ACCOUNTING 211 EXAM 2 ACTUAL QUESTIONS WITH VERIFIED SOLUTIONS

ACCOUNTING 211 EXAM 2 ACTUAL
QUESTIONS WITH VERIFIED SOLUTIONS


◉ Net purchases equation.
Answer: Ending inventory - Beginning inventory - Shipping + Cost of
goods sold


◉ Gross profit equation.
Answer: Net sales - COGS


◉ Gross profit ratio equation.
Answer: Gross profit / Net sales


◉ COGS ratio equation.
Answer: COGS / Net sales


◉ Average unit cost equation.
Answer: Total cost of goods available for sale / Total # of units
available for sale


◉ FIFO.

, Answer: First in, first out


◉ LIFO.
Answer: Last in, first out


◉ Total sales equation.
Answer: Sales price per unit X Number of units sold


◉ Cost per unit equation.
Answer: Total cost / Units purchased


◉ Switching from FIFO to LIFO while inventory price is increasing /
Switching from LIFO to FIFO when inventory price is decreasing ....
Answer: - COGS expense will increase
- Gross margin will decrease
- Income before taxes will decrease
- Income tax expense will decrease
- Net income will decrease


◉ Switching from LIFO to FIFO while inventory price is decreasing /
Switching from FIFO to LIFO when inventory price is increasing....
Answer: - COGS expense will decrease