Accounting Ch.6
which of the following transactions would not result in an adjustment to the inventory account under a perpetual inventory system?
Receipt of payment from a customer within the discount period
Company selects fife method. Prices will be max in a period of:
Rising Prices
FOB Destination
Seller
Which method results in a more realistic amount for income because it matches the most current cost against revenue?
LIFO
Which purchase prices are rising, which of the fooling statements is true?
LIFO produces a higher cost of goods sold than FIFO
Market Value has declined below cost, which method compass with GAAP?
Lower of Cost or market
Transportation is a:
Net Purchase
Briggs company purchases $15,000 of inventory on credit with credit terms 2/10 n30. Briggs paid for the purchase within the discount period. How much did Briggs pay for the inventory?
$14,700
If beginning inventory is $20,000, purchases are $185,000, and ending envoy is $30,000 what is cost of goods sold as detained by the cost of goods sold model?
$175,000
U-Save automotive group purchased 10 vehicles during the current month. 2 trucks were purchased for $20,000 each, 2 SUV's for $31,000 each and 6 hybrids for $27,000 each. He sells 5 hybrids and 2 trucks. what is the ending inventory?
$89,000
TR of 8 times, days in ratio
365/8 = 45.625
reports net income of $95,000, overstates by $5,000. What is effected?
Assets & Equity overstated by $5,000 on balance sheet expenses understated by $5,000 on Income Statement Net Income overstated by $5,000
Effect when record purchase of merchandise on account
Assets and Liabilities increase
When the amount assigned to ending inventory is incorrect:
Balance sheet & Income statement are affected
FOB shipping
Buyer
Company understates inventory at end of period, what effects on COGS & N/I of current year
COGS is overstated N/I is understated
Average inventory of $18,750 & COGS $150,000
Company has TR of 8 Times
Cost of Goods Sold is equal to:
Cost of Goods available for sale - Ending Inventory
Costing method assigns cost to most recent items
FIFO
Which of the following statements is true with regard to gross profit ratio?
an increase in the gross profit rate may indicate that a company is efficiently managing inventory
Ahi purgases merchandise. He returns damaged goods to ABC. What effect does this have for Ahi
assets and Liabilities Increase
An increasing inventory turnover ratio indicates that a company?
has reduced the time it takes to purchase and sell inventory
Ignoring taxes, if a company understates its inventory by $10,000 in the current year
net income for the subsequent year will be overstated by $10,000
which of the following transactions would not result in an entry to the inventory account in the buyers accounting records under a perpetual inventory system?
payment of a credit purchase of merchandise within the discount period
Which of the following systems is true for a company that uses periodic inventory system?
the payment of a purchase within the discount period requires a credit to purchase discounts
Which of the following statements regarding the LCM rule is true?
when the replacement cost of inventory to its market drops below the historical cost of inventory, an adjustment is made to decrease inventory to its market value and decrease income.