Test 3

Question 1

If foods in transit are shipped FOB destination

Answer 1

the seller has title to the goods until they are delivered to the buyer

Question 2

Which of the following should be included in the physical inventory of a company…

Answer 2

goods in transit from another company shipped FOB shipping point

Question 3

Frieght terms of FOB shipping point mean that the.

Answer 3

buyer must bear the frieght cost

Question 4

The terms FOB denotes

Answer 4

free on board

Question 5

Under a consignment arrangement the…

Answer 5

co-signer has ownership until goods are sold to a customer

Question 6

22. Cost of goods sold is computed from the following equation?

Answer 6

(Beginning inventory + purchases) - Ending inventory = Cost of goods sold

Question 7

The LIFO inventory method assumes that the cost of the latest units purchased are

Answer 7

the first to be allocated to the cost of goods sold

Question 8

Which of the following statements are correct with respect to inventories

Answer 8

under FIFO the ending inventory is based on the latest units purchased

Question 9

In periods of rising prices the inventory method which results in the inventory value is the balance sheet that is closest to the current cost is the

Answer 9

FIFO metho

Question 10

Understanding beginning inventory will understate…

Answer 10

costs of goods sold

Question 11

If the beginning inventory is understated by $13,000 the effect of this error in the current period is.

Answer 11

cost of goods sold understated-net income overstated

Question 12

Overstating ending inventory will overstate all of the following except…

Answer 12

costs of goods sold

Question 13

If employees are bonded…

Answer 13

they have been insured against misappropriation of assets

Question 14

The entry to replenish a petty cash fund includes a credit to…

Answer 14

cash

Question 15

A debit balance in Cash Over and Short is reoriented as a

Answer 15

miscellaneous expense

Question 16

A petty cash fund of $100 when the fund contains $4 in cash and receipts for $93….

Answer 16

The entry to replenish the fund would… debit cash over and short for $3

Question 17

A petty cash fund is generally established in order to

Answer 17

pay relatively small expenditures

Question 18

Work in process

Answer 18

Portion of manufactured Inventory that has been placed into production process but is not yet complete

Question 19

Raw materials

Answer 19

The basic goods that will be used in production but have not yet been placed into production

Question 20

Merchandise inventory

Answer 20

The many different items that make up the total inventory

Question 21

FOB (free on board) shipping point

Answer 21

Ownership of the good passes to the buyer when the public carrier accepts the goods from the seller

Question 22

FOB destination

Answer 22

Ownership of the good remain with the seller until the good reach the buyer

Question 23

Specific identification method

Answer 23

Being able to identify which particular units it’s sold in which are still in anything inventory
Using this method companies can accurately determine ending inventory and cost of goods sold

Question 24

FIFO

First in, first out method

Answer 24

The earliest goods purchased are the first to be sold
Often parallels the actual physical flow of merchandise
Oldest goods I recognize the first
The ending inventory is based on the prices of the most recent units purchased
Companies obtain the cost of the ending inventory by taking the unit cost of the most recent purchase in working backward until all units of inventory have been costed

Question 25

LIFO

Last day in, first out method

Answer 25

The latest goods purchased are the first to be sold
Coincides with the physical flow of inventory
The cost of the latest goods purchased are the first to be recognized in determining cost of goods sold
Companies attain the cost of the ending inventory by taking the unit cost of the earliest good available for sale in working for until all units in inventory have been costed

Question 26

Average cost method

Answer 26

Allocates the cost of goods available for sale on the basis of the weighted average unit cost incurred, the average cost method assumes that good are similar in nature

Question 27

Current replacement cost

Answer 27

The cost of purchasing the same goods at the present time from the usual suppliers in the usual quantities current replacement cost is used because a decline in replacement cost of an item usually leads to a decline in the selling price of the item

Question 28

Inventory turnover

Answer 28

A ratio that measures the number of times on average the inventory sold during the period, computed by dividing the cost of good sold by the average inventory during the period