25 An inventory error carried forward into the next period causes misstatements in 8 01:39:10 Multiple Choice Cost of goods sold Gross profit Net income O Gross nrofit sold 25 Gross profit 8 01:38:58 O Net income Gross profit and net income o All of the above 26 Because an inventory error causes an offsetting error in the next period, 8 01:31:42 Multiple Choice Managers can ignore the error. O It is sometimes said to be self- correcting It affects only income statement o It affects only income statement accounts. o If affects only balance sheet accounts. O Managers can ignore the error and it is sometimes said to be self- correcting. 27 Understatement of ending inventory causes 01:31:12 Multiple Choice Cost of goods sold to be overstated and net income to be understated O Cost of goods sold to be overstated and net income to be overstated 27 Cost of goods sold to be understated and net income to be understated 8 01:30:55 Cost of goods sold to be understated and net income to be overstated O Cost of goods sold to be overstated and net income to be accurate Days' sales in inventory 28 Multiple Choice 01:30:44 Is a ratio that estimates how many days it will take to convert inventory on hand to accounts receivable or cash Is a ratio that tells us how much inventory 27 Understatement of ending inventory causes 01:31:12 Multiple Choice Cost of goods sold to be overstated and net income to be understated O Cost of goods sold to be overstated and net income to be overstated O All of 28 the above 8 01:30:09 0 Is a ratio that estimates how many days it will take to convert inventory on hand to accounts receivable or cash and is a ratio that tells us how much inventory a firm has on hand in terms of days' sales 29 Toys "R" Ltd. had cost of goods sold of $6,000 million, ending inventory of $2,500 million, and average inventory turnover of $2,000 million. The days' sales in inventory is 8 01:29:58 Multiple Choice O 152.1 O 121.7 O 87 O 1,095 O All of 28 the above 8 01:30:09 0 Is a ratio that estimates how many days it will take to convert inventory on hand to accounts receivable or cash and is a ratio that tells us how much inventory a firm has on hand in terms of days' sales Iviuluple choice 29 O 152.1 01:29:49 O 121.7 O 87 1,095 O 30.5 31 Companies try to lengthen their operating cycles to increase profit. 01:29:28 True or False True False 32 Merchandise inventory is included in the plant and Equipment section of the balance sheet. 8 01:29:18 True or False True False 33 Merchandise inventory includes merchandise and office supplies. 01:29:10 True or False True False 34 A periodic inventory system requires updating the inventory account at the beginning of an accounting period. 01:29:03 True or False True False A merchandising company 35 Multiple Choice 8 01:28:56 o Earns profit from buying and selling merchandise o Buys products from manufacturers and sells to retailer Buys products from manufacturers and sells them to and sells to retailer 35 8 01:28:45 Buys products from manufacturers and sells them to consumers Reports cost of goods sold on the income statement O All of the above Merchandisers 36 Multiple Choice 8 01:28:37 Earn profit from buying and selling merchandise O Receive fees in exchange for services Earn profit from commissions 36 Receive fees in exchange for services 8 01:28:27 O Earn profit from commissions O Earn profit from fare Do not report gross profit