CH8R - 21. When using a perpetual inventory system, d. all...

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21. When using a perpetual inventory system, d. all of these. 22. Goods in transit which are shipped f.o.b. shipping point should be b. included in the inventory of the buyer. 23. Goods in transit which are shipped f.o.b. destination should be a. included in the inventory of the seller. 24. Which of the following items should be included in a company's inventory at the balance sheet date? d. None of these. Use the following information for questions 25 and 26. During 2007 Foley Corporation transferred inventory to Kline Corporation and agreed to repurchase the merchandise early in 2008. Kline then used the inventory as collateral to borrow from Norwalk Bank, remitting the proceeds to Foley. In 2008 when Foley repurchased the inventory, Kline used the proceeds to repay its bank loan. 25. This transaction is known as a(n) d. product financing arrangement. 26. On whose books should the cost of the inventory appear at the December 31, 2007 balance sheet date? a. Foley Corporation 27.Goods on consignment are b. recorded in a Consignment Out account which is an inventory account. S 28. Valuation of inventories requires the determination of all of the following except c. the cost of goods held on consignment from other companies. P 29. The accountant for the Orion Sales Company is preparing the income statement for 2007 and the balance sheet at December 31, 2007. Orion uses the periodic inventory system. The January 1, 2007 merchandise inventory balance will appear . b. only in the cost of goods sold section of the income statement. P 30. If the beginning inventory for 2006 is overstated, the effects of this error on cost of goods sold for 2006, net income for 2006, and assets at December 31, 2007, respectively, are b. overstatement, understatement, no effect. S 31. The failure to record a purchase of merchandise on account even though the goods are properly included in the physical inventory results in
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d. an understatement of liabilities and an overstatement of owners' equity. 32. Belle Co. received merchandise on consignment. As of March 31, Belle had recorded the transaction as a purchase and included the goods in inventory. The effect of this on its financial statements for March 31 would be b. net income was correct and current assets and current liabilities were overstated. 33. Eller Co. received merchandise on consignment. As of January 31, Eller included the goods in inventory, but did not record the transaction. The effect of this on its financial statements for January 31 would be a. net income, current assets, and retained earnings were overstated. 34. Cross Co. accepted delivery of merchandise which it purchased on account. As of December 31, Cross had recorded the transaction, but did not include the merchandise in its inventory. The effect of this on its financial statements for December 31 would be a. net income, current assets, and retained earnings were understated. 35.
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This note was uploaded on 09/29/2011 for the course ACCOUNTING 3321 taught by Professor Sanchez during the Spring '11 term at Texas Pan American.

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CH8R - 21. When using a perpetual inventory system, d. all...

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