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Unformatted text preview: MULTIPLE CHOICE —Conceptual 21. When using a perpetual inventory system, a. no Purchases account is used. b. a Cost of Goods Sold account is used. c. two entries are required to record a sale. d. all of these. 22. Goods in transit which are shipped f.o.b. shipping point should be a. included in the inventory of the seller. b. included in the inventory of the buyer. c. included in the inventory of the shipping company. d. none of these. 23. Goods in transit which are shipped f.o.b. destination should be a. included in the inventory of the seller. b. included in the inventory of the buyer. c. included in the inventory of the shipping company. d. none of these. 24. Which of the following items should be included in a company's inventory at the balance sheet date? a. Goods in transit which were purchased f.o.b. destination. b. Goods received from another company for sale on consignment. c. Goods sold to a customer which are being held for the customer to call for at his or her convenience. 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) a. consignment. b. installment sale. c. assignment for the benefit of creditors. 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 b. Kline Corporation c. Norwalk Bank d. Kline Corporation, with Foley making appropriate note disclosure of the transaction 27.Goods on consignment are a. included in the consignee's inventory. b. recorded in a Consignment Out account which is an inventory account. c. recorded in a Consignment In account which is an inventory account. d. all of these S 28. Valuation of inventories requires the determination of all of the following except a. the costs to be included in inventory. b. the physical goods to be included in inventory. c. the cost of goods held on consignment from other companies. d. the cost flow assumption to be adopted. 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 a. only as an asset on the balance sheet. b. only in the cost of goods sold section of the income statement. c. as a deduction in the cost of goods sold section of the income statement and as a current asset on the balance sheet....
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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.
- Spring '11