ACG Study Guide Material - A+ Rated Study Resource

ACG Study Guide Material - A+ Rated Study Resource Ownership passes to the buyer when the public carrier accepts the goods if the goods are shipped A. FOB shipper B. FOB shipping point C. FOB transit D. FOB destination E. FOB buyer - answer - B. FOB shipping point Which of the following should not be included in the physical inventory of a company? A. Goods held on consignment from another company B. None of these choices is correct C. Goods shipping on consignment to another company D. all of the answer choice are correct E. Goods in transit from another company shipping FOB shipping point - answer - A. Goods held on consignment from another company Which of the following would most likely employ the specific identification method of inventory costing? A. Office supply store B. Gasoline station C. Restaurant D. All of these are equally likely to use specific identification E. Car dealer - answer - E. Car dealer Inventory costing methods place primary reliance on assumptions about the flow of A. goods. B. resale prices. C. costs. D. values. E. margins. - answer - C. costs. Two companies report the same cost of goods available for sale but each employs a different inventory costing method. If the price of goods purchased as inventory has increased during the period, then the company using A. FIFO will have the lowest retained earnings. B. None of these C. LIFO will have the highest ending inventory. D. FIFO will have the highest cost of goods sold. E. LIFO will have the lowest net income. - answer - E. LIFO will have the lowest net income. Which situation requires using the lower-of-cost-or-market basis to valuing inventory instead of the cost basis? A. A decrease in the price charged to customers B. An increase in the current replacement cost of the inventory C. An increase in the price charged to customers D. A decline in the current replacement cost of the inventory E. Paying for inventory within the discount period - answer - D. A decline in the current replacement cost of the inventory A company uses the periodic inventory method. An error in the physical count of inventory at the end of a period resulted in an understatement of the ending inventory. The effect of this error in the current period is that gross profit is (i) _________________ and retained earnings is (ii) ___________________. A. (i) understated; (ii) understated B. (i) understated; (ii) overstated C. (i) understated; (ii) neither overstated nor understated D. (i) overstated; (ii) understated E. (i) overstated; (ii) overstated - answer - A. (i) understated; (ii) understated Which of these should a company include in its ending inventory? (1) Goods in transit it purchased with terms FOB destination (2) Goods in transit it purchased with terms FOB shipping point. (3) Goods in transit it sold with terms FOB destination (4) Goods in transit it sold with terms FOB shipping point Which of these should be included in its inventory? A. (2) Goods in transit it purchased with terms FOB shipping point and (3) Goods in transit it sold with terms FOB destination B. None of these C. (2) Goods in transit it purchased with terms FOB shipping point and (4) Goods in transit it sold with terms FOB shipping point D. (1) Goods in transit it purchased with terms FOB destination and (4) Goods in transit it sold with terms FOB shipping point E. (1) Goods in transit it purchased with terms FOB destination and (3) Goods in transit it sold with terms FOB destination - answer - A. (2) Goods in transit it purchased with terms FOB shipping point and (3) Goods in transit it sold with terms FOB destination Which inventory method will result in the lowest reported net income during periods with rising costs? A. LIFO B. Average cost C. Inventory method does not affect income. D. FIFO E. Accelerated method - answer - A. LIFO The situation that requires a departure from the cost basis of accounting to the lower of cost or market basis in valuing inventory is necessitated by A