EXAM_2_extra_practice

EXAM_2_extra_practice - Chapter 6 Additional Practice For...

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Chapter 6 – Additional Practice For each of the independent events listed below, analyze the impact on the indicated items at the end of the current year by placing the appropriate code letter in the box under each item. Code: O = item is overstated U = item is understated NA = item is not affected Items Stockholders’ Cost of Net Events Assets Equity Goods Sold Income 1. The ending inventory in the previous period was overstated. 2. A physical count of goods on hand at the end of the current year resulted in some goods being counted twice. 3. Goods purchased on account in December of the current year and shipped FOB shipping point were recorded as purchases, but were not included in the count of goods on hand on December 31 because they had not arrived by December 31. 4. The internal auditors discovered that the ending inventory in the previous period was understated $15,000 and that the ending inventory in the current period was overstated $25,000.
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Items Stockholders’ Cost of Net Events Assets Equity Goods Sold Income 1. NA NA O U 2. O O U O 3. U U O U 5. O O U O At December 31, 2007 Sunrise Company’s inventory records indicated a balance of $752,000. Upon further investigation it was determined that this amount included the following: $112,000 in inventory purchases made by Sunrise shipped from the seller 12/27/07 terms FOB destination, but not due to be received until January 2nd $74,000 in goods sold by Sunrise with terms FOB destination on December 27 th . The goods are not expected to reach their destination until January 6 th . $6,000 of goods received on consignment from Dollywood Company What is Sunrise’s correct ending inventory balance at December 31, 2007? a. $640,000 b. $746,000 c. $560,000 d. $634,000 Inventory costing methods place primary reliance on assumptions about the flow of a. goods. b. costs. c. resale prices. d. values. Which of the following statements is correct with respect to inventories? a. The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold. b. It is generally good business management to sell the most recently acquired goods first. c. Under FIFO, the ending inventory is based on the latest units purchased. d. FIFO seldom coincides with the actual physical flow of inventory.
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If goods in transit are shipped FOB destination a. the seller has legal title to the goods until they are delivered. b. the buyer has legal title to the goods until they are delivered. c. the transportation company has legal title to the goods while the goods are in transit. d. no one has legal title to the goods until they are delivered. The term "FOB" denotes
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This test prep was uploaded on 03/27/2008 for the course AIS 100 taught by Professor Ta during the Spring '08 term at Wisconsin.

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EXAM_2_extra_practice - Chapter 6 Additional Practice For...

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