ACCT 2010 Test 3

Average Inventory

(Beginning Inventory + Ending Inventory) / 2

Depreciation Expense Per Unit

(cost-residual value)/useful life

straight line depreciation

(cost-residual value)/useful life

How is cost of goods sold classified in the financial statements?

As an expense

Capitalizing a cost involves increasing what type of account?

Asset

Ending Inventory

Beginning Inventory + Purchases - COGS

Inventory turnover

COGS / avg inventory

Smatter Corporations purchased land for a new building. Which of the following costs would not be included in the cost of the land?

Cost of a new parking lot constructed on the land

Which Statement about depreciation is false?

Depreciation should not be recorded in years in which the market value of the asset has increased.

Ravenna Candles recently purchased candle-holders for resale in its shops. Which of the following costs would be part of the cost of the candle-holder inventory?

Freight-In

COGS

Goods Available - Ending Inventory

Gross Profit Percentage

Gross Profit / Sales Revenue

Gross Proft

Gross Profit = Sales Revenue - COGS

When a company expenses the cost of maintenance for its heating and cooling system, that cost will appear on its

Income statement

The word market as used in "the lower of cost or market" generally means

Net realizable Value

An error understated Golden Flash Company's December 31st, 2018 ending inventory. What effect will this error have on net income for 2019?

Overstate it

Which inventory system maintains a running record of inventory on hand, purchased, and sold?

Perpetual

Which of the following is a measure if profitability?

Return on Assets

Which of the following items should be accounted for as a capital expenditure?

Taxes paid conjunction with the purchase of office equipment

When does the cost of Inventory become an expense?

When inventory is delivered to a customer

A Capital Expenditure

adds to an asset

Goods Available

beginning inventory + purchases

The sum of ending inventory and cost of goods sold is

cost of goods available

The depreciation method that does not initially use the residual value in depreciation calculations is the

double-declining balance method

In a Period of Rising Prices,

gross profit under FIFO will be higher than under LIFO