acct ch6 receiveables

Some companies refer to "cost of goods sold" as

-cost of products sold -cost of merchandise sold-cost of sales

Which of the following companies would be most likely to utilize the specific identification method? Multiple choice question.

Adams Company produces one-of-a-kind products.

Because prices change over time, costs reported for these accounts tend to differ among inventory cost methods.

Cost of Goods Sold Inventory

Assuming that prices rise over time, which inventory cost flow assumption will result in the lowest cost of goods sold? Multiple choice question.

FIFO

Which of the following items may be classified as nonoperating revenues and expenses for a company that manufactures televisions?

Interest revenue Interest expense Gain from sale of land

Assuming that prices rise over time, which inventory cost flow assumption will result in the lowest pretax income?

LIFO

the __ cost flow assumption more realistically matches the current cost of inventory with current sales revenue.

LIFO

Gross Profit is

Net Sales Revenue minus Cost of Goods Sold.

Palmer Company's beginning inventory consists of 1,000 units at $1.00 per unit. During the year, the company purchases 5,000 units costing a total of $5,800. At the end of the accounting period, Palmer still has 1,000 units on hand. If Palmer uses the weighted average cost method, its cost of goods sold (rounded to the nearest dollar) will be

Reason: 5,000 x [(1,000 + 5,800)/6,000] = $5,667

Which of the following methods are not used for inventory costing? (Select all that apply.

Simple-average NIFO (Next-in first-out is not permitted)

The weighted average cost method assumes that cost of goods sold consists of

a mixture of all the goods available for sale.

Inventory not yet sold is classified as a(n) __ , in the __.

assest; balance sheet

Income tax expense may be disclosed either on the income statement or in the notes to the financial statements.(T/F)

false

Net sales revenue minus cost of goods sold is Multiple choice question.

gross profit

Combining operating income with non-operating revenues and expenses yields Multiple choice question.

income before income taxes

Peter Company, a produce distributer, always tries to sell its oldest produce first. Peter company

is allowed to use the FIFO, LIFO, or Weighted-average cost flow assumptions.

The FIFO inventory method assumes that units remaining in ending inventory are the __ units purchased. Note: this question is asking about ending inventory

last

On a multiple step income statement, the category of revenues and expenses reported immediately after operating income is referred to as __ revenues and expenses.

nonoperating

The FIFO method assumes that units sold are the __ units acquired

oldest

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

specific identification

The LIFO inventory method assumes that the units sold are

the most recent units purchased.

The LIFO inventory method assumes that the units that remain in ending inventory are

the oldest units in inventory.

The specific identification method (select all that apply):

would be beneficial to a company that makes fine jewelry matches each unit of inventory with its actual cost

True or false: The inventory cost flow assumption must match the physical flow of inventory units. True false question.

False Reason: For most companies, the physical flow resembles FIFO; however, LIFO and weighted-average may be utilized.

Which of the following items are included in calculating operating income? (Select all that apply.

General and administrative expenses Utility expense Cost of goods sold

The cost of goods not yet sold is recorded in the ______ account, whereas the cost of goods that are sold to customers is recorded in _____. Multiple choice question.

Inventory; Cost of Goods Sold

Which of the following is a correct interpretation of the information provided by the gross profit ratio?

It measures the amount by which the inventory sale exceeds its cost.

Which of the following methods are available for costing inventory? (Select all that apply.)

LIFO FIFO Specific identification Weighted-average

Bern Company has 100 units costing $200 in beginning inventory. During the year, the company purchases 900 additional units for $1,980. At the end of the year, 200 units remain unsold. If Bern Company utilizes the LIFO method, ending inventory will be

Reason: ($1,980/900 x 100) +$200 = $420

In a LIFO inventory system, inventory costs shown in the balance sheet may be distorted because they may represent costs

incurred several years earlier.

Janex Company manufactures refrigerators. Which of the following items is classified as nonoperating expense

interest expense

A multiple-step income statement reports multiple levels of

profit

Which of the following items are reported in operating income?

Revenues Advertising expenses Selling expenses

Bern Company has 100 units costing $200 in beginning inventory. During the year, the company purchases 900 additional units for $1,980. At the end of the year, 200 units remain unsold. If Bern Company utilizes the LIFO method, cost of goods sold will be

Reason: ($1,980/900 x 800) = $1,760

Adam Company has 100 units costing $300 in beginning inventory. During the year, the company purchases 900 units for a total cost of $2,880. At the end of the year, a physical count reveals that 200 units remain in ending inventory. If the company uses the FIFO method, the cost of ending inventory will be what? Note: this question is asking for the ending inventory value, not cost of goods sold

Reason: $2,880/900 x 200 = $640

How is income tax reported on a multiple-step income statement? Multiple choice question.

Separately after non-operating revenues and expenses (Reason: Income tax expense is reported after operating income.)