Inventory Account In Its General Ledger F8

27 Questions | By Amphib2007 | Last updated: Mar 20, 2022 | Total Attempts: 250

Questions

Settings

Create your own Quiz

Inventory Account In Its General Ledger F8 - Quiz

Questions and Answers

1.

Prior to the computer age, virtually all companies:
- A.
  
  All of these answers are correct.
- B.
  
  Kept detailed inventory records manually
- C.
  
  Used the periodic inventory system
- D.
  
  Used the perpetual inventory system
2.

The type of firm that will have an Inventory account in its general ledger is a:
- A.
  
  Law firm
- B.
  
  Merchandising firm
- C.
  
  Manufacturing firm
- D.
  
  Merchandising, manufacturing, or hybrid firm
3.

Superstar Sports Supplies has purchased 1,800 basketballs this period. During the period it sold 2,000 basketballs. A physical count at the end of the month reveals that Superstar has 500 basketballs still on hand. How many basketballs did Superstar have at the beginning of the current month?
- A.
  
  700
- B.
  
  3,500
- C.
  
  300
- D.
  
  1,300
4.

An inventory system where the inventory calculation and cost of goods sold are determined only at the end of the period for the income statement is:
- A.
  
  Periodic system
- B.
  
  Process system
- C.
  
  Planned system
- D.
  
  Perpetual system
5.

The physical flow of merchandise where a company rotates its stock by selling the oldest merchandise before newer merchandise is called:
- A.
  
  First-in, first-out
- B.
  
  Last-in, first-out
- C.
  
  An averaging of inventory
- D.
  
  Last-in, still-here
6.

Which statement regarding freight costs below is correct?
- A.
  
  Freight paid to ship merchandise in is considered part of the cost of goods sold.
- B.
  
  Freight paid to ship merchandise out to customers is considered part of selling expense.
- C.
  
  Freight paid to ship merchandise in is considered part of selling expense.
- D.
  
  Answers a and b are both correct.
7.
- A.
  
  $327
- B.
  
  $330
- C.
  
  $225
- D.
  
  $390
8.

The average inventory holding period in days is computed by:
- A.
  
  Cost of goods sold divided by average inventory
- B.
  
  Net income divided by average inventory
- C.
  
  365 divided by (the cost of goods sold divided by average inventory)
- D.
  
  Average inventory divided by total assets
9.

Superstar Sports Supplies has started the period with 600 baseballs. During the period it purchased 2,000 additional baseballs. A physical count at the end of the month reveals that Superstar has 500 baseballs still on hand. How many baseballs did Superstar sell during the current month?
- A.
  
  1,900
- B.
  
  500
- C.
  
  2,100
- D.
  
  2,000
10.

A company purchases a computer for use in its own business. The computer should be considered:
- A.
  
  A potential liability
- B.
  
  Merchandise inventory
- C.
  
  A depreciable asset
- D.
  
  Office supplies
11.

The stock of items a company holds for resale to other companies or the general public is called:
- A.
  
  Products
- B.
  
  Stock in trade
- C.
  
  Goods
- D.
  
  Inventory
12.

When prices are increasing, using FIFO results in:
- A.
  
  Lower net income
- B.
  
  Higher net income
- C.
  
  Lower ending inventory
- D.
  
  Higher retail prices to customers
13.

A buyer that regularly takes advantage of 2/10, n/30 payment terms will earn on an annual return of:
- A.
  
  36.5%
- B.
  
  24%
- C.
  
  2%
- D.
  
  73%
14.

During a time of rising prices, more of the total cost of inventory is shown on the income statement as an expense when a company uses the:
- A.
  
  Average cost method
- B.
  
  FIFO method
- C.
  
  LIFO method
- D.
  
  None of these answers is correct.
15.

Under the perpetual inventory system, the inventory amounts shown on accounting records in units and dollars are called:
- A.
  
  Book inventory
- B.
  
  Ledger inventory
- C.
  
  Perpetual inventory
- D.
  
  Actual inventory
16.

Ending inventory is computed by:
- A.
  
  Beginning inventory plus purchases
- B.
  
  Ending inventory plus purchases
- C.
  
  Beginning inventory plus ending inventory
- D.
  
  Goods available for sale less cost of goods sold
17.

Cost of goods available is equal to:
- A.
  
  Ending Inventory + Purchases
- B.
  
  Beginning inventory + Cost of goods sold
- C.
  
  Purchases + Cost of goods sold
- D.
  
  Cost of goods sold + Ending inventory
18.

A company purchases a computer for resale. The computer should be considered:
- A.
  
  A depreciable asset
- B.
  
  Merchandise inventory
- C.
  
  Office supplies
- D.
  
  A potential liability
19.

With regard to the statement of cash flows, payments for the purchase of inventory should be considered a(n):
- A.
  
  Operating activity
- B.
  
  Financing activity
- C.
  
  Investing activity
- D.
  
  None of these answers is correct.
20.

Ending inventory is part of which accounting element?
- A.
  
  Liability
- B.
  
  Revenue
- C.
  
  Equity
- D.
  
  Asset
21.

Superstar Sports Supplies has started the period with 800 soccer balls. During the period it sold 2,000 soccer balls. A physical count at the end of the month reveals that Superstar has 600 soccer balls still on hand. How many soccer balls did Superstar purchase during the current month?
- A.
  
  2,200
- B.
  
  1,800
- C.
  
  600
- D.
  
  1,400
22.
- A.
  
  $605
- B.
  
  $602
- C.
  
  $665
- D.
  
  $500
23.

The cost flow method that is typically used by companies that sell airplanes, antiques, or boats is known as the:
- A.
  
  Average cost method
- B.
  
  LIFO method
- C.
  
  Specific identification method
- D.
  
  FIFO method
24.

A high inventory turnover rate:
- A.
  
  Indicates the company may have problems with theft, damage, or spoilage of its inventory
- B.
  
  Is bad for the company
- C.
  
  Indicates the wrong merchandise is being purchased for resale
- D.
  
  Is good for the company as long as customer satisfaction is not compromised
25.

A liquid propane (LP) gas distributor keeps its supply of LP gas in large 10,000-gallon tanks. When it receives a new shipment of LP gas, it mixes the new product together with the existing product in the tanks. This situation illustrates the physical flow of merchandise known as:
- A.
  
  Last-in, first-out
- B.
  
  Last-in-still here
- C.
  
  First-in, first-out
- D.
  
  An averaging of inventory amounts