FA chapter6 quiz

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Quiz on FA chapter6 quiz, created by meli ssa on 18/02/2019.
meli ssa
Quiz by meli ssa, updated more than 1 year ago
meli ssa
Created by meli ssa over 5 years ago
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Resource summary

Question 1

Question
The next two questions use the following facts. Oceanview Software began January with $3,500 of merchandise inventory. During January, Oceanview made the following entries for its inventory transactions: How much was Oceanview’s inventory at the end of January?
Answer
  • $5,400
  • Zero
  • $4,400
  • $2,200

Question 2

Question
What was Oceanview’s gross profit for January?
Answer
  • Zero
  • $7,600
  • $5,400
  • $2,200

Question 3

Question
When does the cost of inventory become an expense?
Answer
  • When inventory is delivered to a customer
  • When inventory is purchased from the supplier.
  • When cash is collected from the customer.
  • When payment is made to the supplier.

Question 4

Question
If Marble Frame uses the FIFO method, the cost of the ending inventory will be
Answer
  • $39,000.
  • $36,160.
  • $36,260.
  • $36,000.

Question 5

Question
If Marble Frame uses the LIFO method, cost of goods sold will be
Answer
  • $22,600.
  • $22,760.
  • $22,500.
  • $19,760.

Question 6

Question
. In a period of rising prices
Answer
  • Gross profit under FIFO will be higher than under LIFO.
  • . b. LIFO inventory will be greater than FIFO inventory.
  • Net income under LIFO will be higher than under FIFO.
  • Cost of goods sold under LIFO will be less than under FIFO.

Question 7

Question
The Income Statement for Feel Good Health Foods shows gross profit of $154,000, operating expenses of $128,000, and cost of goods sold of $213,000. What is the amount of net sales revenue?
Answer
  • $367,000
  • 341,000
  • $495,000
  • $341,000

Question 8

Question
When the inventory cost is lower than NRV, the inventory should be reported at
Answer
  • . market price of inventory
  • replacement of inventory
  • selling price of inventory less cost to sell
  • acquisition cost of inventory.

Question 9

Question
The sum of (a) ending inventory and (b) cost of goods sold is
Answer
  • goods available.
  • beginning inventory
  • gross profit.
  • net purchases.

Question 10

Question
The following data come from the inventory records of Draper Company: Based on these facts, the gross profit for Dapper Company is
Answer
  • . $152,000.
  • $175,000.
  • $129,000
  • . Some other amount

Question 11

Question
Ellen Braun Cosmetics ended the month of May with inventory of $26,000. Ellen Braun expects to end June with inventory of $14,000 after cost of goods sold of $103,000. How much inventory must Ellen Braun purchase during June in order to accomplish these results?
Answer
  • $89,000
  • $91,000
  • $115,000
  • Cannot be determined from the data given

Question 12

Question
Two financial ratios that clearly distinguish a discount chain such as Kmart from a high-end retailer such as Saks Fifth Avenue are the gross profit percentage and the rate of inventory turnover. Which set of relationships is most likely for Saks Fifth Avenue?
Answer
  • Gross profit percentage : Low Inventory turnover: low
  • Gross profit percentage: Low Inventory turnover: High
  • Gross profit percentage: High Inventory turnover: Low
  • Gross Profit Percentage: High Inventory turnover: High

Question 13

Question
Sales are $540,000 and cost of goods sold is $330,000. Beginning and ending inventories are $29,000 and $34,000, respectively. How many times did the company turn its inventory over during this period?
Answer
  • 17.1 times
  • . 6.7 times
  • 7.2 times
  • 10.5 times

Question 14

Question
Kruger, Inc., reported the following data: Kruger’s gross profit percentage is
Answer
  • . 46.1
  • 51.7.
  • . 47.7
  • 50.0

Question 15

Question
Shailene Wood Company had the following beginning inventory, net purchases, net sales, and gross profit percentage for the first quarter of 20X6 By the gross profit method, the ending inventory should be
Answer
  • $74,000.
  • $76,000.
  • $81,000.
  • $79,000.

Question 16

Question
An error understated Regan Corporation’s December 31, 20X6, ending inventory by $42,000. What effect will this error have on total assets and net income for 20X6?
Answer
  • Assets: Understate Net Income: Understate
  • Assets: No Effect Net income: Overstate
  • Assets: Understate Net income: No effect
  • Assets: No effect Net income: No effect

Question 17

Question
. An error understated Regan Corporation’s December 31, 20X6, ending inventory by $42,000. What effect will this error have on net income for 20X7?
Answer
  • Understate
  • . Overstate
  • No effect
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