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Accy 111- Chapter 8

20 Questions  I  By Mehleezah
Accy 111- Chapter 8
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1.  In a perpetual inventory system, the cost of inventory sold is
A.
B.
C.
D.
2.  In a periodic inventory system, the cost of inventories sold is
A.
B.
C.
D.
3.  The inventory method that will always produce the same amount for cost of goods sold in a periodic inventory system as in a perpetual inventory system would be:
A.
B.
C.
D.
4.  THe use of LIFO in accounting for a firm's inventory
A.
B.
C.
D.
5.  THe primary reasin for the popularity of LIFO is that it
A.
B.
C.
D.
6.  When reported in financial statements, a LIFO allowance accoint usually:
A.
B.
C.
D.
7.  If a company uses LIFO, a LIFO liquidation is problematic for a company's income taxes
A.
B.
C.
D.
8.  Alison's dress shop buys dresses from McGuire Manufacturing. Alison purchased dresses from McGuire on July 17, and received an invoice with a list price amount of $6,200 and payment terms of 3/10, n/30. Alison uses the net method to record purchases. Alison should record the purchase at:
A.
B.
C.
D.
9.  Northwest Fur Co. started 2009 with $97,000 of merchandise inventory on hand. During 2009, $440,000 in merchandise was purchased on account with credit terms of 1/15, n/45. All discounts were taken. Purchases were all made f.o.b. shipping point. Northwest paid freight charges of $9,500. Merchandise with an invoice amount of $3,000 was returned for credit. Cost of goods sold for the year was $376,000. Northwest uses a perpetual inventory system. What is ending inventory assuming Northwest uses the gross method to record purchases?
A.
B.
C.
D.
10.  Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition): • 45 units at $106 • 75 units at $72 • 175 units at $51 Sales for the year totaled 273 units, leaving 22 units on hand at the end of the year. Ending inventory using the average cost method is
A.
B.
C.
D.
11.  Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition): • 40 units at $90 • 70 units at $83 • 171 units at $60 Sales for the year totaled 272 units, leaving 9 units on hand at the end of the year. Ending inventory using the FIFO method is:
A.
B.
C.
D.
12.  Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition): • 40 units at $110 • 72 units at $78 • 170 units at $56 Sales for the year totaled 271 units, leaving 11 units on hand at the end of the year. Ending inventory using the LIFO method is
A.
B.
C.
D.
13.  Nu Company reported the following pretax data for its first year of operations.
Net sales 2,810
  Cost of goods available for sale 2,370
  Operating expenses 800
  Effective tax rate 30%
  Ending inventories:  
     If LIFO is elected 930
     If FIFO is elected 1,160
  What is Nu's net income if it elects FIFO?
A.
B.
C.
D.
14.  Nu Company reported the following pretax data for its first year of operations.
Net sales 2,820
  Cost of goods available for sale 2,490
  Operating expenses 740
  Effective tax rate 30%
  Ending inventories:  
     If LIFO is elected 820
     If FIFO is elected 1,080
 
A.
B.
C.
D.
15.  Nu Company reported the following pretax data for its first year of operations.
Net sales 2,990
  Cost of goods available for sale 2,330
  Operating expenses 860
  Effective tax rate 40%
  Ending inventories:  
     If LIFO is elected 950
     If FIFO is elected 1,160
  What is Nu's gross profit ratio if it elects LIFO? (Round your answer to the nearest whole percentage.)
A.
B.
C.
D.
16.  Nueva Company reported the following pretax data for its first year of operations.
Net sales 7,380
  Cost of goods available for sale 5,690
  Operating expenses 1,708
  Effective tax rate 40%
  Ending inventories:  
     If LIFO is elected 618
     If FIFO is elected 812
What is Nueva's gross profit ratio if it elects FIFO? (Round your answer to two decimal places e.g., .1234 as 12.34%.)
A.
B.
C.
D.
17.  Thompson TV and Appliance reported the following in its 2009 financial statements:
  2009
Sales $424,000
Cost of goods sold:  
      Inventory, January 1 62,000
      Net purchases 330,000
      Goods available for sale 392,000
      Inventory, December 31    102,000
      Cost of goods sold 290,000
Gross profit $134,000
  Thompson's 2009 gross profit ratio is
A.
B.
C.
D.
18.  Thompson TV and Appliance reported the following in its 2009 financial statements:
  2009
Sales $436,000
Cost of goods sold:  
      Inventory, January 1 75,000
      Net purchases 329,000
      Goods available for sale 404,000
      Inventory, December 31    86,000
      Cost of goods sold 318,000
Gross profit $118,000
  Thompson's 2009 inventory turnover ratio is
A.
B.
C.
D.
19.  Anthony Thomas Candies (ATC) reported the following financial data for 2009 and 2008: The average days inventory for ATC for 2009 is:
A.
B.
C.
D.
20.  Bond Company adopted the dollar-value LIFO inventory method on January 1, 2009. In applying the LIFO method, Bond uses internal cost indexes and the multiple-pools approach. The following data were available for Inventory Pool No. 3 for the two years following the adoption of LIFO:
Ending Inventory
At Current At Base
   Year Cost Year Cost Cost index
   1/1/09 $303,500 $303,500 1
12/31/09 351,540 325,500 1.08
12/31/10 420,000 350,000 1.2
Under the dollar-value LIFO method the inventory at December 31, 2010, should be
A.
B.
C.
D.
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