Question 1

Which of the following types of inventory accounts would be used by a wholesaler or retailer?

Accepted Answer

Merchandise inventory is held by wholesalers and retailers who are buying goods from manufacturers and selling them to customers. Raw materials inventory, work in process inventory, and finished goods inventory are typically used by manufacturers who are producing goods.

Question 2

The understatement of ending inventories in one period leads to a(n)____________________ of cost of goods sold in the same period.

Accepted Answer

The answer of The understatement of ending inventories in one...

Question 3

Under the periodic inventory system,all purchases are assumed to occur before any ______.

Accepted Answer

The answer of Under the periodic inventory system,all purchases are...

Question 4

Which of the following accounts would most likely appear on the income statement of a merchandise company,but not on the income statement of a service company?

Accepted Answer

A merchandise company sells physical products and therefore incurs costs to acquire, produce, and transport those products to their customers. These costs are included in the Cost of Goods Sold (COGS), which appears on the income statement of a merchandise company but not on the income statement of a service company. Service companies provide intangible services, so they do not have COGS on their income statements.

B) Selling Expenses and C) Administrative Expenses may appear on both merchandise and service companies' income statements. D) Income Tax Expense is a required account for both kinds of companies but does not differ between them.

Question 5

Under a periodic inventory system,the ____________________ account accumulates the cost of inventory acquired during the period.

Accepted Answer

The answer of Under a periodic inventory system,the ____________________ account...

Question 6

A departure from the cost basis of accounting may be necessary when the ____________________ of the inventory is less than its cost to the company

Accepted Answer

The answer of A departure from the cost basis of...

Question 7

Under the periodic inventory system,Net purchases = Purchases + ______________ - Purchase Discounts - Purchase Returns and Allowances

Accepted Answer

The answer of Under the periodic inventory system,Net purchases =...

Question 8

An overstatement error in the inventory account in the current period will result in an understatement of ____________________ in the subsequent period

Accepted Answer

The answer of An overstatement error in the inventory account...

Question 9

A manufacturing company reported total inventory of $75,000.Assuming the following account balances,what is this company's work in process inventory? Finished goods $15,000 Merchandise inventory $10,000
Raw materials $40,000

Accepted Answer

Work in process inventory can be calculated by subtracting finished goods and merchandise inventory from the total inventory. 
Work in process = Total inventory - Finished goods - Merchandise inventory 
Work in process = $75,000 - $15,000 - $10,000 
Work in process = $50,000 
Thus, the work in process inventory for this company is $50,000.

Question 10

Which of the following best describes "cost of goods available for sale"?

Accepted Answer

Cost of goods available for sale represents the total cost of inventory that is available for sale during a specific period. This cost includes the beginning inventory and any additional purchases made during the period. This total cost is then allocated between the cost of ending inventory and the cost of goods sold for the period.

Question 11

The ratio of a company's cost of goods sold to its average inventory is called its __________.

Accepted Answer

The answer of The ratio of a company's cost of...

Question 12

Under a periodic inventory system,shipping costs are not charged to the inventory asset account.Instead,such costs are charged to the ____________________ account.

Accepted Answer

The answer of Under a periodic inventory system,shipping costs are...

Question 13

Accountants define the market value of inventory as its ____________________.

Accepted Answer

The answer of Accountants define the market value of inventory...

Question 14

The inventory account a manufacturer uses to record the cost of products completed and available for sale is called

Accepted Answer

The finished goods inventory account is used to record the cost of products that have been completed and are available for sale. Choice A, raw materials inventory, records the cost of materials that have not yet been used in production. Choice B, work in process inventory, records the cost of products that are currently in the production process but have not yet been completed. Choice D, merchandise inventory, is typically used by retailers to record the cost of the products they purchase for resale.

Question 15

Determine the amount of inventory on the balance sheet of a manufacturing company from the following account balances: Finished goods $24,000 Merchandise inventory $50,000
Raw materials 30,000 Work in process 6,000

Accepted Answer

The answer of Determine the amount of inventory on the...

Question 16

A company can calculate its average days to sell inventory by dividing 365 days per year by its _____.

Accepted Answer

The answer of A company can calculate its average days...

Question 17

Aaron Corporation Aaron Corporation is a merchandising company.Selected account balances are listed below:

-Refer to the information provided for Aaron Corporation.Calculate net income.

Accepted Answer

The answer of Aaron Corporation Aaron Corporation is a merchandising...

Question 18

Items should be included as part of the company's inventory if they are

Accepted Answer

Items purchased from a creditor, even if not yet paid for, should be included in the company's inventory as they are considered assets owned by the company.

Question 19

Aaron Corporation Aaron Corporation is a merchandising company.Selected account balances are listed below:

-Refer to the information provided for Aaron Corporation.Calculate gross margin.

Accepted Answer

The answer of Aaron Corporation Aaron Corporation is a merchandising...

Question 20

Aaron Corporation Aaron Corporation is a merchandising company.Selected account balances are listed below:

-Refer to the information provided for Aaron Corporation.Calculate the Cost of Goods Sold.

Accepted Answer

The answer of Aaron Corporation Aaron Corporation is a merchandising...

Quiz 6: Cost of Goods Sold and Inventory

Which of the following types of inventory accounts would be used by a wholesaler or retailer?

The understatement of ending inventories in one period leads to a(n)____________________ of cost of goods sold in the same period.

Under the periodic inventory system,all purchases are assumed to occur before any ______.

Which of the following accounts would most likely appear on the income statement of a merchandise company,but not on the income statement of a service company?

Under a periodic inventory system,the ____________________ account accumulates the cost of inventory acquired during the period.

A departure from the cost basis of accounting may be necessary when the ____________________ of the inventory is less than its cost to the company

Under the periodic inventory system,Net purchases = Purchases + ______________ - Purchase Discounts - Purchase Returns and Allowances

An overstatement error in the inventory account in the current period will result in an understatement of ____________________ in the subsequent period

A manufacturing company reported total inventory of $75,000.Assuming the following account balances,what is this company's work in process inventory? Finished goods $15,000 Merchandise inventory $10,000 Raw materials $40,000

Which of the following best describes "cost of goods available for sale"?

The ratio of a company's cost of goods sold to its average inventory is called its __________.

Under a periodic inventory system,shipping costs are not charged to the inventory asset account.Instead,such costs are charged to the ____________________ account.

Accountants define the market value of inventory as its ____________________.

The inventory account a manufacturer uses to record the cost of products completed and available for sale is called

Determine the amount of inventory on the balance sheet of a manufacturing company from the following account balances: Finished goods $24,000 Merchandise inventory $50,000 Raw materials 30,000 Work in process 6,000

A company can calculate its average days to sell inventory by dividing 365 days per year by its _____.

Aaron Corporation Aaron Corporation is a merchandising company.Selected account balances are listed below: -Refer to the information provided for Aaron Corporation.Calculate net income.

Items should be included as part of the company's inventory if they are

Aaron Corporation Aaron Corporation is a merchandising company.Selected account balances are listed below: -Refer to the information provided for Aaron Corporation.Calculate gross margin.

Aaron Corporation Aaron Corporation is a merchandising company.Selected account balances are listed below: -Refer to the information provided for Aaron Corporation.Calculate the Cost of Goods Sold.