Question 1) T.J. Johnson made sales of $9,100 and ended August with inventories totaling $800. Cost of goods sold was $5,800. Total operating expenses were $2,700. How much net income did Johnson earn for the month?
a) $6,400
b) $800
c) $600
d) $3,300
Question 2) Which inventory costing method assigns to ending inventory the newest-the most recent-costs incurred during the period?
a) last-in, first-out, (LIFO)
b) Specific unit cost
c) Average cost
d) First-in, first-out (FIFO)
Question 3) Assume Fairprice.com began January with 10 units of inventory that cost a total of $160. During, January, Fairprice purchased and sold goods as follows
Jan 8 Purchase 30 units @ $17
14 Sale 25 units @ $34
22 Purchase 20 units @ $19
27 Sale 30 units @ $34
a) $431
b) $850
c) $415
d) $670
Question 4) Assume Bargain.com began January with 14 units of inventory that cost a total of $266. During January, Bargain purchased and sold goods as follows:
Jan 8 Purchase 42 units @ $20
14 Sale 35 units @ $40
22 Purchase 28 units @ $22
27 Sale 42 units @ $40
Under the FIFO inventory method, the cost of goods sold on January 14 is $686. Bargain's journal entry (entries) on January 14 is (are)
A. Accounts receivable 686
Inventory 686
B. Accounts receivable 1,400
Sales revenue 1,400
C. Cost of goods sold 686
Inventory 686
D. Both B and C are correct
Question 5. Assume Bargain.com began January with 12 units of inventory that cost a total of $228. During January, Bargain purchased and sold goods as follows:
Jan 8 Purchase 36 units @ $20
14 Sale 30 units @ $40
22 Purchase 24 units @ $22
27 Sale 36 units @ $40
Question 6. Under the FIFO inventory method, the cost of goods sold for the sale on January 14 is $588. After the purchase on January 22, what is Bargain's cost of the inventory on hand?
A. $528
B. $1,476
C. $888
D. $1,200
Question 7: Which inventory costing method results in the lowest net income during a period of rising inventory costs?
a) Specific unit cost
b) Average cost
c) First-in, first-out (FIFO)
d) Last-in, first-out (LIFO)
Question 8: Assume Nile.com began March with 16 units of inventory that cost a total of $304. During March, Nile purchased and sold goods as follows:
Mar 8 Purchase 48 units @ $20
14 Sale 40 units @ $40
22 Purchase 32 units @ $22
27 Sale 48 units @ $40
Suppose Nile.com began March with 16 units of inventory system. Compute the average unit cost of the company's inventory on hand at March 8. Round unit cost to the nearest cent.
A. $19.75
B. $$40.00
C. $50.19
D. Cannot be determined from the given data
Question 9: Which of the following is most closely linked to accounting conservatism?
a. Consistency principle
b. Disclosure principle
c. Materiality concept
d. Lower-of-cost-or-market rule
Question 10: At December 31, 2011, McAdam Company overstated ending inventory by $40,000. How does this error affect cost of goods sold and net income for 2011?
a) Understates cost of goods sold and overstates net income
b) Overstates cost of goods sold and understates net income
c) Leaves both cost of goods sold and net income correct because the errors cancel each other
d) Overstates both cost of goods sold and net income
Question 11: Suppose Outdoor Sportswear suffered a hurricane loss and needs to estimate the cost of the goods destroyed. Beginning inventory was $97,000, net purchase totaled $582,000, and sales came to $970,000. Outdoor's normal gross profit percentage is 48%. Use the gross profit method to estimate the cost of the inventory lost in the hurricane.
a) $504,400
b) $679,000
c) $465,600
d) $174,600