ACC practice problems Ch. 6

Company had aa $26,000 beginning inventory and a $29,000 ending inventory. Net sales were $160,000​; ​purchases, $80,000​; purchase returns and​ allowances, $8,000​; and freight​ in, $3,000. What is Wedge​'s gross profit percentage​ (rounded to the nearest​ percentage)? A. 55% B. 18% C. 45% D. 16%

A. 55%

Which statement is​ true? A.Application of the​ lower-of-cost-or-market rule often results in a lower inventory value. B.An error overstating ending inventory in 2016 will understate 2016 net income. C.When prices are​ rising, the inventory method that results in the lowest ending inventory value is FIFO. D.The inventory method that best matches current expense with current revenue is FIFO.

A.Application of the​ lower-of-cost-or-market rule often results in a lower inventory value.

Which statement is​ true? A.Gross profit is the excess of sales revenue over cost of goods sold. B.Purchase returns and allowances increase the net amount of purchases. C.The Sales account is used to record only sales on account. D.A service company purchases products from suppliers and then sells them.

A.Gross profit is the excess of sales revenue over cost of goods sold.

The ending inventory of Cape Harbor Co. is $46,000. If beginning inventory was $64,000 and goods available​ (cost of goods available for​ sale) totaled $117,000​, the cost of goods sold is A. $135000 B. $64000 C. $71000 D. $53000

C. $71000

Company had aa $26,000 beginning inventory and a $29,000 ending inventory. Net sales were $160,000​; ​purchases, $80,000​; purchase returns and​ allowances, $8,000​; and freight​ in, $3,000. Cost of goods sold for the period is A. $78000 B. $88000 C. $72000 D. $69000

C. $72000

Company had aa $26,000 beginning inventory and a $29,000 ending inventory. Net sales were $160,000​; ​purchases, $80,000​; purchase returns and​ allowances, $8,000​; and freight​ in, $3,000. What is Wedge​'s rate of inventory​ turnover? A. 2.9 times B. 5.5 times C. 2.6 times D. 2.5 times

C. 2.6 times

When applying the​ lower-of-cost-or-market rule to​ inventory, "market" generally means A.resale value. B.original​ cost, less physical deterioration. C.current replacement cost. D.original cost

C.current replacement cost.

Cost of goods sold will appear on which financial​ statement? A.statement of retained earnings B.balance sheet C.statement of cash flows D.income statement

D. income statement

During a period of rising​ prices, the inventory method that will yield the highest net income and asset value is A.LIFO. B.specific identification. C.average cost. D.FIFO

D.FIFO

How is inventory classified in the financial​ statements? A.As an expense B.As a contra account to Cost of Goods Sold C.As a revenue D.As a liability E.As an asset

E.As an asset