Accounting 200- exam 2 SIUE

Zephron Music purchased inventory for $5,200 and also paid a $320 freight bill. Zephron Music returned 30% of the goods to the seller and later took a 1% purchase discount. Assume Zephron Music uses a perpetual inventory system. What is the Zephron Music's final cost of inventory that it kept? (round your answer to the nearest whole number?)

$3924

Assume Shopping.com began April with 16 units of inventory that costs a total of $320. During April, Shopping..com purchased and sold goods as follows: Apr.8 Purchase 48 units @ $21 .14 Sale 40 units @ $42 .22 Purchase 32 units @ $23 .27 sale 48 units @ $42 Under the FIFO inventory costing method and the perpetual inventory system, how much is shopping.com's cost of goods sold for the sale on April 14th?

$824

Suppose Nimble's had costs of goods sold during the year of $260,000. Beginning merchandise inventory was $25,000, and ending merchandise inventory was $30,000. Determine Nimble's inventory turnover for the year. Round to the nearest hundredth.

9.45 times per year

Consistency Principle

A business should use the same accounting methods and procedures from period to period.

Other receivables

A miscellaneous category that includes any other type of receivable where there is a right to receive cash in the future.

Invoice

A seller's request for payment from the purchaser.

FOB shipping point

A situation in which the buyer takes title to the goods after the goods leave the seller's place of business

wholesaler

A type of merchandiser that buys goods from manufacturers and then sells them to retailers

retailer

A type of merchandiser that buys merchandise either from a manufacturer or a wholesaler and then sells those goods to customers.

Notes Receivable

A written promise to pay a specified amount of money at a particular future date.

M.J. Roberts Suppliers had merchandise inventory that costs $1,700. The market value of merchandise inventory is $1,100. What value should Roberts Supplies show on the balance sheet for merchandise inventory? Record the adjusting entry, if one is needed.

A. $1,100

Purchase allowance

An amount granted to the purchaser as an incentive to keep goods that are not "as ordered"

Which principle or concept states that businesses should use the same accounting methods and procedures from period to period?

C. Consistency

Which inventory costing method assigns to ending merchandise inventory the newest-- the most recent-- costs incurred during the period?

C. First in, first out (FIFO)

How should you record a capital expenditure?

Debit an asset

Which method almost always produces the most depreciation in the first year?

Double-Declining-balance

What is the order of the subtotals that appear on a multi-step income statement?

Gross profit, Operating income, total other revenues and expenses, net income

Specific Identification

Identifies exactly which inventory item was sold. Usually used for higher cost inventory.

Which inventory costing method results in the lowest net income during a period of rising inventory costs?

Last in, last out (LIFO)

Which of the following is most closely linked to accounting conservatism?

Lower-of-cost-or-market rule

The Journal entry for the purchase of inventory on account using the perpetual inventory system is

Merchandise Inventory xxx Accounts Payable xxx

A company machine cost $45,000 when new and has accumulated depreciation of $44,000. Suppose print and photo center sold the machine for $1,000. What is the result of this disposal transaction?

No gain or loss

The two main inventory accounting systems are the

Perpetual and periodic

Materiality Concept

Principle that states significant items must conform to GAAP

Conservatism

Principle whose foundation is to exercise caution in reporting financial statement items.

Disclosure Principle

Requires that a company report enough information for outsiders to make knowledgeable decisions

FOB destination refers to a situation where title to goods while in transit belong to the ___?

Seller

Net Sales Revenue

The amount a company has made on sales of merchandise inventory after returns, allowances, and discounts have been taken out.

At December 31 year-end, Connor Corporation has a $12,000 note receivable from a customer. Interest of 7% has accrued for 4 months on the note. What will Conners financial statements report for this situation?

The balance sheet will report the note receivable of the $12,000 and interest receivable of $280.

costs of goods sold

The cost of the merchandising inventory that the business has sold to customers.

Maturity Date

The date when the note receivable is due.

What company uses the perpetual inventory system?

The merchandise inventory account debited for purchases of goods that the company intends to resell to customers

Debtor

The party to a credit transaction who takes on an obligation/payable

creditor

The party who receives a receivable and will collect cash in the future.

Accounts Reveivable

The right to receive cash in the future from customers for goods sold or for services performed.

Last in, Last out (LIFO)

Threats the most recent/newest purchases as the first units sold.

First-In, First-Out (FIFO)

Treats the oldest inventory purchases as the first units sold.

At December 31, 2016, Stevenson Company overstated ending inventory by $36,000. How does this error affect cost of goods sold and net income for 2016?

Understates costs of goods sold and overstates net income?

Purchase Discount

a discount that businesses offer to purchasers as an incentive for early payment

FOB destination

a situation in which the buyer takes ownership (title) at the delivery destination point.

Which account does a merchandiser use that a service company does not? a- Sales Revenue b- Costs of Goods Sold c- Merchandise Inventory d- All of the above

d- All of the above

Credit terms

the payment terms of purchase or sale as stated on the invoice

Which of the following accounts would be closed at the end of the year using the perpetual inventory system?

Costs of Goods Sold

Suppose Daves discounts merchandise Inventory account showed a balance of $8,000 before the year-end adjustments. The physical count of goods on hand totaled $7,400. Dave uses a perpetual inventory system. To adjust the accounts which entry would the company make?

COGS 600 Merchandise Inventory 600