1. Question 3 Alison's dress shop buys dresses from McGuire Manufacturing. Alison purchased dresses from McGuire on July 17 and received an invoice with a list price amount of $6,000 and payment terms of 2/10, n/30. Alison uses the net method to record purchases. Alison should record the purchase at:
2. $5,940.
3. $5,880.
4. $6,000.
5. $6,120.

3.704 points

Question 4

1. Cinnamon Buns Co. (CBC) started 2016 with $52,000 of merchandise on hand. During 2016, $280,000 in merchandise was purchased on account with credit terms of 2/10, n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $9,000. Merchandise with an invoice amount of $4,000 was returned for credit. Cost of goods sold for the year was $316,000. CBC uses a perpetual inventory system.
3. What is cost of goods available for sale, assuming CBC uses the gross method?
4. $312,480.
5. $326,000.
6. $331,480.
7. $337,000.

3.704 points

Question 5

1. The LIFO Conformity Rule states that if LIFO is used for:
2. One class of inventory, it must be used for all classes of inventory.
3. Tax purposes, it must be used for financial reporting.
4. One company in an affiliated group, it must be used by all companies in an affiliated group.
5. Domestic companies, it must be used by foreign partners.

3.704 points

Question 6

1. Texas Petrochemical reported the following April activity for its VC-30 lubricant, which had a balance of 300 qts. @ $2.40 on April 1.
2. Purchases:Sales:Apr. 10500 qts @ $2.50Apr. 3200 qtsApr. 14400 qts @ $2.60Apr. 12500 qtsApr. 20400 qts @ $2.65Apr. 26300 qts
3. The ending inventory assuming LIFO and a periodic inventory system is:
4. $1,580.
5. $1,510.
6. $1,575.
7. $1,470.

3.704 points

Question 7

1. Cost of goods sold is given by:
2. Beginning inventory - net purchases + ending inventory.
3. Beginning inventory + accounts payable - net purchases.
4. Net purchases + ending inventory - beginning inventory.
5. Net Purchases + beginning inventory - ending inventory.

3.704 points

Question 8

1. The largest expense on a retailer's income statement is typically:
2. Salaries and wages.
3. Cost of goods sold.
4. Income tax expense.
5. Depreciation expense.

3.704 points

Question 9

1. In a perpetual inventory system, the cost of inventory sold is:
2. Debited to accounts receivable.
3. Credited to cost of goods sold.
4. Debited to cost of goods sold.
5. Not recorded at the time goods are sold.

3.704 points

Question 10

1. In a periodic inventory system, the cost of purchases is debited to:
2. Purchases.
3. Cost of goods sold.
4. Inventory.
5. Accounts payable.

3.704 points

Question 11

1. The Mateo Corporation's inventory at December 31, 2016, was $325,000 based on a physical count priced at cost, and before any necessary adjustment for the following:
3. Merchandise costing $30,000, shipped f.o.b. shipping point from a vendor on December 30, 2016, was received on January 5, 2017.
4. Merchandise costing $22,000, shipped f.o.b. destination from a vendor on December 28, 2016, was received on January 3, 2017.
5. Merchandise costing $38,000 was shipped to a customer f.o.b. destination on December 28, arrived at the customer's location on January 6, 2017.
6. Merchandise costing $12,000 was being held on consignment by Traynor Company.
8. What amount should Mateo Corporation report as inventory in its December 31, 2016, balance sheet?
9. $367,000.
10. $427,000.
11. $405,000.
12. $325,000.

3.704 points

Question 12

1. Inventory does not include:
2. Materials used in the production of goods to be sold.
3. Assets intended to be sold in the normal course of business.
4. The cost of office equipment.
5. Assets currently in production for normal sales.

3.704 points

Question 13

1. Purchases equal the invoice amount:
2. Plus freight-in, plus discounts lost.
3. Less purchase returns, plus purchase allowances.
4. Plus freight-in, less purchase discounts.
5. Plus discounts, less purchase returns.

3.704 points

Question 14

1. Nu Company reported the following pretax data for its first year of operations.
2. Net sales2,800Cost of goods available for sale2,500Operating expenses880Effective tax rate40%Ending inventories:If LIFO is elected820If FIFO is elected1,060
3. What is Nu's net income if it elects FIFO?
4. $480.
5. $288.
6. $1,360.
7. $144.

3.704 points

Question 15

1. In a period when costs are falling and inventory quantities are stable, the lowest taxable income would be reported by using the inventory method of:
2. Weighted average.
3. LIFO.
4. Moving average.
5. FIFO.

3.704 points

Question 16

1. The primary reason for the popularity of LIFO is that it:
2. Provides better matching of physical flow and cost flow.
3. Saves income taxes currently.
4. Simplifies recordkeeping.
5. Provides a permanent reduction of income taxes.

3.704 points

Question 17

1. Inventory records for Herb's Chemicals revealed the following:
3. March 1, 2016, inventory: 1,000 gallons @ $7.20 = $7,200
4. Purchases:Sales:Mar. 10600 gals @ $7.25Mar. 5400 galsMar. 16800 gals @ $7.30Mar. 14700 galsMar. 23600 gals @ $7.35Mar. 20500 galsMar. 26700 gals
5. The ending inventory under a periodic inventory system assuming average cost (rounding unit cost to three decimal places) is:
6. $5,087.
7. $5,107.
8. $5,077.
9. $5,005.

3.704 points

Question 18

1. Nu Company reported the following pretax data for its first year of operations.
2. Net sales2,800Cost of goods available for sale2,500Operating expenses880Effective tax rate40%Ending inventories:If LIFO is elected820If FIFO is elected1,060
3. What is Nu's net income if it elects LIFO?
4. $288.
5. $144.
6. $240.
7. $480.

3.704 points

Question 19

1. Ending inventory is equal to the cost of items on hand plus:
2. Items in transit sold f.o.b. shipping point.
3. Purchases in transit f.o.b. destination.
4. Items in transit sold f.o.b. destination.
5. None of these answer choices is correct.

3.704 points

Question 20

1. The use of LIFO in accounting for a firm's inventory:
2. Usually matches the physical flow of goods through the business.
3. Is usually used for internal management purposes.
4. Usually provides a better match of expenses with revenues.
5. None of these answer choices is correct.

3.704 points

Question 21

1. Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition):
3. 40 units at $100
4. 70 units at $80
5. 170 units at $60
7. Sales for the year totaled 270 units, leaving 10 units on hand at the end of the year.
9. Ending inventory using the LIFO method is:
10. $1,000.
11. $650.
12. $707.
13. $1,000.
14. $600.
15. $707.
16. $600.

3.704 points

Question 22

1. Cinnamon Buns Co. (CBC) started 2016 with $52,000 of merchandise on hand. During 2016, $280,000 in merchandise was purchased on account with credit terms of 2/10, n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $9,000. Merchandise with an invoice amount of $4,000 was returned for credit. Cost of goods sold for the year was $316,000. CBC uses a perpetual inventory system.
3. Assuming CBC uses the gross method to record purchases, ending inventory would be:
4. $6,480.
5. $15,400.
6. $15,480.
7. $21,000.

3.704 points

Question 23

1. Nueva Company reported the following pretax data for its first year of operations.
2. Net sales7,340Cost of goods available for sale5,790Operating expenses1728Effective tax rate40%Ending inventories:If LIFO is elected618If FIFO is elected798
3. What is Nueva's net income if it elects FIFO?
4. $264.
5. $440.
6. $620.
7. $264.
8. $372.
9. $620.
10. $372.

3.704 points

Question 24

1. In a period when costs are rising and inventory quantities are stable, the inventory method that would result in the highest ending inventory is:
2. Weighted average.
3. Moving average.
4. FIFO.
5. LIFO.

3.704 points

Question 25

1. Nueva Company reported the following pretax data for its first year of operations.
2. Net sales7,340Cost of goods available for sale5,790Operating expenses1728Effective tax rate40%Ending inventories:If LIFO is elected618If FIFO is elected798
3. What is Nueva's net income if it elects LIFO?
4. $440.
5. $264.
6. $620.
7. $372.

3.704 points

Question 26

1. In a perpetual inventory system, the cost of purchases is debited to:
2. Purchases.
3. Cost of goods sold.
4. Inventory.
5. Accounts payable.

3.704 points

Question 27

1. Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition):
3. 40 units at $100
4. 70 units at $80
5. 170 units at $60
7. Sales for the year totaled 270 units, leaving 10 units on hand at the end of the year.
9. Ending inventory using the FIFO method is:
10. $1,000.
11. $650.
12. $707.
13. $1,000.
14. $600.
15. $707.
16. $600.