Accounting 251 exam 2

Beginning inventory is $40,000. Purchases of inventory during the year are $200,000. Ending inventory is $100,000. What is cost of goods sold?

$140,000

Baker Fine Foods has beginning inventory for the year of $12,000. During the year, Baker purchases inventory for $150,000 and ends the year with $20,000 of inventory. Baker will report cost of goods sold equal to:

$142,000

Ravens Inc. has net sales of $200,000, cost of goods sold of $120,000, selling expenses of $6,000, and nonoperating expenses of $2,000. What is the company's gross profit?

$80,000

The primary reason for the popularity of LIFO is that it gives:

A lower income tax obligation when inventory costs are rising.

Cost of Goods Sold is:

An expense account.

The cost of unsold inventory at the end of the year is classified as a(n) ______ in the ______.

Assets; Balance Sheet

Cost of goods sold equals:

Beginning inventory + net purchases − ending inventory.

Gross profit is calculated as net sales minus:

Cost of goods sold.

The cost of the goods that a company sold during a period is shown in its financial statements as ___________ and the cost of the goods that a company still has on hand at the end of the year is shown in the financial statements as ____________.

Cost of goods sold; inventory

Good Inc., sold inventory for $1,200 that was purchased for $700. Good records which of the following when it sells inventory using a perpetual inventory system?

Debit Cost of Goods Sold $700; credit Inventory $700.

In a perpetual inventory system, the entry at the time of a sale to record the cost of the inventory sold includes a:

Debit to Cost of Goods Sold.

Using a perpetual inventory systems, the sale of inventory on account is recorded with a:

Debit to Cost of Goods Sold. Credit to Sales Revenue. Credit to Inventory.

The cost of inventory sold during the current year classified as a(n) ______ in the ______.

Expense; Income statement

The choice of inventory cost flow assumptions affects which of the following amounts?

Gross profit. Inventory. Cost of goods sold.

One of the major differences between service companies and retail or manufacturing companies is that retailers and manufacturers must account for:

Inventory.

The type of income statement that classifies items as operating and nonoperating is the ______ income statement.

Multiple-step

The inventory costing method that matches each unit of inventory with its actual cost is referred to as the _____ method.

Specific identification

In a perpetual inventory system, the purchase of inventory is debited to

inventory

The type of income statement that reports a series of subtotals such as gross profit, operating income, and income before taxes is a ______ income statement.

multiple-step

the following information pertains to Julia & Company: March 1 Beginning inventory = 30 units @ $5 March 3 Purchased 15 units @ $4 March 9 Sold 25 units @ $8 What is the ending inventory balance for Julia & Company assuming that it uses FIFO?

$85

Using a perpetual inventory system, the purchase of inventory on account is recorded with a:

Debit to Inventory.

Using a perpetual inventory system, the entry to record the return of inventory previously purchased on account includes a:

Debt to Accounts Payable

The inventory turnover ratio measures:

The times per period the average inventory balance is sold

The inventory turnover ratio is measured as:

Cost of goods sold divided by average inventory.

Tyler Toys has beginning inventory for the year of $18,000. During the year, Tyler purchases inventory for $230,000 and has cost of goods sold equal to $233,000. Tyler's ending inventory equals:

$15,000

Martha Inc.'s sales equal $60,000 and cost of goods sold equals $20,000. Its beginning inventory was $1,600 and its ending inventory is $2,400. Martha's inventory turnover ratio equals:

10 times

Beginning inventory is $30,000. Purchases of inventory during the year are $50,000. Cost of goods sold is $60,000. What is ending inventory?

20,000

In a period when inventory costs are rising, the inventory method that most likely results in the highest ending inventory is:

FIFO

If A sells to B, and B obtains title while goods are in transit, the goods were shipped _______. If C sells to D, and C maintains title until the goods arrive at D's door then the goods were shipped _______.

FOB shipping point; FOB destination

The gross profit ratio measures:

The amount by which the sale of inventory exceeds its cost per dollar of sales

The balance of the Cost of Goods Sold account at the end of the year represents:

The cost of inventory sold in the current year

Merchandise sold FOB destination indicates that:

The seller holds title until the merchandise is received at the buyer's location.

Merchandise sold FOB shipping point indicates that:

The seller transfers title to the buyer once the merchandise is shipped.