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Unformatted text preview: ACC2002 Midterm Exam Name ______Eriselda Mico___________________________________________________ #1.__c___Which of the following is a characteristic of a perpetual inventory system? a. Inventory purchases are debited to a Purchases account. b. Inventory records are not kept for every item. c. Cost of goods sold is recorded with each sale. d. Cost of goods sold is determined as the amount of purchases less the change in inventory. #2.__b__Which of the following types of interest cost incurred in connection with the purchase or manufacture of inventory should be capitalized as a product cost? a. Purchase discounts lost b. Interest incurred during the production of discrete projects such as ships or real estate projects c. Interest incurred on notes payable to vendors for routine purchases made on a repetitive basis d. All of these should be capitalized. #3.__d__ When a company uses LIFO for external reporting purposes and FIFO for internal reporting purposes, an Allowance to Reduce Inventory to LIFO account is used. This account should be reported a. on the income statement in the Other Revenues and Gains section. b. on the income statement in the Cost of Goods Sold section. c. on the income statement in the Other Expenses and Losses section. d. on the balance sheet in the Current Assets section. #4.___d_Malone Corporation uses the perpetual inventory method. On March 1, it purchased $30,000 of inventory, terms 2/10, n/30. On March 3, Malone returned goods that cost $3,000. On March 9, Malone paid the supplier. On March 9, Malone should credit a. purchase discounts for $600. b. inventory for $600. c. purchase discounts for $540. d. inventory for $540. 30,000 in terms of 2/10, n/30 March 3 we credit $60------ 3000 X 0, 02= 60 credit discount 30,000-3000=27,000 left to paid 27,000 X 0, 02= 540 credit to inventory in March 9 #5.__a__ Checkers uses the periodic inventory system. For the current month, the beginning inventory consisted of 1,200 units that cost $12 each. During the month, the company made two purchases: 500 units at $13 each and 2,000 units at $13.50 each. Checkers also sold 2,150 units during the month. Using the average cost method, what is the amount of cost of goods sold for the month? a. $27,843....
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- Spring '08