ACC 101 Exam 3 with 100% Correct
Answers
Inventories Effect - correct Answer-both the balance sheet and the income statement
Legal Title - correct Answer-The factor which determines wether or not goods should be
included in a physical count of inventory is
If goods in transit are shipped FOB destination - correct Answer-the seller has legal title
to the goods until they are delivered
Which of the following should be included in the physical inventory of a company -
correct Answer-Goods held on consignment from another company
Freight terms of FOB shipping point mean that the - correct Answer-buyer must bear the
freight cost
For companies that use a perpetual inventory system, all of the following are purposes
for taking a physical inventory except - correct Answer-to determine ownership of the
goods
The term "FOB" denotes - correct Answer-free on board
Under a consignment arrangement, the - correct Answer-cosignor has ownership until
goods are sold to the customer
Inventoriable costs include all of the following except the - correct Answer-costs of the
purchasing and warehousing departments
The accounting principle that requires that the cost flow assumption be consistent with
the physical movement of goods is - correct Answer-nonexistent; that is, there is no
accounting requirement
Which of the following statements is correct with respect to inventories? - correct
Answer-Under FIFO, the ending inventory is based on the latest units purchased
In a period of increasing prices, which inventory flow assumption will result in the lowest
amount of income tax expense? - correct Answer-LIFO
, The specific identification method of costing inventories is used when the - correct
Answer-company sells a limited quantity of high-unit cost items
Inventory is reported in the financial statements at - correct Answer-the lower-of-cost-or-
market
The lower-of-cost-or-market basis of valuing inventories is an example of - correct
Answer-Conservatism
Under the lower-of-cost-or-market basis in valuing inventory, market is defined as -
correct Answer-Current replacement cost
The following information is available for Miguel Company at Dec 31, 2016: beginning
inventory $160,000, ending inventory $240,000, cost of goods sold $1,050,000; and
sales 1,800,000. Everett's Inventory turnover in 2016 is - correct Answer-6.56 times
Goods in transit should be included in the inventory of the buyer when the: - correct
Answer-terms of sale are FOB shipping point
The inventory turnover is computed by dividing cost of goods sold by - correct Answer-
average inventory
Sales revenues are usually considered earned when - correct Answer-goods have been
transferred from the seller to the buyer
A sales invoice is a source document that - correct Answer-provides evidence of credit
sales
Sales Returns and Allowances account is classified as - correct Answer-Contra
Revenue Account
A credit granted to a customer for returned goods requires a debit to - correct Answer-
Sales Returns and Allowances and a credit to Accounts Receivable
If a customer agrees to retain merchandise that is defective because the seller is willing
to reduce the selling price, this transaction is known as a sales - correct Answer-
Allowance
A credit sales of 3,600 made one July 15, on which a return of 100 is granted on july 18.
What amount is received as a payment in full on July 24? - correct Answer-$3,395
When goofs are returned that relate to a prior cash sale - correct Answer-the cash
account will be credited
A sales returns and allowances account is not debited if a customer - correct Answer-
Utilizes a prompt payment incentive
Answers
Inventories Effect - correct Answer-both the balance sheet and the income statement
Legal Title - correct Answer-The factor which determines wether or not goods should be
included in a physical count of inventory is
If goods in transit are shipped FOB destination - correct Answer-the seller has legal title
to the goods until they are delivered
Which of the following should be included in the physical inventory of a company -
correct Answer-Goods held on consignment from another company
Freight terms of FOB shipping point mean that the - correct Answer-buyer must bear the
freight cost
For companies that use a perpetual inventory system, all of the following are purposes
for taking a physical inventory except - correct Answer-to determine ownership of the
goods
The term "FOB" denotes - correct Answer-free on board
Under a consignment arrangement, the - correct Answer-cosignor has ownership until
goods are sold to the customer
Inventoriable costs include all of the following except the - correct Answer-costs of the
purchasing and warehousing departments
The accounting principle that requires that the cost flow assumption be consistent with
the physical movement of goods is - correct Answer-nonexistent; that is, there is no
accounting requirement
Which of the following statements is correct with respect to inventories? - correct
Answer-Under FIFO, the ending inventory is based on the latest units purchased
In a period of increasing prices, which inventory flow assumption will result in the lowest
amount of income tax expense? - correct Answer-LIFO
, The specific identification method of costing inventories is used when the - correct
Answer-company sells a limited quantity of high-unit cost items
Inventory is reported in the financial statements at - correct Answer-the lower-of-cost-or-
market
The lower-of-cost-or-market basis of valuing inventories is an example of - correct
Answer-Conservatism
Under the lower-of-cost-or-market basis in valuing inventory, market is defined as -
correct Answer-Current replacement cost
The following information is available for Miguel Company at Dec 31, 2016: beginning
inventory $160,000, ending inventory $240,000, cost of goods sold $1,050,000; and
sales 1,800,000. Everett's Inventory turnover in 2016 is - correct Answer-6.56 times
Goods in transit should be included in the inventory of the buyer when the: - correct
Answer-terms of sale are FOB shipping point
The inventory turnover is computed by dividing cost of goods sold by - correct Answer-
average inventory
Sales revenues are usually considered earned when - correct Answer-goods have been
transferred from the seller to the buyer
A sales invoice is a source document that - correct Answer-provides evidence of credit
sales
Sales Returns and Allowances account is classified as - correct Answer-Contra
Revenue Account
A credit granted to a customer for returned goods requires a debit to - correct Answer-
Sales Returns and Allowances and a credit to Accounts Receivable
If a customer agrees to retain merchandise that is defective because the seller is willing
to reduce the selling price, this transaction is known as a sales - correct Answer-
Allowance
A credit sales of 3,600 made one July 15, on which a return of 100 is granted on july 18.
What amount is received as a payment in full on July 24? - correct Answer-$3,395
When goofs are returned that relate to a prior cash sale - correct Answer-the cash
account will be credited
A sales returns and allowances account is not debited if a customer - correct Answer-
Utilizes a prompt payment incentive
