ACCT 209 exam two

If a company uses FIFO and prices are rising, large purchases of inventory near the end of the year will a. decrease gross profit b. increase COGS c. decrease amount of income taxes paid d. increase value assigned to Ending Inventory e. none of the above

D

Purchase discounts should be: a. added to the price of merchandise sold b. subtracted from the price of merchandise sold c. added to the cost of merchandise purchased d. subtracted from the cost of merchandise purchased e. none of the above

D

The sales returns and allowances account is classified as a. an asset account b. a contra asset account c. an expense account d. a contra revenue account

D

If a company uses LIFO and prices are rising, large purchases of inventory near the end of the year will a. increase gross profit b. increase the COGS c. decrease the amount of income taxes paid d. have no effect on the amount of COGS e. both b and c

E

If a company uses LIFO, large purchases of inventory near the end of the year will a. decrease gross profit b. increase COGS c. decrease amount of income taxes paid d. all of the above e. none of the above

E

which method carries the value of ending inventory at the most current values

FIFO

Which method provides for better matching of COGS with current sales values?

LIFO

which method is most accurate

Specific identification

In a perpetual inventory system: a. the purchases account is closed at the end of the period b. the inventory loss can be determined c. an adjusting entry is required to record COGS d. two or more of the above e. none of the above

B

a disadvantage of the periodic inventory method is that: a. physical counts of inventory are not taken b. COGS may include lost or stolen inventory c. two journal entries are required when inventory is sold and delivered d. the company must use LIFO to determine COGS e. none of the above

B