ACCT Chap 8 practice quiz

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ACCT Chap 8 practice quiz
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2010-05-02 14:41:45
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Accounting practice quick
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Intermediate accounting, 5th edition, Spiceland Ch 8
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  1. In a perpetual inventory system, if merchandise is returned to a supplier:
    A) Purchase returns is credited
    B) Purchase discounts is credited
    C) inventory is debited
    D) Inventory is credited
    D) inventory is credited
    (this multiple choice question has been scrambled)
  2. The Hamlet Company uses the periodic inventory system. Information for 2009 is as follows:
    Sales$2,650,000
    Beginning inventory 680,000
    Purchases 1,200,000
    Purchase returns 12,000
    Ending inventory 740,000

    Hamlet's cost of goods sold for 2009 is:
    A) $1,522,000
    B) $1,188,000
    C) $1,140,000
    D) $1,128,000
    D) $1,128,000

    *$680,000 (beginning balance) + $1,200,000 (purchases) - $12,000 (purchase returns) - $740,000 (ending balance)
    (this multiple choice question has been scrambled)
  3. Symington Corporation uses the periodic inventory system. At December 31, 2009, the end of the company's fiscal year, a physical count of inventory revealed an ending inventory balance of $320,000. The following items were not included in the physical count:

    Goods held on consignment at Murphy Corporation$23,000
    Merchandise shipped to a customer on 12/30 f.o.b. destination
    (merchandise arrived at customer's location on 1/3/10) 12,000
    Merchandise shipped to a customer on 12/29 f.o.b. shipping
    point (merchandise arrived at customer's location on 1/2/10) 6,000
    Merchandise purchased from a supplier, shipped f.o.b.
    destination on 12/29, in transit at year-end 24,000

    Symington's 2009 ending inventory should be:
    A) $332,000
    B) $355,000
    C) $320,000
    D) $379,000
    B) $355,000

    * $320,000 (ending balance) + $12,000 (f.o.b. destination shipment made 12/30) + $23,000 (goods held on consignment).
    (this multiple choice question has been scrambled)
  4. By the gross method of accounting for purchase discounts, a discount not taken is recorded as:
    A) Purchases
    B) Interest expense
    C) A reduction in sales revenue
    d) None of the above

    A) Purchases
    (this multiple choice question has been scrambled)
  5. By the net method of accounting for purchase discounts, a discount not taken is recorded as:
    A) Purchases
    B) Interest expense
    C) a reduction in sales revenue
    d) none of the above
    B) interest expense
    (this multiple choice question has been scrambled)
  6. Identify the statement below concerning the LIFO inventory method that is untrue.
    a) In the absence of changes in costs, the results of using LIFO would be identical to those obtained by FIFO
    b) LIFO will provide a close matching of current revenues with current costs since the most recent costs are expensed first
    c) The ending inventory under LIFO will tend to approximate with current costs since the most recent costs are expensed first
    c) The ending inventory under LIFO will tend to approximate replacement costs
    d) In periods of declining costs, cost of goods sold using LIFO will produce a lower cost of goods sold than FIFO
    c) the ending inventory under LIFO will tend to approximate replacement costs
  7. Sanfillipo, Inc. had 800 units of inventory on hand at March 1, 2009, costing $20 each. Purchases and sales of inventory during the March were as follows:

    DatePurchasesSales
    March 8600 units
    15400 units @ $22 each
    22400 units @ $24 each
    27400 units

    Sanfillipo uses the periodic inventory system. According to a physical count, 600 units were on hand at the end of March.

    The cost of inventory at the end of March applying the FIFO method is:
    A) $12,900
    B) $14,400
    C) $14,000
    D) $12,000
    C) $14,000

    * 400 units @ $24 each + 200 units @ $22 each
    (this multiple choice question has been scrambled)
  8. Sanfillipo, Inc. had 800 units of inventory on hand at March 1, 2009, costing $20 each. Purchases and sales of inventory during the March were as follows:

    DatePurchasesSales
    March 8600 units 15400 units @ $22 each
    22400 units @ $24 each
    27400 units

    Sanfillipo uses the periodic inventory system. According to a physical count, 600 units were on hand at the end of March.The cost of inventory at the end of March applying the LIFO method is:
    A) $14,400
    B) $12,000
    C) $14,000
    D) $12,900
    B) $12,000

    * 600 units @ $20 each
    (this multiple choice question has been scrambled)
  9. Sanfillipo, Inc., had 800 units of inventory on hand at March 1, 2009, costing $20 each. Purchases and sales of inventory during the month of March were as follows:

    DatePurchasesSales
    march 8600 units
    March 15400 units @ $22 each
    March 22400 Units @ $24 each
    March 27 400 units

    Sanfillipo uses the periodic inventory system. According to a physical count, 600 units were on hand at the end of March.

    The cost of inventory at the end of March applying the average cost method is:
    A) $14,400
    B) $14,000
    C) $12,000
    D) $12,900
    D) $12,900

    * average cost of purchases = $21.50 each [(8000 x $20) + (400 x $22) + (400 x $24)] / 1600. Ending inventory = 600 units @ $21.50
    (this multiple choice question has been scrambled)
  10. Sanfillipo., Inco., had 800 units of inventory on hand at March 1, 2009, costing $20 each. Purchases and sales of inventory during the month of march were as follows:

    DatePurchasesSales
    march 8600 units
    march 15400 units @ $22 each
    march 22400 units @ $24 each
    March 27400 units

    Sanfillipo uses the periodic inventory system. According to a physical count, 600 units were on hand at the end of March

    If Sanfillipo instead used the perpetual inventory system, cost of goods sold for the month of March applying the LIFO inventory method would be:
    A) $24,000
    B) $21,500
    C) $22,400
    D) $21,600
    D) $21,600

    * (600 units @ $20 each)+ (400 units @ $24 each)
    (this multiple choice question has been scrambled)
  11. In a period of declining costs, the use of which of the following inventory cost methods would result in the highest ending inventory?
    A) LIFO
    B) FIFO
    C) average cost
    D) weighted-average cost
    A) LIFO

    * the later, lower costs would be matched against revenue, leaving the higher, earlier costs in inventory
    (this multiple choice question has been scrambled)
  12. LIFO liquidation profits occurs when:
    A) Costs are rising and inventory quantity increases
    B) costs increase
    C) costs are rising and inventory quantity declines
    D) costs decline
    C) costs are rising and inventory quantity declines
    (this multiple choice question has been scrambled)
  13. For its 2009 fiscal year, the Kind Pharmaceutical Company reported sales of $10,500,000 cost of goods sold of $6,300,000, and net income of $525,000. The Company's gross profit ratio for the year is:
    A) 60%
    B) 67%
    C) 40%
    D) 5%
    C) 40%

    *($10,500,000 - $6,300,000) \ $10,500,000
    (this multiple choice question has been scrambled)
  14. On December 31, 2009, the Charlie Company adopted the dollar-value LIFO inventory method. Inventory at the end of 2009 for its only inventory pool was $500,000 under the dollar-value LIFO method. At the end of 2010 inventory at year-end cost is $672,000 and the cost index is 1.05. Inventory at the end of 2010 at dollar-value LIFO cost is:
    A) $647,000
    B) $672,000
    C) $625,000
    D) $640,000
    A) $647,000

    * end-of-2010 inventory at and-of-2009 year cost = $640,000 ($672,000 / 1.05). The increase in the end-of-2009 inventory at end-of-2009 dollars is $140,000. Adjusting this to end-of-2010 cost is $147,000 ($140,000 x 1.05) and adding this to the beginning inventory gives $647,000
    (this multiple choice question has been scrambled)
  15. J.T. Rider and Sons uses the dollar-value LIFO inventory method. At the end of 2010 the cost index is 1.25 and the ending inventory at base year cost is $360,000. If 2010 beginning inventory at base year cost was $300,000, 2010 ending inventory at dollar-value LIFO cost is:
    A) $375,000
    B) $300,000
    C) $450,000
    D) $360,000
    A) $375,000

    *$300,000 / [($360,000 - $300,000) x 1.25]
    (this multiple choice question has been scrambled)
  16. Ending inventory is equal to the cost of items on hand plus:
    A) Items in transit sold f.o.b. destination
    B) Purchases in transit f.o.b destination
    C) Items in transit sold f.o.b shipping point
    d) none of the above
    A) items in transit sold f.o.b. destination
    (this multiple choice question has been scrambled)
  17. Under the net method, purchase discounts lost are:
    A) deducted from discount income.
    B) added to accounts payable
    C) included in interest expense
    D) included in purchases
    C) included in interest expense
    (this multiple choice question has been scrambled)
  18. In a period when prices are rising and inventory quantities are stable, the inventory method that would result in the highest ending inventory is:
    A) LIFO
    B) moving average
    C) FIFO
    D) weighted average
    C) FIFO
    (this multiple choice question has been scrambled)
  19. The LIFO conformity Rule states that if LIFO is used for:
    A) One company in an affiliated group, it must be used by all companies in an affiliated group
    B) Domestic companies, it must be used by foreign partners
    C) One class of inventory, it must be used for all classes of inventory
    D) Tax purposes, it must be used for financial reporting
    D) Tax purposes, it must be used for financial reporting
    (this multiple choice question has been scrambled)
  20. The use of LIFO during a long inflationary period can result in:
    A) Significant cash flow advantages over FIFO
    B) A reduction in inventory turnover over FIFO
    C) An inflated balance sheet
    D) A net increase in income tax expense
    A) Significant cash flow advantages over FIFO
    (this multiple choice question has been scrambled)
  21. Inventory does not include
    A) assets intended to be sold in the normal course of business
    B) Assets currently in production for normal sales
    C) Materials used in the production of goods to be sold
    D) Equipment used in the manufacturing of assets for sale
    D) Equipment used in the manufacturing of assets for sale.
    (this multiple choice question has been scrambled)
  22. Inventory records for Cyclops Herbicide revealed the following:

    March 1, 2003, inventory - 1,000 gallons @ $7.20 = $7,200

    Purchases: Sales:
    Mar 10 600 gals @ $7.25 Mar 5 400 gals
    Mar 16 800 gals @ $7.30 mar 14 700 gals
    mar 23 600 gals @ $7.35 mar 20 500 gals
    mar 26 800 gals

    7. Ending Inventory assuming LIFO in a period inventory system would be:
    A) $4,350
    B) $4,410
    C) $4,330
    D) $4,320
    D) $4,320
    (this multiple choice question has been scrambled)
  23. Inventory records for Cyclops Herbicide revealed the following:
    March 1, 2003, inventory - 1,000 gallons @ $7.20 = $7,200
    Purchases: Sales:
    Mar 10 600 gals @ $7.25 Mar 5 400 gals
    Mar 16 800 gals @ $7.30 mar 14 700 gals
    mar 23 600 gals @ $7.35 mar 20 500 gals mar 26 800 gals
    8. The ending inventory assuming FIFO is:
    A) $4,320
    B) $4,350
    C) $4,330
    D) $4,410
    D) $4,410
    (this multiple choice question has been scrambled)
  24. Inventory records for Cyclops Herbicide revealed the following:

    March 1, 2003, inventory - 1,000 gallons @ $7.20 = $7,200

    Purchases: Sales:
    Mar 10 600 gals @ $7.25 Mar 5 400 gals
    Mar 16 800 gals @ $7.30 mar 14 700 gals
    mar 23 600 gals @ $7.35 mar 20 500 gals mar 26 800 gals

    9. The ending inventory under a periodic inventory system assuming average cost is:
    A) $4,362
    B) $4,278
    C) $4,350
    D) $4,380
    A) $4,362
    (this multiple choice question has been scrambled)
  25. On January 1, 2009, Badger Inc., adopted the dollar-value LIFO method. The inventory cost on this date as $100,000. The 2009 ending inventory, valued at year-end costs, was $126,000. The relative costs index for this inventory in 2009 was 1.05

    What inventory balance should Badger report on its 12/31/09 balance sheet?
    A) $100,000
    B) $120,000
    C) $126,000
    D) $121,000
    D) $121,000
    (this multiple choice question has been scrambled)
  26. On January 1, 2009, Badger Inc., adopted the dollar-value LIFO method. The inventory cost on this date as $100,000. The 2009 ending inventory, valued at year-end costs, was $126,000. The relative costs index for this inventory in 2009 was 1.05

    Suppose the Badger's 2010 ending inventory, valued at year0end costs, was $143,000 and that the relative cost index for this inventory in 2010 was 1.10. In determining the inventory balance should Badger report in its 12/31/10 balance sheet:

    A) an additional layer of $11,000 is added to the 1/1/10 balance
    B) an additional layer of $22,000 is added to the 1/1/10 balance
    C) an additional layer of $23,000 is added to the 1/1/10 balance
    D) none of these is correct
    A) An additional layer of $11,000 is added to the 1/1/10 balance
    (this multiple choice question has been scrambled)
  27. On January 1, 2009, Badger Inc., adopted the dollar-value LIFO method. The inventory cost on this date as $100,000. The 2009 ending inventory, valued at year-end costs, was $126,000. The relative costs index for this inventory in 2009 was 1.05

    Suppose that Badger's 2011 ending inventory, valued at year-end costs, was $153,600 and that the relative cost index for this inventory in 2011 was 1.20. What inventory balance would badger report on its 12/31/11 balance sheet?
    A) $129,800
    B) $none of these is correct
    C) $128,000
    D) $153,600
    A) $129,800
    (this multiple choice question has been scrambled)

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