ACC 301 Ch 9 NO answers

ACC 301 Ch 9 NO answers - ACC 301 Chapter 9 Quiz Multiple...

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ACC 301 Chapter 9 Quiz Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. The gross profit method of inventory valuation is invalid when a. there is substantial increase in the quantity of inventory during the year. b. there is substantial increase in the cost of inventory during the year. c. the gross margin percentage changes significantly during the year. d. all ending inventory is destroyed by fire before it can be counted. ____ 2. An overstatement of ending inventory in Period 1 would result in income of Period 2 being a. overstated. b. understated. c. correctly stated. d. The answer cannot be determined from the information given. ____ 3. What is the maximum amount at which inventory can be valued when the goods have experienced a perman- ent decline in value? a. Historical cost b. Sales price c. Net realizable value d. Net realizable value reduced by a normal profit margin ____ 4. Hardy Company is a wholesale electronics distributor. On December 31, 2005, it prepared the following par- tial income statement: Gross sales . .............................. $600,400 Sales discounts . .......................... 400 Net sales . ................................ $600,000 Cost of goods sold: Beginning inventory . .................... $200,000 Net purchases . .......................... 300,000 Given this information, if Hardy Company's gross margin is 30 percent of net sales, what is the correct ending inventory balance? a. $80,000 b. $120,000 c. $180,000 d. $500,000 ____ 5. The following information is available for the Becca Company for the three months ended June 30 of this year: Inventory, April 1 of this year . ..................... $1,200,000 Purchases . ........................................... 4,500,000 Freight-in . .......................................... 300,000 Sales . ............................................... 6,400,000 The gross margin was 25 percent of sales. What is the estimated inventory balance at June 30? a. $880,000 b. $933,000 c. $1,200,000 d. $1,500,000
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____ 6. The following information appears in Olsen Company's records for the year ended December 31: Inventory, January 1 . ................................. $ 325,000 Purchases . ............................................ 1,150,000 Purchase returns . ..................................... 40,000 Freight-in . ........................................... 30,000 Sales . ................................................ 1,700,000
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This note was uploaded on 06/11/2009 for the course ACC 301 taught by Professor Pendarvis during the Spring '09 term at St. Leo.

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ACC 301 Ch 9 NO answers - ACC 301 Chapter 9 Quiz Multiple...

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