. Orange-Aide Company has the following inventory data: | | July 1 | | Beginning inventory | 20 units at $20 | $ 400 | | | 7 | | Purchases | 70 units at $21 | 1,470 | | | 22 | | Purchases | 10 units at $22 | 220 | | | | | | | $2,090 | A physical count of merchandise inventory on July 30 reveals that there are 30 units on hand. Using the average cost method, the value of ending inventory is (Points : 1) |
$600 $627 $630 $660 |
Question 2. 2. Financial information is presented below: | | Operating Expenses | $ 45,000 | | | Sales Returns and Allowances | 13,000 | | | Sales Discounts | 6,000 | | | Sales Revenue | 160,000 | | | Cost of Goods Sold | 77,000 | The amount of net sales on the income statement would be (Points : 1) |
$154,000. $141,000. $160,000. $166,000. |
| Question 3. 3. The accountant at Landry Company is figuring out the difference in income taxes the company will pay depending on the choice of either FIFO or LIFO as an inventory costing method. The tax rate is 30% and the FIFO method will result in income before taxes of $8,740. The LIFO method will result in income before taxes of $7,900. What is the difference in tax that would be paid between the two methods? (Points : 1) |
$840 $588 $252 Cannot be determined from the information provided. |
| Question 4. 4. If goods in transit are shipped FOB destination (Points : 1) |
the seller has legal title to the goods until they are delivered. 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. no one has legal title to the goods until they are delivered. |
Question 5. 5. Echo Sound Company just began business and made the following four inventory purchases in June: | | June | 1 | | 150 units | $ 780 | | | June | 10 | | 200 units | 1,170 | | | June | 15 | | 200 units | 1,260 | | | June | 28 | | 150 units | 990 | | | | | | | $4,200 | A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. The inventory method which results in the highest gross profit for June is (Points : 1) |
the FIFO method. the LIFO method. the weighted average unit cost method. not determinable. |
| Question 6. 6. In periods of rising prices, which is an advantage of using the LIFO inventory costing method? (Points : 1) |
Ending inventory will include latest (most recent) costs and thus be more realistic. Cost of goods sold will include latest (most recent) costs and thus will be more realistic. Net income will be the highest and thus reflect the prosperity of the company. Phantom profits are reported. |
| Question 7. 7. At May 1, 2012, Heineken Company had beginning inventory consisting of 100 units with a unit cost of $7. During May, the company purchased inventory as follows: 200 units at $7 300 units at $8 The company sold 500 units during the month for $12 per unit. Heineken uses the average cost method. Heineken's gross profit for the month of May is (Points : 1) |
$2,250 $3,750 $4,500 $6,000 |
| Question 8. 8. An advantage of the single-step income statement over the multiple-step form is (Points : 1) |
the amount of information it provides. its comprehensiveness. its simplicity. its use in computing ratios. |
| Question 9. 9. Gross profit for a merchandising concern is net sales minus (Points : 1) |
operating expenses. cost of goods sold. sales discounts. cost of goods available for sale. |
| Question 10. 10. When applying the lower of cost or market rule to inventory valuation, market generally means (Points : 1) |
current replacement cost. original cost. resale value. original cost, less physical deterioration. |
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