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Exam 5: Inventories and Cost of Goods Sold

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Question 41

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Readers.com uses a perpetual inventory system. If Readers.com uses the moving average method, how much is cost of goods sold for the units sold on February 15?

A) $245
B) $255
C) $260
D) $270

E) A) and C)
F) B) and D)

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Question 42

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Chen's Department Store Chen's Department Store is a merchandising company that uses the periodic inventory system.Selected account balances are listed below: -Refer to the account information for Chen's Department Store Calculate Chen's cost of goods purchased

A) $ 84,000
B) $ 90,000
C) $ 103,000
D) $ 117,000

E) None of the above
F) A) and D)

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Question 43

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Using the following information, what is the amount of cost of goods sold?

Which one of the following is correct?

Selected data for Sorenta, Inc.and New World Corp., two companies in the same industry, are presented below: Based on this data, which statement below is true?

Specific identification relies on matching unit costs with the actual units sold.

A major advantage of the weighted average method of inventory costing is that

Shipping terms of mean that the buyer pays shipping costs.

Sales returns and allowances is a contra account.

If a customer returns merchandise which has already been paid for, the retailer may give either a cash refund or a credit on account.

Sales Discounts is classified as what type of account?

The amount recognized on the Income Statement as the cost of inventory will be recognized as an) _________________________.

Texas Inc.sold merchandise to Fagin Corp.on December 28, 2014, with shipping terms of FOB destination.Fagin Corp.received the merchandise on January 3, 2015.Which one of the following statements is true?

Under the inventory system, the inventory account is updated after each purchase or sale.

Cost of goods sold is equal to

A departure from the cost basis of accounting may be necessary when the _________________________ of the inventory is less than its cost to the company.

A LIFO reserve represents the amount by which cost of goods sold on a FIFO basis exceeds the cost of goods sold on a LIFO basis for the current year.

If a company overstates its ending inventory for the current year, what are the effects on cost of goods sold and net income for the current year?

Wendt, Inc.counted its ending inventory as $178,000 at year-end, January 31, 2014.Upon review of the records, it was noted that the following items were in transit during the count: A. $2,000 of goods shipped by a supplier to Wendt sent FOB destination on January 31 were received February 5, and were not counted by Wendt. B. $5,000 of goods shipped by a supplier to Wendt sent FOB shipping point on January 30 were received February 2, and were not counted by Wendt. C. $6,000 of goods shipped by Wendt to a customer FOB shipping point on January 31 were received by the customer February 3, and were counted by Wendt. Determine the correct inventory balance at January 31.

Both U.S.GAAP and international financial reporting standards IFRS) require the use of the lower-of-cost-or-market rule to value inventories.