The retail inventory method would include which of the following in the calculation of the goods available for sale at both cost and retail?

a. Freight in

b. Purchase returns

c. Markups

d. Markdowns

Eller Co. received merchandise on consignment. As of January 31, Eller included the goods in inventory, but did not record the transaction. The effect of this on its financial statements for January 31 would be

a. net income, current assets, and retained earnings were overstated.

b. net income was correct and current assets were understated.

c. net income and current assets were overstated and current liabilities were understated.

d. net income, current assets, and retained earnings were understated.

If the beginning inventory for 2020 is overstated, the effects of this error on cost of goods sold for 2020, net income for 2020, and assets at December 31, 2021, respectively, are

a. overstatement, understatement, overstatement.

b. overstatement, understatement, no effect.

c. understatement, overstatement, overstatement.

d. understatement, overstatement, no effect.

Which of the following is not correct in regard to trading (P&L) securities?

a. They are held with the intention of selling them in a short period of time.

b. Unrealized holding gains and losses are reported as part of net income.

c. Any discount or premium is not amortized.

d. All of these are correct.

Option 5

When using a perpetual inventory system,

a. no Purchases account is used.

b. a Cost of Goods Sold account is used.

c. two entries are required to record a sale.

d. all of these

Debt securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or losses and are included as other comprehensive income and as a separate component of stockholders' equity are

a. held-to-maturity debt securities.

b. trading (P&L) debt securities.

c. available-for-sale (OCI) debt securities.

d. never-sell debt securities.

When using the periodic inventory system, which of the following generally would not be separately accounted for in the computation of cost of goods sold?

a. Trade discounts applicable to purchases during the period

b. Cash (purchase) discounts taken during the period

c. Purchase returns and allowances of merchandise during the period

d. Cost of transportation-in for merchandise purchased during the period

Goods in transit which are shipped f.o.b. destination should be

a. included in the inventory of the seller.

b. included in the inventory of the buyer.

c. included in the inventory of the shipping company.

d. none of these.

For a manufacturing company, inventory cost shall include:

a. Abnormal waste

b. Storage and selling costs

c. Variable administrative overhead

d. Fixed manufacturing overhead

Dane, Inc., owns 35% of Marin Corporation. During the calendar year 2020, Marin had net earnings of P300,000 and paid dividends of P30,000. Dane mistakenly recorded these transactions using the fair value method rather than the equity method of accounting. What effect would this have on the investment account, net income, and retained earnings, respectively?

a. Understate, overstate, overstate

b. Overstate, understate, understate

c. Overstate, overstate, overstate

d. Understate, understate, understate

Which of the following items should be included in a company's inventory at the balance sheet date?

a. Goods in transit which were purchased f.o.b. destination.

b. Goods received from another company for sale on consignment.

c. Goods sold to a customer which are being held for the customer to call for at his or her convenience.

d. None of these.

Debt securities that are accounted for at amortized cost, not fair value, are

a. held-to-maturity debt securities.

b. trading (P&L) debt securities.

c. available-for-sale (OCI) debt securities.

d. never-sell debt securities.