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FA Chapter 6 quick check
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Questions in this quiz (16)
1Which statement is true?
- AThe invoice is the purchaser’s request for collection from the customer.
- BA service company purchases products from suppliers and then sells them
- CGross profit is the excess of sales revenue over cost of goods sold
- DThe Sales account is used to record only sales on account.
2Sales discounts should appear in the financial statements
- A. as an addition to inventory.
- Bas a deduction from sales.
- Camong the current liabilities.
- Das an addition to sales
- Eas an operating expense
3. How is inventory classified in the financial statements?
- AAs a liability
- BAs a contra account to Cost of Goods sold
- CAs an expense
- D. As an asset
- EAs a revenue
4Dana uses a FIFO inventory system. Cost of goods sold for the period is
- A. $300
- B$283.
- C$265.
- D$195.
5Dana’s LIFO cost of ending inventory would be
- A$195.
- B$160.
- C$177.
- D$175
6Dana’s average cost of ending inventory is
- A. $195.
- B$160.
- C$177.
- D. $175.
7When applying the lower of cost or net realizable value, NRV means
- Aselling price less discounts.
- Boriginal cost plus profit margin
- C. selling price less cost to sell
- Doriginal cost less physical deterioration.
8During a period of rising prices, the inventory method that will yield the highest net
income and asset value is- ALIFO
- BFIFO
- Cspecific identification.
- Daverage cost.
9Which statement is true?
- A. The inventory method that best matches current expense with current revenue is FIFO.
- BWhen prices are rising, the inventory method that results in the lowest ending inventory
value is FIFO. - CAn error overstating ending inventory in 2010 will understate 2010 net income
- DApplication of the inventory valuation rule may result in a lower inventory value than
the cost of inventory.
10The ending inventory of Misty Harbor Co. is $75,000. If beginning inventory was $86,000
and goods available totaled $127,000, the cost of goods sold is- A$41,000.
- B$52,000.
- C$86,000.
- D$138,000.
- E. none of the above.
11Lantern Company had cost of goods sold of $148,000. The beginning and ending inventories were $16,000 and $28,000, respectively. Purchases for the period must have been
- A$136,000
- B$160,000.
- C. $164,000.
- D. $176,000.
- E$192,000.
12Highway Company had a $28,000 beginning inventory and a $35,000 ending inventory. Net sales
were $184,000; purchases, $93,000; purchase returns and allowances, $7,000; and freight-in,
$3,000.
Cost of goods sold for the period is- A. $96,000
- B$98,000.
- C. $82,000
- D$81,000.
- Enone of the above.
13Highway Company had a $28,000 beginning inventory and a $35,000 ending inventory. Net sales
were $184,000; purchases, $93,000; purchase returns and allowances, $7,000; and freight-in,
$3,000.
What is Highway’s gross profit percentage (rounded to the nearest percentage)?- A50%
- B55%
- C45%
- DNone of the above
14Highway Company had a $28,000 beginning inventory and a $35,000 ending inventory. Net sales
were $184,000; purchases, $93,000; purchase returns and allowances, $7,000; and freight-in,
$3,000
What is Highway’s rate of inventory turnover?- A2.6 times
- B5.3 times
- C. 3.0 times
- D2.3 times
15. Beginning inventory is $120,000, purchases are $270,000, and sales total $460,000. The
normal gross profit is 40%. Using the gross profit method, how much is ending inventory?- A$206,000
- B$132,000
- C$114,000
- D$88,000
- ENone of the above
16An overstatement of ending inventory in one period results in
- A. an understatement of the beginning inventory of the next period
- B. an understatement of net income of the next period
- C. an overstatement of net income of the next period.
- Dno effect on net income of the next period
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- Quiz on FA Chapter 6 quick check, created by meli ssa on 18/02/2019.
- Author
- meli ssa
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- English
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