Accounting Test #2 (Section 6)

Crane Bookstore had 450 units on hand at January 1, costing $10 each. Purchases and sales during the month of January were as follows: Date Purchases Sales Jan. 14 350 @ $13 17 200 @ $8 25 200 @ $12 29 200 @ $15 Crane does not maintain perpetual inventory records. According to a physical count, 300 units were on hand at January 31.The cost of the inventory at January 31, under the FIFO method is: $3600. $3000. $2400. $3200.

$3200.

Which of the following should be included in the physical inventory of a company? Goods held on consignment from another company. Goods in transit to another company shipped FOB shipping point. Goods in transit from another company shipped FOB shipping point. Both b and c above.

Goods in transit from another company shipped FOB shipping point.

As a result of a thorough physical inventory, Coronado Company determined that it had inventory worth $319600 at December 31, 2020. This count did not take into consideration the following facts: Walker Consignment currently has goods worth $48000 on its sales floor that belong to Coronado but are being sold on consignment by Walker. The selling price of these goods is $74400. Coronado purchased $22500 of goods that were shipped on December 27, FOB destination, that will be received by Coronado on January 3. Determine the correct amount of inventory that Coronado should report. $367600. $390100. $342100. $319600.

Inventory on hand + Inventory out on consignment = Correct amount of investment$319600 + $48000 = $367600.

Which of the following is NOT a common cost flow assumption used in costing inventory? Last-in, first-out Average cost First-in, first-out

Middle-in, first-out

A company just starting in business purchased three merchandise inventory items at the following prices. First purchase $59; Second purchase $69; Third purchase $66. If the company sold two units for a total of $204 and used FIFO costing, the gross profit for the period would be $75. $76. $79. $69.

Sales revenue - (First purchase cost + Second purchase cost) = Gross profit$204 - ($59 + $69) = $76.

Which one of the following inventory methods is often impractical to use? LIFO Average cost FIFO Specific identification

Specific identification

A company purchased inventory as follows: 100 units at $3.00 400 units at $8.00 The average unit cost for inventory is $3.50. $3.00. $8.00. $7.00.

Total cost of units available for sale ÷ No. units available for sale = Average cost per unit[(100 × $3.00) + (400 × $8.00)] ÷ 500 = $7.00.

Cost of goods sold is computed from the following equation: sales - cost of goods purchased + beginning inventory - ending inventory. beginning inventory - cost of goods purchased + ending inventory. sales + gross profit - ending inventory + beginning inventory. beginning inventory + cost of goods purchased - ending inventory.

beginning inventory + cost of goods purchased - ending inventory.

Freight terms of FOB shipping point mean that the buyer must bear the freight costs. goods are placed free on board at the buyer's place of business. seller must bear the freight costs. seller must debit freight out.

buyer must bear the freight costs.

Under a consignment arrangement, the consigned goods are included in the inventory of the consignee. consignor has ownership until goods are shipped to the consignee. consignee has ownership when the goods are in the consignee's possession. consignor has ownership until goods are sold to a customer.

consignor has ownership until goods are sold to a customer.

Beginning inventory plus the cost of goods purchased equals net purchases. total goods purchased. cost of goods available for sale. cost of goods sold.

cost of goods available for sale.

The cost of goods available for sale is allocated between beginning inventory and ending inventory. beginning inventory and cost of goods purchased. ending inventory and cost of goods sold. beginning inventory and cost of goods on hand.

ending inventory and cost of goods sold.

The term "FOB" denotes free only (to) buyer. freight charge on buyer. free on board. freight on board.

free on board

The factor which determines whether or not goods should be included in a physical count of inventory is whether or not the purchase price has been paid. legal title. management's judgment. physical possession.

legal title

Manufacturers usually classify inventory into all the following general categories except work in process. raw materials. merchandise inventory. finished goods.

merchandise inventory.

Inventory is reported as a current asset on the balance sheet. reported under the classification of Property, Plant, and Equipment on the balance sheet. often reported as a miscellaneous expense on the income statement. generally valued at the price for which the goods can be sold.

reported as a current asset on the balance sheet.

The LIFO inventory method assumes that the cost of the latest units purchased are not allocated to cost of goods sold or ending inventory. the first to be allocated to ending inventory. the first to be allocated to cost of goods sold. the last to be allocated to cost of goods sold.

the first to be allocated to cost of goods sold.

If goods in transit are shipped FOB destination the buyer has legal title to the goods until they are delivered. the transportation company has legal title to the goods while the goods are in transit. the seller has legal title to the goods until they are delivered. no one has legal title to the goods until they are delivered.

the seller has legal title to the goods until they are delivered.