2361 Exam 2 Practice Ch 5, 6 Inventories _2_

2361 Exam 2 Practice Ch 5, 6 Inventories _2_ - Exam 2:...

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Exam 2: Inventories – Questions 17-27 17. In a period of increasing prices, which inventory flow assumption will result in the lowest amount of income tax expense? a. FIFO b. LIFO c. Average Cost d. Income tax expense for the period will be the same under all assumptions. 18. An error in the physical count of goods on hand at the end of a period resulted in a $10,000 overstatement of the ending inventory. The effect of this error in the current period is Cost of Goods Sold Net Income a. Understated Understated b. Overstated Overstated c. Understated Overstated d. Overstated Understated 19. Trane Company purchased merchandise inventory with an invoice price of $4,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Trane Company pays within the discount period? a. $4,000. b. $3,920. c. $3,600. d. $3,680. 20. When a customer returns merchandise purchased on credit, the retailer debits a. Sales and credits Accounts Receivable. b. Sales Returns and Allowances and credits Accounts Receivable.
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2361 Exam 2 Practice Ch 5, 6 Inventories _2_ - Exam 2:...

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