2/2points awarded
ItemScored
Item 1
The understatement of the ending inventory balance causes:
Multiple Choice
Cost of goods sold to be understated and net income to be overstated.
Cost of goods sold to be overstated and net income to be overstated.
Cost of goods sold to be overstated and net income to be correct.
Cost of goods sold to be overstated and net income to be understated.
Correct
Cost of goods sold to be understated and net income to be understated.
2/2points awarded
ItemScored
Item 2
Giorgio had cost of goods sold of $9,469 million, ending inventory of $2,137 million, and average inventory of
$2,013 million. Its inventory turnover equals:
Multiple Choice
82.4 days.
0.23.
4.70.
Correct
77.6 days.
4.48
Item 3
Use the following information for Shafer Company to compute inventory turnover for year 2.
Year 2 Year 1
Net sales $ 647,500 $ 582,000
Cost of goods sold 389,220 360,840
Ending inventory 76,700 79,300
Multiple Choice
9.98
4.99
Correct
8.44
4.63
8.30
Item 4
Sandoval needs to determine its year-end inventory. The warehouse contains 20,000 units, of which 3,000 were
damaged by flood and are not sellable. Another 2,000 units were purchased from Markor Company, FOB shipping
,point, and are currently in transit. The company also consigns goods and has 4,000 units at a consignee's location.
How many units should Sandoval include in its year-end inventory?
Multiple Choice
19,000
29,000
21,000
26,000
23,000
Correct
ITEM 5
A company has the following purchases and sales during February. Using the FIFO periodic inventory method, what
is the cost of the 12 units that are sold?
Date Activities Units Acquired at Cost Units Sold at Retail
February 1 Beginning inventory 10 units @ $10 = $100
February 3 Purchase 20 units @ $12 = $240
February 5 Sales 12 units sold
Multiple Choice
$130
$120
$140
$124
Correct
$128
ITEM 6
Marquis Company uses a weighted-average perpetual inventory system and has the following purchases and sales:
Date Activities Units Acquired at Cost Units Sold at Retail
August 2 Purchase 10 units @ $26 = $260
August 18 Purchase 15 units @ $28 = $420
August 29 Sales 12 units sold
What is the amount of the cost of goods sold for this sale?
Note: Round average cost per unit to 2 decimal places.
Multiple Choice
$680.00
$150.50
$326.40
Correct
$316.00
$420.00
ITEM 7
The current period's ending inventory is:
Multiple Choice
The next period's beginning inventory.
, Correct
The prior period's beginning inventory.
The current period's net purchases.
The current period's beginning inventory.
The current period's cost of goods sold.
ITEM 8
Which of the following statements regarding inventory shrinkage is false?
Multiple Choice
Inventory shrinkage can be caused by theft or deterioration.
Inventory shrinkage is recognized by crediting an operating expense.
Correct
Inventory shrinkage refers to the loss of inventory.
Inventory shrinkage is recognized by debiting Cost of Goods Sold.
Inventory shrinkage is determined by comparing a physical count of inventory with recorded
inventory amounts.
ITEM 9
Managers use an internal control system:
Multiple Choice
To monitor and control business activities.
Correct
To guarantee a return to investors.
Only if the company uses a computerized system.
To ensure profitable operations.
To eliminate the need for an audit.
ITEM 10
Pelcher Company maintains a $455 petty cash fund. On January 31, the fund is replenished. The accumulated
receipts on that date represent $121 for office supplies, $162 for merchandise inventory, and $81 for miscellaneous
expenses. There is a cash overage of $5. The journal entry to replenish the fund on January 31 is:
Multiple Choice
Debit Office Supplies Expense, $121; Debit Merchandise inventory, $162; Debit Miscellaneous
expenses, $81; Debit Cash over and short, $5; Credit Petty cash, $369.
Debit Office Supplies Expense, $121; Debit Merchandise inventory, $162; Debit Miscellaneous
expenses, $81; Debit Cash over and short, $5; Credit Cash, $369.
Debit Office Supplies Expense, $121; Debit Merchandise inventory, $162; Debit Miscellaneous
expenses, $81; Credit Cash over and short, $5; Credit Cash, $359.
Correct
Debit Office Supplies Expense, $121; Debit Merchandise inventory, $162; Debit Miscellaneous
expenses, $81; Credit Cash over and short, $5; Credit Petty cash, $359.
Debit Office Supplies Expense, $121; Debit Merchandise inventory, $162; Debit Miscellaneous
expenses, $81; Debit Cash over and short, $5; Credit Petty cash, $455.
ITEM 11
A company's net sales were $716,900, its cost of goods sold was $243,030 and its net income was $55,900. Its
gross margin ratio equals:
Multiple Choice
ItemScored
Item 1
The understatement of the ending inventory balance causes:
Multiple Choice
Cost of goods sold to be understated and net income to be overstated.
Cost of goods sold to be overstated and net income to be overstated.
Cost of goods sold to be overstated and net income to be correct.
Cost of goods sold to be overstated and net income to be understated.
Correct
Cost of goods sold to be understated and net income to be understated.
2/2points awarded
ItemScored
Item 2
Giorgio had cost of goods sold of $9,469 million, ending inventory of $2,137 million, and average inventory of
$2,013 million. Its inventory turnover equals:
Multiple Choice
82.4 days.
0.23.
4.70.
Correct
77.6 days.
4.48
Item 3
Use the following information for Shafer Company to compute inventory turnover for year 2.
Year 2 Year 1
Net sales $ 647,500 $ 582,000
Cost of goods sold 389,220 360,840
Ending inventory 76,700 79,300
Multiple Choice
9.98
4.99
Correct
8.44
4.63
8.30
Item 4
Sandoval needs to determine its year-end inventory. The warehouse contains 20,000 units, of which 3,000 were
damaged by flood and are not sellable. Another 2,000 units were purchased from Markor Company, FOB shipping
,point, and are currently in transit. The company also consigns goods and has 4,000 units at a consignee's location.
How many units should Sandoval include in its year-end inventory?
Multiple Choice
19,000
29,000
21,000
26,000
23,000
Correct
ITEM 5
A company has the following purchases and sales during February. Using the FIFO periodic inventory method, what
is the cost of the 12 units that are sold?
Date Activities Units Acquired at Cost Units Sold at Retail
February 1 Beginning inventory 10 units @ $10 = $100
February 3 Purchase 20 units @ $12 = $240
February 5 Sales 12 units sold
Multiple Choice
$130
$120
$140
$124
Correct
$128
ITEM 6
Marquis Company uses a weighted-average perpetual inventory system and has the following purchases and sales:
Date Activities Units Acquired at Cost Units Sold at Retail
August 2 Purchase 10 units @ $26 = $260
August 18 Purchase 15 units @ $28 = $420
August 29 Sales 12 units sold
What is the amount of the cost of goods sold for this sale?
Note: Round average cost per unit to 2 decimal places.
Multiple Choice
$680.00
$150.50
$326.40
Correct
$316.00
$420.00
ITEM 7
The current period's ending inventory is:
Multiple Choice
The next period's beginning inventory.
, Correct
The prior period's beginning inventory.
The current period's net purchases.
The current period's beginning inventory.
The current period's cost of goods sold.
ITEM 8
Which of the following statements regarding inventory shrinkage is false?
Multiple Choice
Inventory shrinkage can be caused by theft or deterioration.
Inventory shrinkage is recognized by crediting an operating expense.
Correct
Inventory shrinkage refers to the loss of inventory.
Inventory shrinkage is recognized by debiting Cost of Goods Sold.
Inventory shrinkage is determined by comparing a physical count of inventory with recorded
inventory amounts.
ITEM 9
Managers use an internal control system:
Multiple Choice
To monitor and control business activities.
Correct
To guarantee a return to investors.
Only if the company uses a computerized system.
To ensure profitable operations.
To eliminate the need for an audit.
ITEM 10
Pelcher Company maintains a $455 petty cash fund. On January 31, the fund is replenished. The accumulated
receipts on that date represent $121 for office supplies, $162 for merchandise inventory, and $81 for miscellaneous
expenses. There is a cash overage of $5. The journal entry to replenish the fund on January 31 is:
Multiple Choice
Debit Office Supplies Expense, $121; Debit Merchandise inventory, $162; Debit Miscellaneous
expenses, $81; Debit Cash over and short, $5; Credit Petty cash, $369.
Debit Office Supplies Expense, $121; Debit Merchandise inventory, $162; Debit Miscellaneous
expenses, $81; Debit Cash over and short, $5; Credit Cash, $369.
Debit Office Supplies Expense, $121; Debit Merchandise inventory, $162; Debit Miscellaneous
expenses, $81; Credit Cash over and short, $5; Credit Cash, $359.
Correct
Debit Office Supplies Expense, $121; Debit Merchandise inventory, $162; Debit Miscellaneous
expenses, $81; Credit Cash over and short, $5; Credit Petty cash, $359.
Debit Office Supplies Expense, $121; Debit Merchandise inventory, $162; Debit Miscellaneous
expenses, $81; Debit Cash over and short, $5; Credit Petty cash, $455.
ITEM 11
A company's net sales were $716,900, its cost of goods sold was $243,030 and its net income was $55,900. Its
gross margin ratio equals:
Multiple Choice
