ACCY 111: Accounting Exam! Quiz

20 Questions | By Mehleezah | Last updated: Mar 21, 2022 | Total Attempts: 573

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1.

In a perpetual inventory system, the cost of inventory sold is
- A.
  
  Credit to Cost of Goods Sold
- B.
  
  Debited to Accounts Receivable
- C.
  
  Debited to Cost of Goods Sold
- D.
  
  Not recorded at the time
2.

In a periodic inventory system, the cost of inventories sold is:
- A.
  
  Not recorded at the time of sale
- B.
  
  Debited to cost of goods sold
- C.
  
  Debited to accounts receivable
- D.
  
  Credited to cost of goods sold
3.

The inventory method that will always produce the same amount for the cost of goods sold in a periodic inventory system as in a perpetual inventory system would be:
- A.
  
  FIFO
- B.
  
  LIFO
- C.
  
  Weighted Average
- D.
  
  None of these
4.

The use of LIFO in accounting for a firm's inventory:
- A.
  
  Usually matches the physical flow of goods through the business
- B.
  
  Is usually used for internal mgmt purposes
- C.
  
  Usually provides a better match of expenses with revenues
- D.
  
  None of these is correct
5.

The primary reason for the popularity of LIFO is that it:
- A.
  
  Simplifies record keeping
- B.
  
  Saves income taxes currently
- C.
  
  Provides better matching of physical flow and cost flow
- D.
  
  Provides a permanent reduction of income taxes
6.

When reported in financial statements, a LIFO allowance account usually:
- A.
  
  Indicates the effect on insome if LIFO were not used
- B.
  
  Is shown in the firm's income statement
- C.
  
  Is added to LIFO cost to indicate what the inventory would cost on a FIFO bases
- D.
  
  Shows the current rate of inflation for tha asset
7.

If a company uses LIFO, a LIFO liquidation is problematic for a company's income taxes:
- A.
  
  Whether inventory purchase costs are declining or rising
- B.
  
  LIFO liquidations are not problematic for a company's income taxes
- C.
  
  When inventory purchase costs are rising
- D.
  
  When inventory purchase costs are declining
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.
  
  $3,007
- B.
  
  $6,386
- C.
  
  $6,014
- D.
  
  $6,200
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.
  
  $163,070
- B.
  
  $167,500
- C.
  
  $170,500
- D.
  
  $163,130
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.
  
  $1,424.
- B.
  
  $1,172
- C.
  
  $1,122
- D.
  
  $2,332
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.
  
  $590
- B.
  
  $810
- C.
  
  $540
- D.
  
  $630
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.
  
  $666.
- B.
  
  $616
- C.
  
  $1,210
- D.
  
  $762
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.
  
  $1,600
- B.
  
  $399
- C.
  
  $560
- D.
  
  $800
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.
  
  $287
- B.
  
  $469
- C.
  
  $410.
- D.
  
  $670
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.
  
  19%
- B.
  
  61%
- C.
  
  54%
- D.
  
  66%
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.
  
  62.54%
- B.
  
  31.27%
- C.
  
  57.05%
- D.
  
  33.9%
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.
  
  None of these is correct
- B.
  
  22%
- C.
  
  31%
- D.
  
  32%
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.
  
  3.7
- B.
  
  5.07
- C.
  
  3.95
- D.
  
  5.42
19.

Anthony Thomas Candies (ATC) reported the following financial data for 2009 and 2008: The average days inventory for ATC for 2009 is:
- A.
  
  151 days
- B.
  
  Less than 100 days
- C.
  
  114 days
- D.
  
  132 days
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.
  
  $356,660
- B.
  
  $350,000
- C.
  
  $351,760
- D.
  
  None of these