ACCT 200 Exam 2 Questions And Answers With
Verified Study Solutions
Expanded Accounting Equation ANS Assets = Liabilities + Common Stock + ((Revenues -
Expenses)-dividends))
Revenue Recognition Principle ANS The principle that companies recognize revenue in the
accounting period in which the performance obligation is satisfied. accrual basis
FIFO method ANS First-in First-out: milk. oldest in stored in front and with newer in the back. value
of ending inventory comes from last in.
LIFO method ANS last in first out: tires, newest stored in front and oldest stored in back. value of
ending inventory comes from first in.
value of ending inventory for fifo comes from ANS last in
value of ending inventory for lifo comes from ANS first in
Weighted Average Unit Method ANS a process costing method that blends together units and costs
from both the current and prior periods
in a period of inflation which cost flow method has highest COGS? ANS LIFO
, in a period of inflation which cost flow method has highest EI? ANS FIFO
in FOB shipping point ownership passes when ANS goods are shipped
in FOB shipping point who pays for shipping ANS buyer
in FOB destination ownership passes when ANS goods arrive to buyer
in FOB destination who pays for shipping ANS seller
if ending inventory is understated, COGS is ANS overstated
if ending inventory is understated, net income is ANS understated because COGS is overstated
if ending inventory is overstated, stockholders equity is ANS understated because net income is
understated
if ending inventory is understated, assets are ANS understated
Issues with high inventory levels ANS storage cost, interest cost, funds tied up in inventory, cost
associated with obsolescence.
Issues with low inventory levels ANS lost sales
if the value of the inventory is lower than it's cost ANS it must be written down to market value
market value ANS replacement cost
lower of cost or market ANS simple simple simple. pick the lower of the two prices between cost or
market
Verified Study Solutions
Expanded Accounting Equation ANS Assets = Liabilities + Common Stock + ((Revenues -
Expenses)-dividends))
Revenue Recognition Principle ANS The principle that companies recognize revenue in the
accounting period in which the performance obligation is satisfied. accrual basis
FIFO method ANS First-in First-out: milk. oldest in stored in front and with newer in the back. value
of ending inventory comes from last in.
LIFO method ANS last in first out: tires, newest stored in front and oldest stored in back. value of
ending inventory comes from first in.
value of ending inventory for fifo comes from ANS last in
value of ending inventory for lifo comes from ANS first in
Weighted Average Unit Method ANS a process costing method that blends together units and costs
from both the current and prior periods
in a period of inflation which cost flow method has highest COGS? ANS LIFO
, in a period of inflation which cost flow method has highest EI? ANS FIFO
in FOB shipping point ownership passes when ANS goods are shipped
in FOB shipping point who pays for shipping ANS buyer
in FOB destination ownership passes when ANS goods arrive to buyer
in FOB destination who pays for shipping ANS seller
if ending inventory is understated, COGS is ANS overstated
if ending inventory is understated, net income is ANS understated because COGS is overstated
if ending inventory is overstated, stockholders equity is ANS understated because net income is
understated
if ending inventory is understated, assets are ANS understated
Issues with high inventory levels ANS storage cost, interest cost, funds tied up in inventory, cost
associated with obsolescence.
Issues with low inventory levels ANS lost sales
if the value of the inventory is lower than it's cost ANS it must be written down to market value
market value ANS replacement cost
lower of cost or market ANS simple simple simple. pick the lower of the two prices between cost or
market
