Accounting 201Chapter 06 Practice Test Flashcards
In times of rising inventory costs, which inventory method generally results in the highest ending inventory? A) FIFO. B) LIFO. C) Weighted-average. D) Lower-of-cost-or-market.
A
Winner Company purchases 100 units of inventory from Neue Company for $1,000 on account. To encourage early payment, Neue Company offers the terms 2/10, n/30. If Winner pays nine days after the purchase, the cost of its purchase will be: A) $1,080. B) $1,020. C) $1,000. D) $ 980.
D
Which of the following generally is found in the balance sheet of a manufacturing company?
A) Finished goods.
B) Work in process.
C) Raw materials.
D) All three accounts are found in a manufacturer’s balance sheet.
D
Suppose that Witchel Company’s ending inventory is understated by $500 at the end of the year. If the error is not discovered, the company’s gross profit for the year will be
A) Overstated.
B) Understated.
C) Stated correctly.
D) The effect of the error will depend on the sales price of the inventory.
B
Snow Company's net sales revenue is $200,000, its cost of goods sold is $110,000 and its operating income is $20,000. How much are Snow Company's operating expenses? A) $90,000. B) $70,000. C) $50,000. D) $20,000.
B
At the end of the year, Marline Corporation determines that its ending inventory has a cost of $2,000 and a market value of $1,900. What would be the effects(s) of the adjustment to write-down inventory to market value?
A) Decrease in net income.
B) Increase in net income.
C) Increase in cost of ending inventory.
D) No effect on net income and ending inventory.
A
Which cost flow assumption generally results in the lowest reported amount of net income in periods of rising inventory costs?
A) LIFO.
B) FIFO.
C) Weighted-average.
D) Income will be the same under each assumption.
A
Weichtel Company’s beginning inventory was $20,000. During the year, Weichtel purchases inventory costing $100,000. Based on a physical count at the end of the year, Weichtel determines that the ending inventory is $28,000. How much was cost of goods sold for the year? A) $148,000.
B) $108,000.
C) $100,000.
D) $ 92,000.
D
Schnell Company purchases inventory for $100,000 on account. Shipping terms are FOB destination; Schnell pays shipping cost of $5,000. Prior to paying for the purchase, Schnell discovers that some of the inventory was damaged and receives an allowance of $7,000. Net purchases are: A) $107,000. B) $105,000. C) $100,000. D) $ 98,000.
D
Weiss Company’s beginning inventory was $10,000. During the year, Weichtel purchases inventory costing $100,000. Based on a physical count at the end of the year, Weichtel determines that the ending inventory is $8,000. How much is cost of goods available for sale? A) $110,000.
B) $100,000.
C) $102,000.
D) $ 98,000
A
For a manufacturing company, the cost of items not yet complete at the end of the period are shown in the A) Cost of goods sold account. B) Raw materials account. C) Work in process account. D) Finished goods account.
C
Fan Company purchases inventory on account for $2,500. The entry to record this purchase using a perpetual inventory system would include a: A) Debit to Purchases. B) Debit to Inventory. C) Credit to Accounts Receivable. D) Debit to Accounts Payable
B
