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Exam 6: Cost Of Goods Sold and Inventory

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Question 31

True/False

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For a merchandising company, the cost of goods sold is subtracted from net sales to arrive at gross profit.

A) True
B) False

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Question 32

Multiple Choice

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Stallworth Corp. uses a periodic inventory system. The following information is available for the month of November: -Refer to the information provided for Stallworth Corp. If the company uses the LIFO inventory costing method, the cost of goods sold for November would be

A) $1,505.00.
B) $1,517.50.
C) $2,109.00.
D) $2,121.50.

E) A) and D)
F) A) and C)

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Question 33

Multiple Choice

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Match the costs that might be included as part of the cost of inventory to the listed accounting treatment. (Choices may be used more than once.) -Invoice price paid for resale goods.

If a company overstates its ending inventory for the current year, what are the effects on assets, cost of goods sold, income before taxes, and retained earnings for the current year?

The following data are available for one item of merchandise sold by Jocque Fabrics, which uses a periodic inventory system. -Refer to the information provided for Jocque Fabrics. If the LIFO method is used, determine the following amounts: A) Ending inventory on February 28th B) Cost of Goods sold for the month of February C) Gross Margin for February

Match the terms with the descriptions provided. -Companies such as Macy's and Target.

If the amount assigned to ending inventory is incorrect,

Shipping terms of ____________________ mean that the buyer pays shipping costs.

Match the costs that might be included as part of the cost of inventory to the listed accounting treatment. (Choices may be used more than once.) -Prices are declining; ending inventory with this method falls between the amounts for the other two methods.

Which of the following statements regarding the application of the lower of cost or market method is true?

Match the costs that might be included as part of the cost of inventory to the listed accounting treatment. (Choices may be used more than once.) -Prices are declining; ending inventory is lower with this method.

Match the costs that might be included as part of the cost of inventory to the listed accounting treatment. (Choices may be used more than once.) -Paid for purchased goods within the discount period.

The journal entries required for purchase and sales transactions using the perpetual system are more complex than under the periodic system but offer the advantage of

Stallworth Corp. uses a periodic inventory system. The following information is available for the month of November: -Refer to the information provided for Stallworth Corp. If the company uses the weighted average cost method, the cost assigned to each unit in ending inventory would be

Oliver & Co. has been in business for fifteen years. During that time, the company has consistently used the LIFO inventory costing method. Because of inflation, purchase prices for merchandise have increased consistently over the fifteen years. The company has maintained the same inventory quantities over the 15 years. Which of the following statements is true for the company?

Under the periodic method, the information on sales can be combined within any period because all purchases are assumed to occur before any sales transactions.

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

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

Harris Corp. sold merchandise to Ichay Company on December 28, 2019, with shipping terms of FOB destination. The buyer received the merchandise on January 3, 2020. Which of the following is true?

If cost of goods sold does not equal the cost of merchandise purchased during the period, an adjustment must be made to correct the error.