2361 Exam 2 Ch 5 Inventory Practice

2361 Exam 2 Ch 5 Inventory Practice - Practice Exam Ch 5...

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Practice Exam Ch 5 Inventory Journal Entries Multiple Choice Identify the choice that best completes the statement or answers the question. Billit Corporation Billit Corporation is a merchandising company. Selected account balances are listed below. Sales $500,000 Purchases 225,000 Beginning Inventory 16,000 Ending Inventory 30,000 Operating Expenses 148,000 Income Tax Expense 10,000 Beginning Retained Earnings 53,000 Dividends 15,000 ____ 1. Calculate the Cost of Goods Sold for Billit Corporation. a. $275,000 b. $259,000 c. $241,000 d. $211,000 ____ 2. The cost of goods sold is equal to: a. purchases less beginning inventory plus ending inventory. b. the inventory account as reported on the balance sheet. c. the cost of goods available for sale less ending inventory. d. the amount of inventory on hand at the end of the accounting period. ____ 3. Which of the following statements is false ? a. The inventory account is updated after every sale and after every merchandise purchase under the perpetual inventory system. b. The inventory account is updated only at the end of the accounting period under the peri- odic inventory system. c. A cost of goods sold account is updated after each sale of merchandise under the periodic inventory system. d. A purchases account is used only under the periodic inventory system. ____ 4. In order to determine inventory for its balance sheet, a company must count the inventory at the end of its ac- counting period according to: a. the periodic inventory system. b. the perpetual inventory system. c. both the periodic and perpetual inventory systems. d. neither the periodic nor perpetual inventory systems. ____ 5. The amount recognized on the balance sheet as the cost of inventory will ultimately be recognized as: a. sales revenue b. cost of goods sold c. operating expenses d. administrative expenses
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____ 6. Augustus, Inc. buys designer clothing to sell in its retail stores. Since much of the merchandise comes from New York and Europe, Augustus must pay freight charges to get the merchandise shipped in. Which of the following statements must be true? a. Transportation-in, paid by Augustus, is added to the inventory account under the periodic system. b. Transportation-in, paid by Augustus, is subtracted from purchases under the periodic sys- tem. c.
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2361 Exam 2 Ch 5 Inventory Practice - Practice Exam Ch 5...

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