1: Unsold inventory is recorded in income statement as asset

A: True

B: False

2: Cost of good available for sale is the same as cost of sale

A: True

B: False

3: Inventory that is damaged is the part of cost of goods sold

A: True

B: False

4: Sales of inventory should be recorded when deal or contract is signed

A: True

B: False

5: What is FOB shipping point ?

6: What is FOB destination point?

7: In continuous inventory system , if inventory is purchased on account, it is recorded as

DR: Purchase

CR: Account Payable

A: True

B: False

8: A periodic inventory system maintains cost of goods sold account

A: True

B: False

9: International Accounting Standard supports FIFO

A: True

B: False

10: US GAAP supports LIFO

A: True

B: False

11: On January 1, Metro Hardware has a beginning inventory of $70,000. During January, net purchase amount to $20,000 and net sales total $40,000.If Metro's gross profit is 30%, what is its estimated inventory on January 31?

Answer:

12: Calculate inventory turnover from the given data

Opening inventory : 12000

Closing inventory : 15000

Additional Purchases: 50,000

13: Calculate average days to sell inventory ( use 365 days )

Opening inventory : 14000

Closing inventory : 17000

Additional Purchases: 60,000

14: Calculate receivables turnover

Opening receivables : 13000

Closing receivables: 15000

Gross Sales : 60,000

Sales Return : 12,000

15: Calculate average days to collect receivables ( Use 365 days )

Opening receivables : 12000

Closing receivables: 12000

Gross Sales : 78,000

Sales Return : 17,000

16: If closing inventory is overstated, cost of goods sold will be

A: Overstated

B: understated

C: Remains same as there is no impact

17: If closing inventory is understated, cost of goods sold will be

A: Overstated

B: understated

C: Remains same as there is no impact

18: If opening inventory is understated, cost of goods sold will be

A: Overstated

B: understated

C: Remains same as there is no impact

19: If opening inventory is overstated, cost of goods sold will be

A: Overstated

B: understated

C: Remains same as there is no impact

20: If cost of goods sold is overstated , gross profit will be

A: Overstated

B: understated

C: Remains same as there is no impact

21: If cost of goods sold is understated , gross profit will be

A: Overstated

B: understated

C: Remains same as there is no impact

22: Opening inventory is reported in the balance sheet at the end of the year

A: True

B: False

23: A periodic inventory system is used when management needs information throughout the year about inventory and profits

A: True

B: False

24:In periodic inventory system, inventory account is continuously updated to reflect purchases, sales, and returns of inventory

A: True

B: False

25: In order to ensure the accuracy of their perpetual records, most businesses take a perpetual inventory count of the merchandise on hand at least once a year.

A: True

B: False

26: Inventory shrinkage are recorded as abnormal cost of doing business

A: True

B: False

27: On May 10, Hudson Company sold 90 computers to Apex. At the sale date, Hudson perpetual inventory records included the following costs:

Purchase dateQuantity. Unit cost. Total cost

April 9701500105000

May 130160048000

Total 100153000

Record the cost of 90 computer sold on May 10 using

A: Average cost method

B:FIFO

C:LIFO

28:Franklin Company

A: had 10 items in the inventory at the beginning of the year

B: 20 more items were bought during the year at $11 per item

C: 25 units were sold

What was the amount of ending inventory under FIFO, LIFO & Average inventory method.

29: The recent annual report of Kraft reveals the following:

Cost of goods sold: 12,499,000

Inventory (beginning): 1,943,000

Inventory (end):1,928,000

Average time required to collect account receivables: 18 days

A: Compute inventory turnover

B: Compute its average inventory days

C: What is the length of operating cycle