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This Study Resource Was: Week 8 Short Quiz 008 Accounting For Inventories Part 2-4

The document provides a short quiz with 10 multiple choice questions related to accounting for inventories. The questions cover topics like inventory valuation methods, perpetual vs periodic inventory systems, inventory disclosures, and accounting for consignment goods.

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KRIS ANNE SAMUDIO
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24 views1 page

This Study Resource Was: Week 8 Short Quiz 008 Accounting For Inventories Part 2-4

The document provides a short quiz with 10 multiple choice questions related to accounting for inventories. The questions cover topics like inventory valuation methods, perpetual vs periodic inventory systems, inventory disclosures, and accounting for consignment goods.

Uploaded by

KRIS ANNE SAMUDIO
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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ACTG311

Week 8

Short Quiz 008: Accounting for Inventories Part 2-4

1. Tony's AutoParts Store is a small retailer. Tony Brown owns the business and has
purchased a microcomputer system equipped with bar coding devices. Tony Brown
uses the first-in, first-out (FIFO) method to value inventory and is concerned about
the impact on inventory valuation of a switch from a periodic inventory system to a
perpetual inventory system. Which one of the following statements is
correct? Inventory and cost of goods sold will be the same whether or not a
perpetual or periodic inventory system is used.
2. The weighted average inventory costing method is particularly suitable to inventory
where, homogeneous products are mixed together.

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3. Which of the following is not a common disclosure for inventories? Inventory

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location.

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4. When using the periodic inventory system, which of the following generally would

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not be separately accounted for in the computation of cost of goods sold? Trade

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discounts applicable to purchases during the period
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5. During 2015, Terry Co., a manufacturer of chocolate candies, contracted to purchase
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100,000 pounds of cocoa beans at 3.00 per pound, delivery to be made in the spring
of 2016. Because a record harvest is predicted for 2016, the price per pound for
cocoa beans had fallen to 2.30 by December 31, 2015.
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Of the following journal entries, the one which would properly reflect in 20015the
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effect of the commitment of Terry Co. to purchase the 100,000 pounds of cocoa is.
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Estimated Loss on Purchase Commitments: 70,000 Estimated Liability on Purchase


Commitments: 70,000
6. In a periodic inventory system that uses the weighted average cost flow method, the
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beginning inventory is the; Total goods available for sale minus the net purchases.
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7. In a perpetual inventory system, two entries are normally made to record each sales
transaction. The purpose is best described by which of the following statements?
One entry recognizes the sales revenue and the other recognizes the cost of goods
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sold
8. ________________ is an increase in the selling price over the original retail price.
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Markup
9. ______________ is a decrease in the selling price which does not bring the new selling
price below the original retail. Markup Cancellation
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10. Dolan Co. received merchandise on consignment. As of March 31, Dolan had
recorded the transaction as a purchase and included the goods in inventory. The
effect of this on its financial statements for March 31 would be.
net income was correct and current assets and current liabilities were overstated.

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