MGMT 200 Chapter 6 Exam Questions and Answers Fully Solved Latest Update 2025-2026
Which of the following represents the balance of Cost of Goods Sold at the end of the year? -
Answers The cost of inventory sold during the year.
Which of following best describes a merchandising company? - Answers A company that
purchases products that are primarily in finished form for resale to customers.
A multiple-step income statement provides the advantage of: - Answers Separating revenues
and expenses based on their different types of activities.
At the beginning of the year, Johnson Supply has inventory of $5,200. During the year, the
company purchases an additional $20,000 of inventory. An inventory count at the end of the
year reveals remaining inventory of $3,000. What amount will Bennett report for cost of goods
sold? - Answers $22,200
Which of the following levels of profitability in a multiple-step income statement represents all
revenues less all expenses? - Answers Net income.
Snow Company has the following inventory transactions for the year:
Date Transaction Numbers of Units Unit Cost Jan.1 Beginning inventory 200 $4.00 Apr.20
Purchase 800 4.25 Sep.8 Purchase 400 4.50
Assuming Snow sells 1,000 units, calculate ending inventory under FIFO. - Answers $1,800.
(take from bottom)
Snow Company has the following inventory transactions for the year:
Date Transaction Numbers of Units Unit Cost Jan.1 Beginning inventory 200 $4.00 Apr.20
Purchase 800 4.25 Sep.8 Purchase 400 4.50
Assuming Snow sells 1,000 units, calculate cost of goods sold under LIFO. - Answers $4,350.
(take from top)
Which cost flow assumption generally results in the highest reported amount of net income in
periods of rising inventory costs? - Answers FIFO.
Which cost flow assumption must be used for financial reporting if it is also used for tax
reporting? - Answers LIFO.
Fan Company purchases inventory on account. The entry to record this purchase using a
perpetual inventory system would include a debit to: - Answers Inventory.
Fan Company sells inventory on account. The entry or entries to record this sale using a
perpetual inventory system would include a: - Answers Debit to Accounts Receivable.
, Credit to Sales Revenue
Debit to Cost of Goods Sold.
The entry to write down inventory from cost to net realizable value at the end of the year
includes a: - Answers Debit to Cost of Goods Sold.
At the end of the year, Marline Corporation determines that its ending inventory has a cost of
$2,000 and a net realizable value of $1,900. What would be the effect of the adjustment to write
down inventory to net realizable value? - Answers Decrease in net income.
For the year, Sealy Incorporated reports net sales of $50,000, cost of goods sold of $40,000, and
an average inventory balance of $5,000. What is Sealy's gross profit ratio? - Answers 20%
A company's inventory turnover ratio measures: - Answers The number of times the company
sells its average inventory balance during the year.
Using a periodic inventory system, recording the sale of inventory on account would include: -
Answers Debit Accounts Receivable; credit Sales Revenue.
Suppose Windell Corporation understates its ending inventory amount. What effect will this
have on the reported amount of net income in the year of the error? - Answers Understate net
income.
Which of the following levels of profitability in a multiple-step income statement represents
revenues from the sale of inventory less the cost of that inventory? - Answers Gross profit.
Madison Outlet has the following inventory transactions for the year:
Date Transaction Numbers of Units Unit Cost Totalcost Jan. 1 Beginning inventory 10 $200
$2,000 Mar. 14 Purchase 15 300 4,500 $6,500 Jan. 1 - Dec. 31 Total sales to customers 12
What amount would Madison report for ending inventory using weighted-average cost? -
Answers $3,380. (percentage types is the percentage of cost)
Using a perpetual inventory system, the purchase of inventory on account would be recorded as
- Answers Debit Inventory; credit Accounts Payable.
Maxwell Corporation has the following inventory information at the end of the year:
InventoryQuantity Unit Cost Unit NRV Item A 20 $20 $35 Item B 50 30 25 Item C 40 10 15
Using the lower of cost and net realizable method, for what amount would Maxwell report
ending inventory? - Answers $2,050.
Using a periodic inventory system, the purchase of inventory on account would be recorded as -
Answers Debit Purchases; credit Accounts Payable.
Which of the following represents the balance of Cost of Goods Sold at the end of the year? -
Answers The cost of inventory sold during the year.
Which of following best describes a merchandising company? - Answers A company that
purchases products that are primarily in finished form for resale to customers.
A multiple-step income statement provides the advantage of: - Answers Separating revenues
and expenses based on their different types of activities.
At the beginning of the year, Johnson Supply has inventory of $5,200. During the year, the
company purchases an additional $20,000 of inventory. An inventory count at the end of the
year reveals remaining inventory of $3,000. What amount will Bennett report for cost of goods
sold? - Answers $22,200
Which of the following levels of profitability in a multiple-step income statement represents all
revenues less all expenses? - Answers Net income.
Snow Company has the following inventory transactions for the year:
Date Transaction Numbers of Units Unit Cost Jan.1 Beginning inventory 200 $4.00 Apr.20
Purchase 800 4.25 Sep.8 Purchase 400 4.50
Assuming Snow sells 1,000 units, calculate ending inventory under FIFO. - Answers $1,800.
(take from bottom)
Snow Company has the following inventory transactions for the year:
Date Transaction Numbers of Units Unit Cost Jan.1 Beginning inventory 200 $4.00 Apr.20
Purchase 800 4.25 Sep.8 Purchase 400 4.50
Assuming Snow sells 1,000 units, calculate cost of goods sold under LIFO. - Answers $4,350.
(take from top)
Which cost flow assumption generally results in the highest reported amount of net income in
periods of rising inventory costs? - Answers FIFO.
Which cost flow assumption must be used for financial reporting if it is also used for tax
reporting? - Answers LIFO.
Fan Company purchases inventory on account. The entry to record this purchase using a
perpetual inventory system would include a debit to: - Answers Inventory.
Fan Company sells inventory on account. The entry or entries to record this sale using a
perpetual inventory system would include a: - Answers Debit to Accounts Receivable.
, Credit to Sales Revenue
Debit to Cost of Goods Sold.
The entry to write down inventory from cost to net realizable value at the end of the year
includes a: - Answers Debit to Cost of Goods Sold.
At the end of the year, Marline Corporation determines that its ending inventory has a cost of
$2,000 and a net realizable value of $1,900. What would be the effect of the adjustment to write
down inventory to net realizable value? - Answers Decrease in net income.
For the year, Sealy Incorporated reports net sales of $50,000, cost of goods sold of $40,000, and
an average inventory balance of $5,000. What is Sealy's gross profit ratio? - Answers 20%
A company's inventory turnover ratio measures: - Answers The number of times the company
sells its average inventory balance during the year.
Using a periodic inventory system, recording the sale of inventory on account would include: -
Answers Debit Accounts Receivable; credit Sales Revenue.
Suppose Windell Corporation understates its ending inventory amount. What effect will this
have on the reported amount of net income in the year of the error? - Answers Understate net
income.
Which of the following levels of profitability in a multiple-step income statement represents
revenues from the sale of inventory less the cost of that inventory? - Answers Gross profit.
Madison Outlet has the following inventory transactions for the year:
Date Transaction Numbers of Units Unit Cost Totalcost Jan. 1 Beginning inventory 10 $200
$2,000 Mar. 14 Purchase 15 300 4,500 $6,500 Jan. 1 - Dec. 31 Total sales to customers 12
What amount would Madison report for ending inventory using weighted-average cost? -
Answers $3,380. (percentage types is the percentage of cost)
Using a perpetual inventory system, the purchase of inventory on account would be recorded as
- Answers Debit Inventory; credit Accounts Payable.
Maxwell Corporation has the following inventory information at the end of the year:
InventoryQuantity Unit Cost Unit NRV Item A 20 $20 $35 Item B 50 30 25 Item C 40 10 15
Using the lower of cost and net realizable method, for what amount would Maxwell report
ending inventory? - Answers $2,050.
Using a periodic inventory system, the purchase of inventory on account would be recorded as -
Answers Debit Purchases; credit Accounts Payable.
