Mod 10 Wrong Answers Flashcards
When shipping terms are FOB destinTion, the only amount to be included in the buyer’s cost of inventory is…
It’s purchase price
When the shipping terms are FOB destination the seller bears all costs of transporting the goods of the buyer including…3
1 packaging costs
2 shipping costs
3 special handling charges
Purchases are always recorded net of…
Trade discounts
When more than one trade discount is applied to a list price it is called…
A chain discount
Chain discounts are applied in…
Steps
Under FOB Shipping point, Remittance from buyer would include…
Any shipping expenses paid by seller
If inventory is written off it should be…
Subtracted to get cost of goods sold
Under the net method, purchase discounts not taken are recorded in…
Purchase discounts lost account
When the net method is used, purchase discounts lost are…
Considered a financial expense and are excluded from cost of inventory
Normal capacity refers to…
Range in production levels that will vary based on business
And industry specific factors
For normal capacity actual production may only be used if…
It approximates normal capacity
Under LIFO perpetual ending inventory includes…
Any purchases made after the last sale
The moving average method requires a new unit cost be computed each time goods are…
Purchased
When calculating inventory using the moving average method divide total cost of inventory by…
Number of units of inventory
4 steps in gross profit method
1 compute COGAS
2 compute estimated COGS = sales - (sales x GP%)
3 compute ending inventory = COGAS - estimated COGS
4 notice difference
How is the buyer’s accounts payable affected if, goods are lost in transit, when they were shipped FOB shipping point?
The cost of those goods should be added to accounts payable
How is accounts payable in year 2, treated if goods are shipped to the buyer FOB destination and arrive in year 3.
Accounts payable is unaffected
How is accounts payable affected by returned goods supplied by vendor?
Decreases when credited by vendor
A consignee’s payment of reimbursable freight costs results in…
Accounts receivable for the consignor
Which accounts are cumulative/are not cumulative:
Construction expenses
Construction in progress
Construction expenses are not cumulative
Construction in progress is cumulative
The equation used to recognize income on the cost to cost basis
Revenue (Profit) =
((Cost to date/total expected cost) x expected profit)
- profit recognized in previous periods
In the construction industry contract related assets and liabilities are usually classified as…
Current
On the balance sheet, construction in progress (CIP) account is netted with…
The contra account: progress billings
If construction in progress exceeds progress billings, the excess is reported as…
A current asset
On the balance sheet construction in progress and billings only include…
Numbers from profitable contracts
Calculation for construction in progress
Construction in progress = costs incurred to date + profits recognized
Calculation for: costs and estimated earnings in excess of billings
(Just for profitable projects)
Costs and estimated earnings in excess of billings =
Construction in progress - billings
Billings in excess of costs and estimated earnings is reported for…
Unprofitable LT construction projects
Calculation for: billings in excess of costs and estimated earnings
billings in excess of costs and estimated earnings =
Billings - costs incurred to date
