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Stack #4137273
| Question | Answer |
|---|---|
| equation for cost of goods sold | beginning inventory+purchases-ending inventory |
| beginning inventory plus purchases equals | goods available for sale |
| under the periodic inventory system | inventory must be counted at the end of each accounting period |
| the perpetual inventory method of tracking inventory is considered superior to the periodic method because the perpetual method... | tells what inventory a company should have on hand at any point in time |
| in order to calculate shrinkage | a perpetual inventory system requires an occasional count of actual inventory |
| an incorrect statement about shrinkage | it is easier to detect shrinkage in a periodic inventory system than in a perpetual inventory system |
| a sale is recorded when goods leave the sellers shipping department when the merchandise is shipped. | FOB shipping point |
| when inventory is sold, the cost of the inventory is removed from the inventory account and reported on a multistep the income statement as | cost of goods sold |
| the gross profit percentage is an indication of how... | much profit is earned as a percentage of each dollar of sales |
| which of the following is not one of the primary goals of inventory management | minimize the quantity of ending inventory |
| inventory levels increase by 10 % at your company during the fourth quarter. Based on this increase, which of the following statements must be correct. | this could be good news if the company is ordering more goods because sales appear to be rising |
| goods placed in inventory are initially recorder at | the amount paid to acquire the asset and prepare it for sale |
| what would not be affected by the choice of an inventory costing method (that is, choosing between FIFO LIFO weighted average, and specific identification | sales revenue |
| which of the following is right FIFO results in a lower net income than LIFO when costs rise LIFO results in a higher net income than FIFO when coasts are falling | LIFO results in a higher net income than FIFO when costs are falling |
| when a company has inventory, which is subject to gradually increasing prices, the use of the LIFO method of valuing inventory will result in the | lowest amount of assets and lowest amount of net income |
| if inventory costs have been falling during the year which cost method results in the highest gross profit for the year | LIFO |
| FIFO uses the _____ cost for cost of goods sold on the income statement and the _______ cost for inventory on the balance sheet | Oldest and newest |
| LIFO uses the ___ unit costs for cost of goods sold on the income statement and the _____ unit costs for inventory on the baloance sheet | newest and oldest |
| When the lower of cost or market rule/net realizable value requires an inventory adjustment, the... | write-down is usually reported as a part of cost of goods sold |
| Probes, Incorporated wrote down its inventory to the lower replacement value. The effect on Probes' accounting equation includes | decrease in assets |
| the process of buying and selling inventory is known as | inventory turnover |
| which of the following actions would most likely cause the inventory turnover to increase | maintaining the same average inventory kept on hand increasing the volume of sales |
| a decreasing inventory turnover ratio indicates | a longer time span between the purchase and sale of inventory |
| for a merchandiser, inventory turnover refers to how many times | the company purchases and sells its inventory of goods |
| accounts receivable | are amounts owed to a business by its cutomers |
| why are estimates of bad debts used to record uncollectectible amounts of accounts receivable | doing so avoids violating the exxpense recognition (matching) principle |
| the aollowance for doubtful accounts account is a contr-account that offsets | accounts receivable, |
| recording the estimate of bad debt expense | follows the expense recognition (matching) principle |
| on the balance sheet, the allowance for Doubtful Accounts | is subtracted from Accounts receivable |
| the receivables turnover ratio | measures how many times on average the process of selling and collecting is repeated during the period |
| a low accounts receivable turnover indicates | customers are making payments slowly |
| legacy incorporated receivables turnover ratio increased from 11.8 last year to 14.1 this year. a correct statement | this could be an indication that the company is using more efficient collection methods |
| the days-to-collect measures the | number of days it takes to collect accounts receivable |
| a statement about hte receivables turnover analysis | receivables turnover refers to how fast receivables are colected |
| all other things being equal a company is better off when its receivable turnover ratio | is high and its days-to-collect measure is low |
Created by:
rolli1al