ACC 131- Exam 3- Liesel Mitchell ISU Questions and Answers Already Passed Latest Update
2025-2026
If a customer is unhappy with a product and the company reduces the amount the customer
must pay but the customer keeps the product, this is called - Answers a sales allowance
When freight terms are F.O.B. shipping point - Answers the buyer pays for the freight and
records the cost as an increase to Inventory
Sales Discounts and Sales Returns & Allowances are both - Answers contra-revenue accounts
Jay Company purchased $13,000 of inventory on credit with credit terms of 3/15, n/60. If they
paid within 3 days of the purchase, how much will the discount be? - Answers $390
If beginning inventory is $35,000, Cost of Goods Sold is $325,000, and ending inventory is
$40,000, what is the amount of purchases as determined by the cost of goods sold model? -
Answers Cost of Goods Sold + Ending Inventory = Cost of Goods Available for Sale
$325,000 + $40,000 = $365,000
Cost of Goods Available for Sale = Beginning Inventory + Purchases
Cost of Goods Available for Sale - Beginning Inventory = Purchases
$365,000 - $35,000 = $330,000
When a company sells a product they must make - Answers two journal entries, one to record
revenue and one to record the Cost of Goods Sold and the decrease to Inventory
The account, Freight-Out, is - Answers an expense that is part of Operating Expenses
If the purchaser makes a payment within the discount period, the amount of the discount will be
recorded by the purchaser as - Answers a credit to Inventory
Net Sales is - Answers calculated as Sales Revenue minus Sales Discounts and Sales Returns &
Allowances
For the purchaser, discounts, returns, and allowances all decrease the Inventory account
because of the - Answers historical cost principle
The purpose of an inventory costing method is - Answers to assign costs to units sold and to
units left in inventory
In a perpetual inventory system, using the average cost method, the average cost per unit is
calculated as - Answers total cost of units available divided by the total units available
Cost of goods available for sale - Answers is the sum of beginning inventory and purchases
, The inventory costing method that assigns the cost of earlier purchases to the units sold and
the cost of later purchases to the units left in ending inventory is - Answers First-In, First-Out
(FIFO)
A car dealership purchased two trucks for $20,000 each, two SUVs for $31,000 each, and six
hybrid cars for $27,000 each. A review of the sales invoices revealed that five of the hybrid cars
were sold and both trucks were sold.
What is the cost of goods sold using the specific identification method? - Answers (2 trucks x
$20,000) + (5 hybrid cars x $27,000) = $40,000 + $135,000 = $175,000
Mitchell Co. uses a perpetual inventory system and had the following information for the month
of June:
Beginning inventory of 25 units at $22 each
June 4 purchased 85 units at $27 each
June 10 purchased 125 units at $30 each
The selling price of all units was $45
If they sold 100 units on June 5 and use LIFO, what would be the Cost of Goods Sold for the
June 5 sale? - Answers 85 units x $27 each = $2,295
100 - 85 = 15 units x $22 each = $330
$2,295 + $330 = $2,625
Mitchell Co. uses a perpetual inventory system and had the following information for the month
of June:
Beginning inventory of 25 units at $22 each
June 4 purchased 85 units at $27 each
June 10 purchased 125 units at $30 each
The selling price of all units was $45
If they sold 100 units on June 5 and use FIFO, what would be the Cost of Goods Sold for the
June 5 sale? - Answers 25 units x $22 = $550
100 - 25 = 75 x 27 = $2,025
$550 + $2,025 = $2,5755 units x $22 = $550
100 - 25 = 75 x 27 = $2,025
2025-2026
If a customer is unhappy with a product and the company reduces the amount the customer
must pay but the customer keeps the product, this is called - Answers a sales allowance
When freight terms are F.O.B. shipping point - Answers the buyer pays for the freight and
records the cost as an increase to Inventory
Sales Discounts and Sales Returns & Allowances are both - Answers contra-revenue accounts
Jay Company purchased $13,000 of inventory on credit with credit terms of 3/15, n/60. If they
paid within 3 days of the purchase, how much will the discount be? - Answers $390
If beginning inventory is $35,000, Cost of Goods Sold is $325,000, and ending inventory is
$40,000, what is the amount of purchases as determined by the cost of goods sold model? -
Answers Cost of Goods Sold + Ending Inventory = Cost of Goods Available for Sale
$325,000 + $40,000 = $365,000
Cost of Goods Available for Sale = Beginning Inventory + Purchases
Cost of Goods Available for Sale - Beginning Inventory = Purchases
$365,000 - $35,000 = $330,000
When a company sells a product they must make - Answers two journal entries, one to record
revenue and one to record the Cost of Goods Sold and the decrease to Inventory
The account, Freight-Out, is - Answers an expense that is part of Operating Expenses
If the purchaser makes a payment within the discount period, the amount of the discount will be
recorded by the purchaser as - Answers a credit to Inventory
Net Sales is - Answers calculated as Sales Revenue minus Sales Discounts and Sales Returns &
Allowances
For the purchaser, discounts, returns, and allowances all decrease the Inventory account
because of the - Answers historical cost principle
The purpose of an inventory costing method is - Answers to assign costs to units sold and to
units left in inventory
In a perpetual inventory system, using the average cost method, the average cost per unit is
calculated as - Answers total cost of units available divided by the total units available
Cost of goods available for sale - Answers is the sum of beginning inventory and purchases
, The inventory costing method that assigns the cost of earlier purchases to the units sold and
the cost of later purchases to the units left in ending inventory is - Answers First-In, First-Out
(FIFO)
A car dealership purchased two trucks for $20,000 each, two SUVs for $31,000 each, and six
hybrid cars for $27,000 each. A review of the sales invoices revealed that five of the hybrid cars
were sold and both trucks were sold.
What is the cost of goods sold using the specific identification method? - Answers (2 trucks x
$20,000) + (5 hybrid cars x $27,000) = $40,000 + $135,000 = $175,000
Mitchell Co. uses a perpetual inventory system and had the following information for the month
of June:
Beginning inventory of 25 units at $22 each
June 4 purchased 85 units at $27 each
June 10 purchased 125 units at $30 each
The selling price of all units was $45
If they sold 100 units on June 5 and use LIFO, what would be the Cost of Goods Sold for the
June 5 sale? - Answers 85 units x $27 each = $2,295
100 - 85 = 15 units x $22 each = $330
$2,295 + $330 = $2,625
Mitchell Co. uses a perpetual inventory system and had the following information for the month
of June:
Beginning inventory of 25 units at $22 each
June 4 purchased 85 units at $27 each
June 10 purchased 125 units at $30 each
The selling price of all units was $45
If they sold 100 units on June 5 and use FIFO, what would be the Cost of Goods Sold for the
June 5 sale? - Answers 25 units x $22 = $550
100 - 25 = 75 x 27 = $2,025
$550 + $2,025 = $2,5755 units x $22 = $550
100 - 25 = 75 x 27 = $2,025
