A company purchases $25,000 of inventory in January 20X6 and will pay for it in March 20X6, which of the following statements is false?

a.Cost of goods sold will increase by $25,000 in January 20X6

b.The income statement will report the $25,000 as cost of goods sold in January 20X6 when they are purchased

c.The accounts payable for this purchase be will zero in March 20X6

d.The statement of cash flows will report an operating cash outflow of $25,000 in March 20X6

e.The company will report accounts payable of $25,000 in February 20X6

Question 2

At the end of the month Main Ltd. determined that the cost of goods that had been sold during the month was $125,000. How might this information be recorded?

a.An increase in expenses of $125,000 and an increase in accounts payable of $125,000

b.An increase in inventory of $125,000 and a decrease in cash of $125,000.

c.The information is not recorded as no economic event had taken place.

d.A decrease in inventory of $125,000 and an increase in expenses of $125,000

e.None of the other alternatives are correct

Question 3

At the end of the month Main Ltd. determined that the ending balance of inventory was $125,000. How might this information be recorded?

a.An increase in inventory of $125,000 and a decrease in cash of $125,000.

b.A decrease in inventory of $125,000 and an increase in expenses of $125,000

c.The information is not recorded as no economic event had taken place.

d.An increase in expenses of $125,000 and an increase in accounts payable of $125,000

e.None of the other alternatives are correct

Question 4

On January 1, 20X7, the ledger of Conglomo Corporation correctly showed supplies inventory of $900. During 20X7, supplies purchases amounted to $6,000. A count (inventory) of supplies on hand at December 31, 20X7, showed $1,800. The 20X7 income statement should report supplies expense amounting to

a.$6,000

b.$5,100

c.None of the other alternatives are correct

d.$1,800

e.$6,900

Question 5

On January 1, 20X7, the ledger of Conglomo Corporation correctly showed supplies inventory of $900. During 20X7, supplies purchases amounted to $6,000. A count (inventory) of supplies on hand at December 31, 20X7, showed $1,800. The 20X7 Balance Sheet statement should report supplies amounting to:

a.$6,900

b.$1,800

c.$5,100

d.$6,000

e.None of the other alternatives are correct

Question 6

On January 15, Frazier Company received merchandise for resale from its normal supplier. The invoice price was $3,600 with terms of 4/10, n/30 for 100 units of Part #345. The invoice was paid on January 19. Freight costs were $120 and the company paid $108 of interest on a loan to buy the inventory. What is the unit cost that should be recorded for each of the 100 units of Part # 345?

a.$36.00

b.$35.76

c.$34.56

d.$37.20

e.None of the other alternatives are correct

Question 7

The ending balance of the Accounts Receivable account was $10,000 and the beginning balance was $14,000. Services billed to customers for the period were $21,500. What was the amount of collections from customers?

a.None of the other alternatives are correct

b.$25,500

c.$45,500

d.$31,500

e.$17,500

Question 8

The ending balance of the Accounts Receivable account was $12,000. Services billed to customers for the period were $21,500, and collections on account from customers were $23,600. What was the beginning balance of Accounts Receivable?

a.None of the other alternatives are correct

b.$14,100

c.$9,900

d.$33,100

e.$33,500

Question 9

The following amounts have been extracted from the accounts of Sell-It at its year-end, December 31, 20x9:

Sales $50,000

Cost of Goods Sold $35,000

Inventory $10,000

Account Payable $8,000

The gross profit which Sell-it would report is

a.$50,000

b.None of the other alternatives are correct

c.$40,000

d.$7,000

e.$15,000

Question 10

The following amounts have been extracted from the accounts of Sell-It at its year-end, December 31, 20x9:

Sales $50,000

Cost of Goods Sold $43,000

Inventory $10,000

Account Payable $8,000

The gross profit which Sell-it would report is

a.None of the other alternatives are correct

b.$15,000

c.$7,000

d.$50,000

e.$40,000

Question 11

When a company uses the perpetual inventory system in accounting for its merchandise inventory, which of the following is true?

a.Purchases are recorded in the cost of goods sold account.

b.The inventory account is updated after each sale

c.The inventory account is updated throughout the year as purchases are made.

d.None of the other alternatives are correct

e.Cost of goods sold is computed at the end of the accounting period rather than at each sale.

Question 12

Which of the following documents does not initiate an entry being made in the accounts

a.Credit memo

b.Sales invoice

c.None of the other alternatives are correct

d.Purchase order

e.Purchase invoice

Question 13

A merchandise company's beginning inventory plus merchandise purchases minus ending inventory equals:

a.cost of goods sold.

b.ending inventory.

c.cost of goods available for sale.

d.sales level.

Question 14

In March, BetterBuy purchases six plasma TVs from Toshiba for $1,500 each (serial numbers 11534892 through 11534897).

In April, the company purchases four more identical TVs from Toshiba for $1,450 each (serial numbers 11542631 through 11542634).

In May, the company purchases five more identical TVs for $1,600 each (serial numbers 11550964 through 11550968).

In June, BetterBuy sells two of these TVs (serial numbers 11534894 and 11542631).

If BetterBuy uses the specific identification method, its cost of goods sold should be:

a.$3,000

b.$2,950

c.$3,200

d.$3,033

Question 15

In March, BetterBuy purchases six plasma TVs from Toshiba for $1,500 each (serial numbers 11534892 through 11534897). In April, the company purchases four more identical TVs from Toshiba for $1,450 each (serial numbers 11542631 through 11542634). In May, the company purchases five more identical TVs for $1,600 each (serial numbers 11550964 through 11550968). In June, BetterBuy sells two of these TVs (serial numbers 11534894 and 11542631).BetterBuy records $3,000 as the cost of goods sold. BetterBuy is using the:

a.FIFO inventory costing method.

b.Weighted average inventory costing method.

c.specific identification inventory costing method.

d.LIFO inventory costing method.

Question 16

The Acme Company buys 300 units of merchandise in January at $5 each. In February, Acme buys 500 units at $4 each and in March it buys 200 units at $6 each. Acme sells 150 units during this quarter. What is the cost of goods sold using the FIFO inventory costing method?

a.$900

b.$600

c.$934

d.$750

Question 17

The primary goals of inventory management do not include:

a.maintaining sufficient quality of inventory to keep customers satisfied.

b.maintaining a sufficient quantity of inventory to keep customers satisfied.

c.maintaining a large inventory for long periods.

d.minimizing the costs associated with maintaining inventories.

Question 18

The specific identification inventory costing method would probably be most appropriate for which of the following goods?

a.Bottles of suntan lotion in Wal-Mart's central warehouse.

b.Diamond necklaces at a Tiffany's & Co. jewellery store.

c.Sets of tires at the Goodyear plant.

d.Boxes of brass 4-inch drywall screws at Home Depot.

Question 19

Which of the following may not be true if excessive quantities of inventory are ordered?

a.Would always lead to higher sales and resulting in higher profits.

b.Storage and interest costs may increase.

c.There is a greater probability that goods will become damaged or obsolete.

d.Goods might have to be sold at large discounts.

Question 20

Your company buys 500 pairs of socks at $3 each (including other purchasing costs such as transportation) and sells them for $5 each. Which of the following statements is true?

a.The sales revenue is $2,500.

b.The cost of goods sold is $2,500.

c.The net income is $2,500.

d.The gross profit is $2,500.