S07_136A_MT2_8am

S07_136A_MT2_8am - MAY 21, 2007 ANDERSON ECON 136A SPRING...

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MAY 21, 2007 ANDERSON ECON 136A SPRING 2007 8AM CLASS MIDTERM 2 v. 1 Name _________________________ Answer questions #1-25 on your green scantron--WRITE YOUR VERSION # ON YOUR SCANTRON PLEASE!!! Answer the remaining questions in your blue-books. 1. XYZ, Inc. ships goods FOB shipping point which are in transit at the end of the year. As of the end of the year, XYZ should do what with respect to this inventory? a. Include in inventory until the bill from the trucking company is received. b. Include in inventory until the customer pays the invoice. c. Exclude from inventory. d. Include in inventory. 2. The 460 cubic inch engine was produced by which auto-maker? a. Buick b. Dodge c. AICPA d. Ford 3. If a material amount of inventory has been ordered through a formal purchase contract at the balance sheet date for future delivery at firm prices, a. disclosure is required only if prices have since risen substantially. b. an appropriation of retained earnings is necessary. c. this fact must be disclosed. d. disclosure is required only if prices have declined since the date of the order. 4. Inventory is recorded under LIFO by the accounting system at a cost of $10,000. The inventory is expected to sell for $11,000, it would cost $9,900 to replace, $200 in commissions to sell, and has a normal profit margin of 20%. Which of the following is true of this inventory? a. The designated market value is $10,800 and the inventory should be reported on the balance sheet at $10,000. b. The designated market value is $9,900 and the inventory should be reported on the balance sheet at $9,900. c. The designated market value is $11,000 and the inventory should be reported on the balance sheet at $10,000. d. The designated market value is $9,900 and the inventory should be reported on the balance sheet at $10,000.
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MIDTERM 2 v. 1--Page 2 5. Inventory was overstated at the beginning of the year by $10,000 and was properly stated at the end of the year. During the year, the accounting system recorded cost of sales in the amount of $500,000. The proper amount to report under GAAP for COGS for the year is: a. $510,000 b. none of these c. $490,000 d. $500,000 6. 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. All of these should be capitalized. c. Interest incurred on notes payable to vendors for routine pur- chases made on a repetitive basis d. Interest incurred during the production of discrete projects such as ships or real estate projects 7. The journal entries for a bank reconciliation a. may include a credit to Accounts Receivable for an NSF check. b. are taken from the "balance per bank" section only.
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S07_136A_MT2_8am - MAY 21, 2007 ANDERSON ECON 136A SPRING...

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