Title | Ch06 - CH6 |
---|---|
Course | Managarial Accounting |
Institution | University Canada West |
Pages | 85 |
File Size | 1.4 MB |
File Type | |
Total Downloads | 115 |
Total Views | 161 |
CH6...
CHAPTER 6 RECORDING AND ANALYZING MERCHANDISING TRANSACTIONS, RECEIVABLES, AND INVENTORY SUMMARY OF QUESTIONS BY LEARNING OBJECTIVE AND BLOOM’S TAXONOMY Item
LO
BT
Item
LO
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.
1 1 1 1 1 1 1 1 1 1 2 2 2
K K K K K C C K K K K K K
14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26.
2 2 2 2 2 2 2 2 2 2 2 2 2
63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82. 83. 84.
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
K K K K K K K K K K C K K K K K K K K K K K
94. 95. 96. 97. 98. 99. 100. 101. 102. 103. 104. 105. 106. 107. 108. 109. 110. 111. 112. 113. 114. 115.
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
BT Item LO BT Item True-False Statements K 27. 3 K 39. K 28. 3 K 40. K 29. 3 K 41. K 30. 3 K 42. K 31. 3 K 43. K 32. 3 K 44. C 33. 3 K 45. C 34. 3 C 46. K 35. 3 C 47. K 36. 3 C 48. K 37. 3 C 49. K 38. 3 C 50. K Multiple Choice Questions AP 125. 2 AP 156. AN 126. 2 C 157. AP 127. 2 AP 158. AP 128. 2 AP 159. AP 129. 2 AP 160. AP 130. 2 AP 161. AP 131. 2 AP 162. AP 132. 2 AP 163. AP 133. 2 AP 164. AP 134. 2 AP 165. AP 135. 2 AP 166. AP 136. 2 AP 167. AP 137. 2 AP 168. AP 138. 2 AP 169. AP 139. 2 AP 170. AP 140. 2 AP 171. K 141. 2 AP 172. K 142. 2 C 173. AP 143. 2 C 174. AP 144. 2 C 175. AP 145. 2 C 176. AP 146. 2 C 177.
FOR INSTRUCTOR USE ONLY
LO
BT
Item
LO
BT
3 3 3 3 3 3 3 3 3 3 3 3
C C C C C K K K K K C C
51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62.
3 3 3 4 4 4 4 4 4 5 5 5
C K K C K K K K K AP C K
C K C K K C K AN C C C AP AP C K K K K K C AN C
187. 188. 189. 190. 191. 192. 193. 194. 195. 196. 197. 198. 199. 200. 201. 202. 203. 204. 205. 206. 207. 208.
3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3
3 3 3 3 3 4 4 4 4 4 4 4 4 4 4 4 4 4 5 5 5 5
K AP AP AP C K K K K K K K AP AP AP AP AP AP AP AP AP AP
6-2 85. 86. 87. 88. 89. 90. 91. 92. 93.
Test Bank for Survey of Accounting, First Edition 1 1 1 2 2 2 2 2 2
K C AP K K K K AP AP
116. 117. 118. 119. 120. 121. 122. 123. 124.
2 2 2 2 2 2 2 2 2
217. 218. 219. 220.
1,4 1 1 1
AP AP AP AP
221. 222. 223. 224.
2 2 2 2
234. 235. 236. 237. 238.
1 1 1 1 1
AP AP AP AP AP
239. 240. 241. 242. 243.
2 2 2 2 2
256. 257. 258.
1 1 1
K K K
271.
1-5
K
272. 273. 274.
1 1 2
C K C
259. 260. 261.
1 1, 4 1
275. 276.
Note: TF = True-False MC = Multiple Choice Ma = Matching
2 2
K 147. 2 C 178. K 148. 2 C 179. K 149. 2 C 180. K 150. 2 K 181. K 151. 2 K 182. AP 152. 3 K 183. AP 153. 3 K 184. AP 154. 3 K 185. AP 155. 3 AP 186. Brief Exercises AP 225. 3 K 228. AP 226. 3 AP 229. AP 227. 3 AP 230. C Exercises AP 244. 2 AP 248. AP 245. 2 AP 249. AP 246. 1,3 AP 250. AP 247. 1,3 AP 251. AP Completion Statements K 262. 2 K 265. K 263. 2 K 266. K 264. 2 K 267. Matching Short Answer Essay K 277. 2 C C 278. 3 AN
3 3 3 3 3 3 3 3 3
279. 280.
C = Completion Ex = Exercise SA = Short Answer Essay
FOR INSTRUCTOR USE ONLY
AN 209. C 210. AN 211. AP 212. K 213. AP 214. AP 215. AP 216. C
3 4 4
AP AP K
5 5 5 5 5 5 5 5
231. 232. 233.
AP AP K C AN AN AN AN
4, 5 4, 5 4, 5
AP AP AP
3 3 3 3
AP AP AP AP
252. 253. 254. 255.
4, 5 4, 5 4, 5 4, 5
AP AP AP AP
2 2 3
K K K
268. 269. 270.
3 3 5
K K K
5 5
C K
4 4
C C
281. 282.
Recording and Analyzing Merchandising Transactions, Receivables, and Inventory
6-3
SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE
Item 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Item 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 88.
Type TF TF TF TF TF TF TF TF TF TF Type TF TF TF TF TF TF TF TF TF TF TF TF TF TF TF TF MC
Item 63. 64. 65. 66. 67. 68. 69. 70. 71.
Item 89. 90. 91. 92. 93. 94. 95. 96. 97. 98. 99. 100. 101. 102. 103. 104. 105.
Type MC MC MC MC MC MC MC MC MC
Learning Objective 1 Item Type Item Type 72. MC 81. MC 73. MC 82. MC 74. MC 83. MC 75. MC 84. MC 76. MC 85. MC 77. MC 86. MC 78. MC 87. MC 79. MC 217. BE 80. MC 218. BE
Item 219. 220. 234. 235. 236. 237. 238. 246. 247.
Type BE BE Ex Ex Ex Ex Ex Ex Ex
Item 256. 257. 258. 259. 260. 261. 271. 272. 273.
Type CS CS CS CS CS CS Ma SA SA
Type MC MC MC MC MC MC MC MC MC MC MC MC MC MC MC MC MC
Learning Objective 2 Item Type Item Type 106. MC 123. MC 107. MC 124. MC 108. MC 125. MC 109. MC 126. MC 110. MC 127. MC 111. MC 128. MC 112. MC 129. MC 113. MC 130. MC 114. MC 131. MC 115. MC 132. MC 116. MC 133. MC 117. MC 134. MC 118. MC 135. MC 119. MC 136. MC 120. MC 137. MC 121. MC 138. MC 122. MC 139. MC
Item 140. 141. 142. 143. 144. 145. 146. 147. 148. 149. 150. 151. 221. 222. 223. 224. 239.
Type MC MC MC MC MC MC MC MC MC MC MC MC BE BE BE BE Ex
Item 240. 241. 242. 243. 244. 245. 262. 263. 264. 265. 266. 271. 274. 275. 276. 277.
Type Ex Ex Ex Ex Ex Ex CS CS CS CS CS Ma SA SA SA SA
FOR INSTRUCTOR USE ONLY
6-4
Test Bank for Survey of Accounting, First Edition
SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE (continued) Item 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40.
Type TF TF TF TF TF TF TF TF TF TF TF TF TF TF
Item 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 152. 153.
Type TF TF TF TF TF TF TF TF TF TF TF TF MC MC
Item 53. 54. 55. 56. 57.
Type TF TF TF TF TF
Item 58. 59. 192. 193. 194.
Type TF TF MC MC MC
Learning Objective 3 Item Type Item Type 154. MC 168. MC 155. MC 169. MC 156. MC 170. MC 157. MC 171. MC 158. MC 172. MC 159. MC 173. MC 160. MC 174. MC 161. MC 175. MC 162. MC 176. MC 163. MC 177. MC 164. MC 178. MC 165. MC 179. MC 166. MC 180. MC 167. MC 181. MC Learning Objective 4 Item Type Item Type 195. MC 200. MC 196. MC 201. MC 197. MC 202. MC 198. MC 203. MC 199. MC 204. MC
Type MC MC MC MC MC
Learning Objective 5 Item Type Item Type 212. MC 231. BE 213. MC 232. BE 214. MC 233. BE 215. MC 252. Ex 216. MC 253. Ex
Item 60. 61. 62. 205. 206.
Type TF TF TF MC MC
Item 207. 208. 209. 210. 211.
Note: TF = True-False MC = Multiple Choice Ma = Matching
Item 182. 183. 184. 185. 186. 187. 188. 189. 190. 191. 225. 226. 227. 228.
Type MC MC MC MC MC MC MC MC MC MC BE BE BE BE
Item 246. 247. 248. 249. 250. 251. 267. 268. 269. 271. 278.
Type Ex Ex Ex Ex Ex Ex CS CS CS Ma SA
Item 217. 229. 230. 231. 232. 233. 252.
Type BE BE BE BE BE BE Ex
Item 253. 254. 271. 260. 279. 280.
Type Ex Ex Ma CS CS CS
Item 254. 255. 270. 271. 281.
Type Ex Ex CS Ma SA
Item 282.
Type SA
C = Completion Ex = Exercise SA = Short Answer Essay
FOR INSTRUCTOR USE ONLY
Recording and Analyzing Merchandising Transactions, Receivables, and Inventory
6-5
CHAPTER LEARNING OBJECTIVES 1. Describe inventory systems and record purchases and sales. Because of the presence of inventory, a merchandising company has sales revenue, cost of goods sold, and gross profit. To account for inventory, a merchandising company must choose between a perpetual inventory system and a periodic inventory system. The Inventory account is increased for all purchases of merchandise. When inventory is sold, Accounts Receivable (or Cash) and Sales Revenue are increased for the selling price of the merchandise. At the same time, Cost of Goods Sold is increased and Inventory is decreased for the cost of inventory items sold. 2. Discuss how to classify and determine cost of inventory under a periodic approach. Merchandisers need only one inventory classification, merchandise inventory, to describe the different items that make up total inventory. Manufacturers, on the other hand, usually classify inventory into three categories: finished goods, work in process, and raw materials. The primary basis of accounting for inventories is cost. Cost includes all expenditures necessary to acquire goods and place them in a condition ready for sale. Cost of goods available for sale includes (a) cost of beginning inventory and (b) cost of goods purchased. The inventory cost flow methods are specific identification and three assumed cost flow methods-FIFO, LIFO, and average-cost. The cost of goods available for sale may be allocated to cost of goods sold and ending inventory by specific identification or by a method based on an assumed cost flow. When prices are rising, the first-in, first-out (FIFO) method results in lower cost of goods sold and higher net income than.the average-cost and the last-in, first-out (LIFO) methods. The reverse is true when prices are falling. In the balance sheet, FIFO results in an ending inventory that is closest to current value, whereas the inventory under LIFO is the farthest from current value. LIFO results in the lowest income taxes (because of lower taxable income). 3. Explain how companies recognize and value receivables. Receivables are frequently classified as accounts, notes, and other. Accounts receivable are amounts customers owe on account. Notes receivable represent claims that are evidenced by formal instruments of credit. Other receivables include nontrade receivables such as interest receivable, loans to company officers, advances to employees, and income taxes refundable. Companies record accounts receivable when they perform a service on account or at the point- of-sale of merchandise on account. Sales returns and allowances and cash discounts reduce the amount received on accounts receivable. The two methods of accounting for uncollectible accounts are the allowance method and the direct write-off method. Under the allowance method, companies estimate uncollectible accounts as a percentage of receivables. It emphasizes the cash realizable value of the accounts receivable. An aging schedule is frequently used with this approach. 4. Prepare a multiple-step income statement and a comprehensive income statement A multiple-step income statement shows numerous steps in determining net income, including results of nonoperating activities. A comprehensive income statement adds or subtracts any items of other comprehensive income to net income to arrive at comprehensive income. 5. Compute and analyze gross profit rate and profit margin. Profitability is affected by gross profit, as measured by the gross profit rate, and by management’s ability to control costs, as measured by the profit margin.
FOR INSTRUCTOR USE ONLY
6-6
Test Bank for Survey of Accounting, First Edition
TRUE-FALSE STATEMENTS 1.
Retailers and wholesalers are both considered merchandising enterprises.
Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: N one, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
2.
The operating cycle of a merchandising company ordinarily is shorter than that of a service company.
Ans: F, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Re porting, AICPA PC: None, IMA: Reporting
3.
Sales revenue minus operating expenses equals gross profit.
Ans: F, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
4.
Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.
Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement, AICPA PC: None, IMA: Reporting
5.
A periodic inventory system does not require a detailed record of inventory items.
Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: Reporting
6.
The purchase of inventory and its eventual sale lengthen the operating cycle of a merchandising company.
Ans: T, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Business Economics
7.
An advantage of using the periodic inventory system is that it requires less record keeping than the perpetual inventory system.
Ans: T, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
8.
Cost of Goods Sold is considered an expense of a merchandising firm.
Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
9.
Net sales minus cost of goods sold is called gross profit.
Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
10.
Under the perpetual inventory system, purchases of merchandise for sale are recorded in the Inventory account.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None , AICPA FC: Measurement, AICPA PC: None, IMA: Reporting
11.
Raw materials inventories are the goods that a manufacturing company has completed and are ready to be sold to customers.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
12.
A manufacturer’s inventory consists of raw materials, work in process, and finished goods.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB:None, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
13.
In accounting for inventory, the assumed flow of costs must match the physical flow of goods.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
14.
Inventory methods such as FIFO and LIFO deal more with flow of costs than with flow of goods. FOR INSTRUCTOR USE ONLY
Recording and Analyzing Merchandising Transactions, Receivables, and Inventory
6-7
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
15.
The average cost inventory method relies on a simple average calculation.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
16.
If prices never changed there would be no need for alternative inventory methods.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
17.
The specific identification method of costing inventories tracks the actual physical flow of the goods available for sale.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None, AICPA FC: Measurement, AICPA PC: None, IMA: Reporting
18.
Management may choose any inventory costing method it desires as long as the cost flow assumption chosen is consistent with the physical movement of goods in the company.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None, AICPA FC: Measurement, AICPA PC: None, IMA: Reporting
19.
The First-in, First-out (FIFO) inventory method results in an ending inventory valued at the most recent cost.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
20.
If a company has no beginning inventory and the unit cost of inventory items does not change during the year, the value assigned to the ending inventory will be the same under LIFO and average cost flow assumptions.
Ans: T, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
21.
If the unit price of inventory is increasing during a period, a company using the LIFO inventory method will show less gross profit for the period, than if it had used the FIFO inventory method.
Ans: T, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
22.
A company may use more than one inventory cost flow method at the same time.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
23.
Use of the LIFO inventory valuation method enables a company to report paper or phantom profits.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
24.
The LIFO inventory method agrees with the actual physical movement of goods in most businesses.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
25.
In periods of falling prices, LIFO will result in a higher ending inventory valuation than FIFO.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None, AICPA FC: Measurement, AICPA PC: None, IMA: FSA
26.
In periods of falling prices, FIFO will result in a larger net income than the LIFO method.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None, AICPA FC: Measurement, AICPA PC: None, IMA: FSA
27.
Trade receivables occur when two companies trade or exchange notes receivables.
Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
28.
Trade receivables can be an account receivable or a note receivable.
Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
FOR INSTRUCTOR USE ONLY
6-8 29.
Test Bank for Survey of Accounting, First Edition Other receivables include non-trade receivables such as loans to company officers.
Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
30.
Advances to employees are referred to as accounts receivable.
Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
31.
Both accounts receivable and notes r...