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QN=1

Merchandise inventory includes:

a.

All goods owned by a company and held for sale.

b. c. d. e.

All goods in transit. All goods on consignment. Only damaged goods. All goods in the stores of company.

Answer CHAPTER:

a 6

QN=2

Costs included in the Merchandise Inventory account can include:

a. b. c. d. e.

Invoice price minus any discount. Transportation-in. Storage. Insurance. All of these.

ANS: PTS: CHAPTER: MIX CHOICES:

E 1 6 No

QN=3

During a period of steadily rising costs, the inventory valuation method that yields the lowest reported net income is: Specific identification method. Average cost method. Weighted-average method. FIFO method. LIFO method.

a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=4 a. b. c. d. e.

E 1 6 no

The inventory valuation method that results in the lowest taxable income in a period of inflation is: LIFO method. FIFO method. Weighted-average cost method. Specific identification method. Gross profit method.

ANS: PTS: CHAPTER: MIX CHOICES:

A 1 6 No

QN=5

Which of the following inventory costing methods will always result in the same values for ending inventory and cost of goods sold regardless of whether a perpetual or periodic inventory system is used? FIFO and LIFO LIFO and weighted-average cost Specific identification and FIFO FIFO and weighted-average cost LIFO and specific identification

a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=6 a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES:

C 1 6 No

An overstatement of ending inventory will cause An overstatement of assets and equity on the balance sheet. An understatement of assets and equity on the balance sheet. An overstatement of assets and an understatement of equity on the balance sheet. An understatement of assets and an overstatement of equity on the balance sheet. No effect on the balance sheet. A 1 6 No

QN= 7 a. b. c. d. e. ANS: PTS: CHAPTER: MIX CHOICES:

Acceptable inventory methods include: LIFO method. FIFO method. Specific identification method. Weighted average method. All of these. E 1 6 No

QN=8

A company had the following purchases during the current year: Jan: 10 units at $ 120 Feb: 20 units at $130

May: 15 units at $140 Sep: 12 units at $150 Nov: 10 units at $160 On December 31, there were 26 units remaining in ending inventory. These 26 units consisted of 2 from January, 4 from February, 6 from May, 4 from September, and 10 from November. Using the specific identification method, what is the cost of the ending inventory? a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES:

$3,500. $3,800. $3,960. $3,280. $3,640. B 1 6 No

QN=9

A company had inventory on November 1 of 5 units at a cost of $20 each. On November 2, they purchased 10 units at $22 each. On November 6 they purchased 6 units at $25 each. On November 8, 8 units were sold for $55 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale?

a. b. c. d. e. ANS:

$304 $296 $288 $280 $276 E

PTS:

1

CHAPTER: MIX CHOICES:

6 no

QN=10

Acme-Jones Corporation uses a weighted-average perpetual inventory system. August 2, 10 units were purchased at $12 per unit. August 18, 15 units were purchased at $14 per unit. August 29, 12 units were sold. What was the amount of the cost of goods sold for this sale? $148.00. $150.50. $158.40. $210.00. $330.00.

a. b. c. d. e. f. ANS:

C

PTS:

1

CHAPTER: MIX CHOICES:

6 no

QN=11

A company has inventory of 10 units at a cost of $10 each on June 1. On June 3, it purchased 20 units at $12 each. 12 units are sold on June 5. Using the FIFO perpetual inventory method, what is the cost of the 12 units that were sold? $120. $124. $128. $130. $140.

a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=12

a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=13

a. b. c. d. e. f. ANS: PTS: CHAPTER:

B 1 6 no

A company has inventory of 15 units at a cost of $2 each on August 1. On August 5, it purchased 10 units at $3 per unit. On August 12 it purchased 20 units at $4 per unit. On August 15, it sold 30 units. Using the FIFO perpetual inventory method, what is the value of the inventory at August 15 after the sale? $140. $80. $60. $30. $70. C 1 6 No

A company had inventory of 10 units at a cost of $20 each on November 1. On November 2, it purchased 10 units at $21 each. On November 6 it purchased 15 units at $25 each. On November 8, it sold 20 units for $54 each. Using the LIFO perpetual inventory method, what was the cost of the 20 units sold? $395. $480. $375. $510. $520. B 1 6

QN=14

Acme-Jones Company uses a weighted-average perpetual inventory system. August 2, 8 units were purchased at $12 per unit. August 18, 15 units were purchased at $14 per unit. August 29, 20 units were sold. August 31, 10 units were purchased at $16 per unit. What is the per-unit value of ending inventory on August 31?

a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES:

$12.00. $13.30. $15.38. $16.00. $17.74.

QN=15

a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=16

a. b. c. d. e. f. ANS: PTS:

C 1 6 No

Given the following information, determine the cost of the inventory at June 30 using the LIFO perpetual inventory method. June, 1: Beginning inventory 15 units at $20 each June, 15: Sale of 6 units at $50 June, 29: Purchased of 8 units at $25 The cost of goods sold is : $200. $220. $120. $275. $300. C 1 6 No

A company has inventory of 10 units at a cost of $10 each on June 1. On June 3, it purchased 20 units at $12 each. 12 units are sold on June 5. Using the FIFO periodic inventory method, what is the cost of ending inventories? $120. $216. $128. $130. $140. B 1

CHAPTER: MIX CHOICES:

6 No

QN=17

A company has inventory of 20 units at a cost of $12 each on August 1. On August 5, it purchased 10 units at $13 per unit. On August 12 it purchased 15 units at $14 per unit. On August 15, it sold 30 units. Using the FIFO periodic inventory method, what is the value of Cost of goods sold on August 15? $140. $160. $370. $210. $590.

a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=18

a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=19

a.

b.

C 1 6 No

A company had inventory of 15 units at a cost of $20 each on November 1. On November 2, it purchased 10 units at $22 each. On November 6 it purchased 12 units at $25 each. On November 8, it sold 22 units for $54 each. Using the FIFO perpetual inventory method, what was the cost of the 22 units sold? $454. $366. $450. $570. $520. a 1 6 No

A company that uses a perpetual inventory system made the following cash purchases and sales: Jan, 1: Purchased 100 units at $10 per unit. Feb, 5: Purchased 60 units at $12 per unit. March, 16: Sold 40 units for $ 16 per unit. Prepare general journal entries to record the March 16 sale assuming a cash sale and the FIFO method is used. March 16 Dr Cash 400 Cr Sale revenue 400 Dr COGS 640 Cr Inventories 640 March 16 Dr Cash 640

Cr Sale revenue COGS 400 Cr Inventories March 16 Dr Sale revenue 640 Cr Cash 640 Dr COGS 400 Cr Inventories March 16 Dr Sale revenue 640 Cr Cash 640 Dr Inventories 400 Cr COGS 400 None of these

640

Dr

c.

d.

e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=20

a.

b.

c.

d.

e. f. ANS: PTS: CHAPTER: MIX

400

400

B 1 6 No

A company that uses a perpetual inventory system made the following cash purchases and sales: Jan, 1: Purchased 100 units at $10 per unit. Feb, 5: Purchased 60 units at $12 per unit. March, 16: Sold 40 units for $ 16 per unit. Prepare the general journal entry to record the March 16 sale assuming a cash sale and the LIFO method is used: Dr Cash 640 Cr Sale revenue 640 Dr COGS 450 Cr Inventories 450 Dr Cash 640 Cr Sale revenue 640 Dr COGS 840 Cr Inventories 840 Dr Cash 640 Cr Sale revenue 640 Dr COGS 480 Cr Inventories 480 Dr Sale revenue 640 Cr cash 640 Dr COGS 480 Cr Inventories 480 None of these C 1 6 No

CHOICES: QN=21

a.

b.

c.

d.

e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=22

a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES:

A company that uses a perpetual inventory system made the following cash purchases and sales: Jan, 1: Purchased 100 units at $10 per unit. Feb, 5: Purchased 60 units at $12 per unit. March, 16: Sold 40 units for $ 16 per unit. Prepare the general journal entry to record the March 16 sale assuming a cash sale and the weighted average method is used. Dr Cash 640 Cr Sale revenue 640 Dr COGS 450 Cr Inventories 450 Dr Cash 640 Cr Sale revenue 640 Dr COGS 340 Cr Inventories 340 Dr Cash 640 Cr Sale revenue 640 Dr COGS 470 Cr Inventories 470 Dr Cash 640 Cr Sale revenue 640 Dr COGS 430 Cr Inventories 430 None of these d 1 6 no

A company had inventory of 10 units at a cost of $20 each on November 1. On November 2, it purchased 10 units at $22 each. On November 6 it purchased 6 units at $25 each. On November 8, it sold 22 units for $54 each. Using the FIFO perpetual inventory method, what was the cost of the 22 units sold? $570 $470 $670 $370 $740 b 1 6 NO

QN=23 a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES:

Which of the following is not considered as subcategory of owner’s Equity? Revenue Withdrawal Assets Expense Contributed capital c 1 1 NO

QN=24 a.

The properties used in operation activities of a business is call: Revenue

b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES:

Withdrawal Assets Expense Liabilities

QN=25 a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=26 a. b. c. d. e. f. ANS: PTS:

c 1 1 NO

Which of the following is a liability? Account payable Account receivable Cash Inventory expense a 1 1 NO

Which of the following is not a liability? Account payable Note payable Short term loan Long term loan Short term investment e 1

CHAPTER: MIX CHOICES:

1 NO

QN=27 a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES:

Which of the following is not a category or element of the balance sheet? Expense Liabilities Assets Account payable Loan

QN=28

a.

b.

a 1 1 NO

Newton Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Newton Company wrote off the $3,000 uncollectible account of its customer, P. Best. The journal entry on May 3 is: Dr allowance for doubtful debts 3000 Cr account receivable 3000 Dr bad debt expense 3000 Cr account receivable

3000

c.

Dr bad debt expense 3000 Cr Allowance for doubtful debt 3000

d.

Dr account receivable 3000 Cr bad debt expense

3000

Dr Accounts receivable 3000 Cr Cash

3000

e. f. ANS: PTS: CHAPTER: MIX CHOICES:

a 1 9 NO

QN=29

A company has $20,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 6% of outstanding receivables are uncollectible. The current debit balance (before adjustments) in the allowance for doubtful accounts is $800. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:

a.

$1200

b.

$500

c.

$400

d.

$1000

e. f. ANS: PTS: CHAPTER: MIX CHOICES:

None of these

QN=30 a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=31 a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=32

a. b. c. d. e.

c 1 9 NO

Electron borrowed $15,000 cash from TechCom by signing a promissory note. TechCom's entry to record the transaction should include a: Debit to Notes Receivable for $15,000. Debit to Accounts Receivable for $15,000. Credit to Notes Receivable for $15,000. Debit Notes Payable for $15,000. Credit to Cash for $15,000. a 1 9 NO

The amount due on the maturity date of a $12,000, 60-day 8%, note receivable is: $6,000. $12,000. $160. $12,160. $5,920. d 1 9 No

The company has $1679 credit sales at year end. Experiences show that 4% of credit sales may not be collectable. What is the estimated bad debt expense to be record at year end? $1200 $419 $67.16 $100 None of these

f. ANS: PTS: CHAPTER: MIX CHOICES: QN=33

a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=34

a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=35

a. b. c. d. e. f. ANS: PTS:

c 1 9 No

A vehicle had an estimated useful life of 8 years. The vehicle cost $23,000 and its estimated salvage value is $1,500. The depreciation expense (using straight line method) for a year is: $ 2687.50. $ 3546.50. $ 2875.00. $10,750.00. $ 2,856.25. a 1 10 no

A company used straight-line depreciation for an item of equipment that cost $12,000, had a salvage value of $2,000, and had a five-year useful life. What is the depreciation expense for one year? $1000. $1800. $2400. $2000. $2160. d 1 10 No

Orange Company purchased equipment on July 1 for $28,500 and decided to depreciate the equipment on the straight-line method over its useful life of five years. Assuming the equipment's salvage value is $4,500, the amount of monthly depreciation expense Nelson should recognize is: $2,400 $ 200 $4800 $400 $ 450 d 1

CHAPTER: MIX CHOICES:

10 No

QN=36

Thomas Enterprises purchased a depreciable asset on January 1, 2008 at a cost of $100,000. The asset is expected to have a salvage value of $15,000 at the end of its five-year useful life. Balance of accumulated depreciation of this asset at the end of 2009 is $27540 $21600 $34000 $17000 $90000

a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN= 37

a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=38 a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES:

c 1 10 No

Lomax Enterprises purchased a depreciable asset for $20,000 on January 1, 2008. The asset will be depreciated using the straight-line method over its four-year useful life. Assuming the asset's salvage value is $2,000, what will be the amount of accumulated depreciation on this asset on June 30, 2011? $18000 $4500 $13500 $20,000 $15750 e 1 10 No

Accounting is an information and measurement system that: Identifies business activities. Records business activities. Communicates business activities. Helps people make better decisions. All of these. e 1 1 No

QN=39 a. b. c. d. e. f. ANS:

b

PTS:

1

CHAPTER: MIX CHOICES:

1 no

QN=40 a. b. c. d. e. f. ANS:

External users of accounting information include: Shareholders. Customers. Creditors. Government regulators. All of these. e

PTS:

1

CHAPTER: MIX CHOICES:

1 no

QN=41

The accounting assumption that requires every business to be accounted for separately from other business entities, including its owner or owners is known as the: Objectivity principle. Business entity assumption. Going-concern assumption. Revenue recognition principle. Cost principle.

a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=42

a. b. c. d. e.

Internal users of accounting information include: Shareholders. Managers. Lenders. Suppliers. Customers.

b 1 1 no

The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the: Going-concern principle. Business entity principle. Objectivity principle. Cost Principle. Monetary unit principle.

f. ANS: PTS: CHAPTER: MIX CHOICES: QN=43 a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=44 a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=45 a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=46

a 1 3 no

Which of the following accounting principles would require that all goods and services purchased should be recorded at cost? Going-concern principle. Continuing-concern principle. Cost principle. Business entity principle. Consideration principle. c 1 1 no

An example of a financing activity is: Buying office supplies. Obtaining a long-term loan. Buying office equipment. Selling inventory. Buying land. b 1 1 no

An example of an operating activity is: Paying wages. Purchasing office equipment. Borrowing money from a bank. Selling stock. Paying off a loan. a 1 1 no

Operating activities:

a.

Are the means organizations use to pay for resources like land, buildings and equipment.

b.

Involve using resources to research, develop, purchase, produce, distribute and market products and services. Involve acquiring and disposing of resources that a business uses to acquire and sell its products or services. Are also called asset management. Are also called strategic management.

c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=47 a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=48 a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=49 a. b. c. d. e. f. ANS:

b 1 1 no

An example of an investing activity is Paying wages of employees. Withdrawals by the owner. Purchase of land. Selling inventory. Contribution from owner. c 1 1 no

Net Income: Decreases equity. Represents the amount of assets owners put into a business. Equals assets minus liabilities. Is the excess of revenues over expenses. Represents owners' claims against assets. d 1 1 No

If equity is $300,000 and liabilities are $192,000, then assets equal: $108,000. $192,000. $300,000. $492,000. $792,000. d

PTS: CHAPTER: MIX CHOICES:

1 1 No

QN=50

Resources owned or controlled by a company that are expected to yield future benefits are: Assets. Revenues. Liabilities. Owner's Equity. Expenses.

a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=51 a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES:

a 1 1 No

Gross increases in equity from a company's earnings activities are: Assets. Revenues. Liabilities. Owner's Equity. Expenses. b 1 1 no

QN=52 a.

The difference between a company's assets and its liabilities, or net assets is: Net income.

b.

Expense.

c.

Equity.

d.

Revenue.

e. f. ANS: PTS: CHAPTER: MIX CHOICES:

Net loss. c 1 1 NO

QN=53 a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=54 a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=55 a. b. c. d. e. f. ANS: PTS: CHAPTER: MIX CHOICES: QN=56 a. b. c. d. e. f. ANS:

Creditors' claims on the assets of a company are called: Net losses. Expenses. Revenues. Equity. Liabilities. e 1 1 NO

Decreases in equity that represent costs of assets or services used to e...