ACC 557 Week 5 Ch 5 & 6 Quiz

ACC 557 Week 5 Ch 5 & 6 Quiz

Week 5 Quiz, Ch 5 & 6

 

Multiple Choice Question 178

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In a perpetual inventory system, a return of defective merchandise by a purchaser is recorded by crediting

 

 

Purchases.

 

 

Purchase Allowance.

 

 

Purchase Returns.

 

 

Inventory.

 

Multiple Choice Question 127

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Gross profit does not appear

 

 

to be relevant in analyzing the operation of a merchandiser.

 

 

on a multiple-step income statement.

 

 

on a single-step income statement.

 

 

on the income statement if the periodic inventory system is used because it cannot be calculated.

 

IFRS Multiple Choice Question 250

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Under GAAP, companies generally classify income statement items by

 

 

nature or function.

 

 

date incurred.

 

 

function.

 

nature.

 

 

 

Multiple Choice Question 154

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During August, 2013, Baxter's Supply Store generated revenues of $30,000. The company's expenses were as follows: cost of goods sold of $18,000 and operating expenses of $2,000. The company also had rent revenue of $500 and a gain on the sale of a delivery truck of $1,000.

Baxter's operating income for the month of August, 2013 is

 

 

$10,500.

 

 

$11,500.

 

 

$12,000.

 

 

$10,000.

 

Multiple Choice Question 177

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Kate Company purchased inventory from Phoebe Company. The shipping costs were $500 and the terms of the shipment were FOB shipping point. Kate would have the following entry regarding the shipping charges:

 

 

Inventory

 

500

 

 

 

Cash

 

 

 

500

      

 

 

Freight-out

 

500

 

 

 

Cash

 

 

 

500

      

 

 

There is no entry on Kate's books for this transaction.

 

 

Freight Expense

 

500

 

 

 

Cash

 

 

 

500

      

 

IFRS Multiple Choice Question 254

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For the income statement, IFRS requires

 

 

single-step approach or multiple-step approach.

 

 

no specific income statement approach.

 

 

multiple-step approach.

 

 

single-step approach.

 

Multiple Choice Question 99

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A credit sale of $2,700 is made on July 15, terms 2/10, n/30, on which a return of $150 is granted on July 18. What amount is received as payment in full on July 24?

 

 

$2,499

 

 

$2,700

 

 

$2,646

 

 

$2,550

 

Multiple Choice Question 105

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Romanoff Industries had the following inventory transactions occur during 2013:

    

Units

 

Cost/unit

2/1/13

 

Purchase

 

18

 

$45

3/14/13

 

Purchase

 

31

 

$47

5/1/13

 

Purchase

 

22

 

$49


The company sold 50 units at $70 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company’s after-tax income using FIFO? (rounded to whole dollars)

 

$829

 

 

$1,184

 

 

$774

 

 

$1,106

 

 

Multiple Choice Question 97

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Netta Shutters has the following inventory information.

Nov. 1

 

Inventory

 

15 units @ $8.00

8

 

Purchase

 

60 units @ $8.30

17

 

Purchase

 

30 units @ $8.40

25

 

Purchase

 

45 units @ $8.80


A physical count of merchandise inventory on November 30 reveals that there are 45 units on hand. Assume a periodic inventory system is used. Ending inventory under FIFO is

 

$369.

 

 

$396.

 

 

$870.

 

 

$897.

 

Multiple Choice Question 76

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Which of the following statements is correct with respect to inventories?

 

The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold.

 

 

It is generally good business management to sell the most recently acquired goods first.

 

 

Under FIFO, the ending inventory is based on the latest units purchased.

 

 

FIFO seldom coincides with the actual physical flow of inventory.

 

Multiple Choice Question 133

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On July 31, Tractor Supplies sold merchandise to J. Robson on account. The sales price was $8,400, and the cost of goods sold was $6,300. The sales revenue was recorded immediately, but the entry recording the cost of goods sold was dated August 2. As a result, net income for July was

 

not affected, but the net income for August is understated.

 

 

overstated by $8,400.

 

 

overstated by $6,300.

 

 

overstated by $2,100.

 

IFRS Multiple Choice Question 229

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The major IFRS requirements related to accounting for and reporting inventories are

 

the same as GAAP with a couple of exceptions.

 

 

completely different fom GAAP.

 

 

not comparable to GAAP.

 

 

the same as GAAP.

 

Multiple Choice Question 81

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Effie Company uses a periodic inventory system. Details for the inventory account for the month of January, 2013 are as follows:

  

                    Units

 

                    Per unit price

 

                    Total

Balance, 1/1/13

 

                    200

 

                    $5.00

 

$1,000

Purchase, 1/15/13

 

                    100

 

                      5.30

 

530

Purchase, 1/28/13

 

                    100

 

                      5.50

 

550


An end of the month (1/31/13) inventory showed that 140 units were on hand. How many units did the company sell during January, 2013?

 

60

 

 

140

 

 

260

 

 

200

 

Multiple Choice Question 158

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Over the last few years, Mohawk Industries has operated with a gross profit rate of 35%. On January 1, 2012, the company had inventory on hand with a cost of $750,000. Purchases of merchandise during January amounted to $215,000, and sales for the month were $480,000. Using the gross profit method, what is the estimated inventory at January 31

 

$653,000.

 

 

$480,000.

 

 

$169,750.

 

 

$627,250.

 

Multiple Choice Question 84

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Effie Company uses a periodic inventory system. Details for the inventory account for the month of January, 2013 are as follows:

  

                    Units

 

                    Per unit price

 

                    Total

Balance, 1/1/13

 

                    200

 

                    $5.00

 

$1,000

Purchase, 1/15/13

 

                    100

 

                      5.30

 

530

Purchase, 1/28/13

 

                    100

 

                      5.50

 

550


An end of the month (1/31/13) inventory showed that 140 units were on hand. If the company uses FIFO and sells the units for $10 each, what is the gross profit for the month?

 

$1,838

 

 

$1,900

 

 

$1,220

 

 

$1,282

 

 

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