Acc quiz 2

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Question 1 of 1

Time Left

561966

180

block

Ignoring taxes, if ending inventory this year is understated by $70, then net income this year is

Select the correct answer(s).

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Explanation

Consider the following example, where “truth” is what should have been reported and “As Reported” understates ending inventory by $70. The result is that cost of goods sold are too high by $70 which would understate net income by $70: “Truth” Beginning Inv 150 + Purchases 700 = Goods available 850 − Ending Inv (100) = Cost of Goods Sold 750 As Reported Beginning Inv 150 + Purchases 700 = Goods available 850 − Ending Inv (30) = Cost of Goods Sold 820 Diff. - Ending Inv 70 =Cost of Goods sold 70 If Cost of Goods Sold is overstated, Net Income will be understated

561970

300

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Peeke Company has the following inventory information for the current year: Beginning Inventory 100 units @ $30.00 per unit Purchase #1 60 units @ $35.00 per unit Purchase #2 40 units @ $40.00 per unit Ending Inventory 30 units What is the cost assigned to cost of goods sold for the year using LIFO (Last-In-First-Out) inventory method?

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Explanation

$5,800 = (40*40)+(60*35)+(70*30)

561985

180

none

A firm’s inventory turnover:

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Explanation

A firms inventory turnover is affected by the inventory method used because FIFO and LIFO methods have an effect on COGS

561989

180

none

If a firm’s inventory turnover increases, its days’ sales in inventory will:

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Explanation

Days sales in inventory = 365/inventory turnover. If your Inventory Turnover increases, that means Days sales is going to decrease.

561990

300

none

Wang Company’s average inventory during the year was $50,000, sales revenues were $420,000, and cost of goods sold were $300,000. Wang’s days’ sales in inventory for the year was (rounded to one decimal place):

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Explanation

Days sales in inventory = 365/inventory turnover Inventory turnover = 300,000/50,000 = 6 Days sales in inventory=365 /6 = 60.8 days

561991

300

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For the current month, the beginning inventory consisted of 200 units that cost $65 each. During the month, the company made two purchases: 300 units at $69 each and 150 units at $70 each. The company also sold 500 units during the month. Using the weighted-average cost method, what is the cost of ending inventory?

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Explanation

The cost of goods available for sale = (200x$65) + (300x$69) + (150x$70) = $44,200 The number of goods available = 200+300+150 = 650 The dollar per unit assigned to ending inventory and COGS is = $44,200/650 = $68 Ending inventory = goods available minus goods sold = 650-500=150 Cost of Goods Sold = 500 x $68 = $10,200

561741

none

In times of rising prices, which method is most likely to result in the highest cost of goods sold?

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Explanation

LIFO results in the highest cost of goods sold because the inventory would usually cost more.

Acc quiz 2

Question 1 of 1

Time Left

Ignoring taxes, if ending inventory this year is understated by $70, then net income this year is

Select the correct answer(s).

(0/0)

Explanation

Select the correct answer(s).

(0/0)

Explanation

A firm’s inventory turnover:

Select the correct answer(s).

(0/0)

Explanation

If a firm’s inventory turnover increases, its days’ sales in inventory will:

Select the correct answer(s).

(0/0)

Explanation

Wang Company’s average inventory during the year was $50,000, sales revenues were $420,000, and cost of goods sold were $300,000. Wang’s days’ sales in inventory for the year was (rounded to one decimal place):

Select the correct answer(s).

(0/0)

Explanation

Select the correct answer(s).

(0/0)

Explanation

In times of rising prices, which method is most likely to result in the highest cost of goods sold?

Select the correct answer(s).

(0/0)

Explanation

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