Accounting 1 Final
Use LIFO to determine ending inventory: 2 @$25 3@ $30 2@ $27
2 @ $25
Calculate ending merchandise inventory at 12/31/18 using the lower of cost or market rule
2975
Inventory costing methods include
All the above
In a periodic inventory system, How is cost of good's sold calculated?
Opening Inventory+Cost of Purchases-closing inventory
This is an inventory where you count all of the product you have on hand
Physical Inventory
Unearned revenue is revenue that
The business has collected in cash, but not yet earned
A widely used method of allocating merchandise cost that assumes the first merchandise bought is the first merchandise sold is called the first-in, first-out method.
True
After adjustments are made to the merchandise inventory account and posting is completed, the income summary account will reflect both the amount of beginning and ending inventory.
True
Both the debit and credit amounts in the merchandise inventory account at the end of an accounting period are used to calculate the cost of goods sold.
True
Cash received in advance for performing a service or delivering a product is called unearned revenue.
True
Errors in the ending inventory have a direct effect on net income for the period.
True
First-in, first-out costing assigns the most recent purchase cost to the ending inventory shown on the balance sheet.
True
If the ending inventory is overstated for any reason, net income will also be overstated.
True
Last-in, first-out costing matches the most current cost of items purchased against the current sales revenue.
True
Merchandise Inventory has a normal debit balance.
True
The amount of inventory on hand is determined by physically counting the goods on hand and determining the cost of those goods.
True
The credit to the merchandise inventory account when making adjustments at the end of the accounting period will be the same amount as was debited at the end of the previous accounting period.
True
The loss due to write-down of inventory should be reported on the income statement as an expense.
True
The merchandise inventory account is never debited or credited during the year using the periodic method.
True
Under the accrual basis of accounting, revenue is recorded when earned regardless of when cash is received.
True
Understating the ending inventory causes the cost of goods sold to be overstated and net income to be understated.
True
Unearned Revenue is a liability account.
True
Revenue is said to be earned when the business has
Delivered a good or service to the customer
In a periodic inventory system, inventory is....
Determined at the end of each fiscal period
When unearned revenue is earned, do you
Dr. Unearned revenue Cr Revenue
In the Gross Profit Method of estimating inventory, Net Sales minus the estimated gross profits gives you
Estimated cost of goods sold
A method of allocating merchandise costs that assumes the sales in the period were made from the most recently purchased merchandise and the earliest merchandise bought remain in inventory is called the first-in, first-out method.
False
A method of assigning merchandise cost that requires that each item sold and each item remaining in inventory be separately identified with respect to its purchase cost is called last-in, first-out.
False
The term "LIFO" relates to the merchandise in inventory at the end of the accounting period, not to the merchandise sold during the period
False
Unearned Revenue has a normal debit balance
False
When prices are rising, net income calculated by using the first-in, first-out method is smaller than the amount determined from using either the last-in, first-out or the weighted-average method.
False
Perpetual inventory system
Is updated on an on-going basis
The main important difference between FIFO and LIFO are
LIFO sells new purchases first and FIFO sells them last
Unearned revenue is an example of an
Liability
The accounts affected by inventory adjustments
Merchandise Inventory and Income Summary