items.

Accepted Answer

A) True 
 B)False

Question 13

Calculate the cost of goods sold under each of the following methods given the information below about purchases and sales during the year. Assume a periodic inventory system.
  Sales for April: 115 units
a)________ FIFO
b)________ LIFO
c)________ Weighted-average

Accepted Answer

a)FIFO (20 × $30)+ (70 × $32)+...

Question 14

Under the perpetual inventory system, in addition to making the entry to record a return of goods from a customer, a company would:

Accepted Answer

A)  debit Merchandise Inventory and credit Cost of Goods Sold.
B)  debit Cost of Goods Sold and credit Merchandise Inventory.
C)  debit Sales and credit Cost of Goods Sold.
D)  debit Purchases and credit Cost of Goods Sold.

Question 15

The journal entry to record a sale of inventory under the perpetual system includes:

Accepted Answer

A)  a debit to Cost of Goods Sold and a credit to Merchandise Inventory.
B)  a debit to Cost of Goods Sold and a debit to Merchandise Inventory.
C)  a debit to Accounts Receivable or Cash and a credit to Sales.
D)  both A and C.

Question 16

Under the ________ inventory system, cost of goods sold and the amount of merchandise inventory on hand are updated when merchandise is bought and sold.

Accepted Answer

The answer of Under the ________ inventory system, cost of...

Question 17

The perpetual inventory system is a system which:

Accepted Answer

A)  updates inventory continuously.
B)  uses either FIFO, LIFO, weighted-average, or specific invoice method.
C)  never needs a physical inventory taken.
D)  both A and B.

Question 18

Under the perpetual inventory method, purchase returns are credited to ________.

Accepted Answer

merchandis...

Question 19

FIFO provides an up-to-date ending inventory on the balance sheet because it uses the latest purchases to calculate ending inventory.

Accepted Answer

A) True 
 B)False

Question 20

Inventory becomes part of Cost of Goods Sold when a company:

Accepted Answer

A)  receives the inventory.
B)  purchases the inventory.
C)  sells the inventory.
D)  makes payment on the inventory.

Exam 15: Accounting for Merchandise Inventory

Given the following accounts: Indicate the account(s)to be debited and credited to record the following transactions. -Sold merchandise on account. - Perpetual Debit ________ & ________ Credit ________ & ________

Correct AnswerverifiedDebit 2 & ...View AnswerShow Answer

FIFO provides an up-to-date ending inventory on the balance sheet because it uses the latest purchases to calculate ending inventory.

Correct AnswerverifiedShow Answer

Under the ________ inventory system, cost of goods sold and the amount of merchandise inventory on hand are updated when merchandise is bought and sold.

Correct AnswerverifiedShow Answer

The journal entry to record a sale of inventory under the perpetual system includes:

Correct AnswerverifiedShow Answer

The advantage of the weighted-average method is:

Correct AnswerverifiedShow Answer

The perpetual inventory system is a system which:

Correct AnswerverifiedShow Answer

Under the ________ inventory system, no entries are made to the merchandise inventory or cost of goods sold account during the year.

Correct AnswerverifiedShow Answer

If goods are shipped FOB destination point by the seller, when does title pass?

Correct AnswerverifiedShow Answer

The retail method is used by many merchandising businesses to estimate the amount of inventory.

Correct AnswerverifiedShow Answer

Under the average-cost method, costs are matched with individual sale items.

Correct AnswerverifiedShow Answer

In a perpetual inventory system:

Correct AnswerverifiedShow Answer

LIFO reflects most recent costs for inventory on the balance sheet.

Correct AnswerverifiedShow Answer

An incorrect inventory figure will affect only the income statement.

Correct AnswerverifiedShow Answer

Under the perpetual inventory method, purchase returns are credited to ________.

Correct Answerverifiedmerchandis...View AnswerShow Answer

Inventory becomes part of Cost of Goods Sold when a company:

Correct AnswerverifiedShow Answer

If the ending inventory is overstated in period 1:

Correct AnswerverifiedShow Answer

Hawkeye Tack uses a periodic inventory system. Hawkeye Tack sold 80 sweaters during September. Other data for September includes: Cost of goods sold under the FIFO method is:

Correct AnswerverifiedShow Answer

Calculate the cost of goods sold under each of the following methods given the information below about purchases and sales during the year. Assume a periodic inventory system. Sales for April: 115 units a)________ FIFO b)________ LIFO c)________ Weighted-average

Correct Answerverifieda)FIFO (20 × $30)+ (70 × $32)+...View AnswerShow Answer

Under the perpetual inventory system, in addition to making the entry to record a return of goods from a customer, a company would:

Correct AnswerverifiedShow Answer

The company returned $200 of damaged merchandise. The entry to record this under the periodic inventory method is:

Correct AnswerverifiedShow Answer

Given the following accounts: Indicate the account(s)to be debited and credited to record the following transactions. -Sold merchandise on account. - Perpetual Debit & Credit &

Correct Answer
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Debit 2 & ...
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merchandis...
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Calculate the cost of goods sold under each of the following methods given the information below about purchases and sales during the year. Assume a periodic inventory system. Sales for April: 115 units a) FIFO b) LIFO c) Weighted-average

Correct Answer
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a)FIFO (20 × $30)+ (70 × $32)+...
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Correct Answer
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