ACCT ch6 practice test - ACCT ch 6 practice quiz An...

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ACCT ch 6 practice quiz An understatement of Year 1's beginning inventory will: cause Year 1's cost of goods sold to be understated. An understatement of Year 1's beginning inventory will cause Year 1's cost of goods sold to be understated . Misstating Year 1's beginning inventor y will only affect Year 1. A misstatement of ending inventory, however, will have effects in both Year 1 and Year 2. The consequences of misstatements can be determined using the formulas Beginning Inventory + Net Cost of Purchases - Ending Inventory = Cost of Goods Sold and Net Sales - Cost of Goods Sold - Operating Expenses = Income Before Income Taxes. During the year, Toyz for Boyz had beginning inventory of $350,000, ending inventory of $320,000, and cost of goods sold of $1,507,500. The days' inventory on hand was: 81.1 days. Inventory turnover must be computed to determine days' inventory on hand . Inventory turnover is equal to 4.5 times . It is determined by dividing cost of goods sold of $1,507,500 by the average inventory of $335,000 [($350,000 + $320,000)/2]. Days' inventory on hand is equal to 365 days divided by the inventory turnover, or 81.1 days (365 days/4.5 times). Inventory for a manufacturing company is made up of: finished goods raw materials work in process. all of these. Inventory for a manufacturing company does include finished goods, but it is also made up of raw materials and work in process. d., all of these, is correct. Which of the following costs usually would not be included in the cost of inventory? Storage costs Insurance on goods in transit is included in the cost of inventory, but storage costs are not. In principle, storage costs should be included in inventory cost, but in practice, it is difficult to allocate these costs to specific items so they are usually considered period
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This note was uploaded on 03/28/2011 for the course ACCT 2301 taught by Professor G.a.gross during the Spring '11 term at Richland Community College.

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ACCT ch6 practice test - ACCT ch 6 practice quiz An...

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