ch05_tb_so5 - CHAPTER 5 Test Bank Study Objective 5...

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CHAPTER 5 Test Bank: Study Objective 5 TRUE-FALSE STATEMENTS AND SOLUTIONS 47. With the periodic inventory system, goods` available for sale must be calculated before cost of goods sold. 48. Under the periodic system, the purchases account is used to accumulate all purchases of merchandise for resale. Answers to True-False Statements 1. T 9. T 17. T 25. F 33. F 41. T 49. F 2. F 10 F 18. T 26. T 34. T 42. T 50. T 3. F 11. F 19. F 27. F 35. T 43. F 51. F 4. T 12. F 20. F 28. T 36. T 44. F 52. F 5. F 13. T 21. T 29. F 37. F 45. T 6. T 14. T 22. T 30. T 38. F 46. T 7. T 15. T 23. F 31. T 39. F 47. T 8. F 16. T 24. F 32. T 40. F 48. T
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MULTIPLE CHOICE QUESTIONS AND SOLUTIONS 173. When using a periodic inventory system, which statement concerning the computation of cost of goods sold is correct? a. The amount of ending inventory is determined on the last day of the accounting period. b. Cost of Goods Available for Sale includes net purchases plus the ending inventory. c. Purchases represent cash paid for purchases during the accounting period. d. Freight in is ignored. 174. When using the periodic inventory system, which of the following is not a step in determining cost of goods purchased? a. Add freight in. b. Subtract purchase returns and allowances. c. Subtract cost of ending inventory. d. All of these are necessary steps. 175. At the beginning of the year, Midtown Athletic had an inventory of $400,000. During the year, the company purchased goods costing $1,600,000. If Midtown Athletic reported ending inventory of $600,000 and sales of $2,000,000, their cost of goods sold and gross profit rate must be a. $1,000,000 and 50% b. $1,400,000 and 30% c. $1,000,000 and 30% d. $1,400,000 and 70% 176. At the beginning of the year, Downtown Athletic had an inventory of $200,000. During the year, the company purchased goods costing $800,000. If Downtown Athletic reported ending inventory of $300,000 and sales of $1,050,000, their cost of goods sold and gross profit rate must be a. $500,000 and 52.4% b. $700,000 and 33.3% c. $500,000 and 33.3% d. $700,000 and 66.7% 177. During the year, Darla’s Pet Shop’s merchandise inventory decreased by $20,000. If the company’s cost of goods sold for the year was $300,000, purchases must have been a. $320,000. b. $280,000. c. $260,000. d. Unable to determine. 178. During the year, Carla’s Pet Shop’s merchandise inventory decreased by $25,000. If the company’s cost of goods sold for the year was $375,000, purchases must have been a. $400,000.
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b. $350,000. c. $325,000. d. Unable to determine. 179. The amount of cost of good available for sale during the year depends on the amounts of a. beginning merchandise inventory and cost of goods sold. b. beginning
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ch05_tb_so5 - CHAPTER 5 Test Bank Study Objective 5...

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