Chapter_8_Inventory_Review_Question_only_V2

Chapter_8_Inventory_Review_Question_only_V2 - Question 1 1....

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Question 1 1. In the last 4 years, Evergreen Ltd. has changed its method of inventory valuation from FIFO to weighted average, then back to FIFO. This selection of accounting principles would be in contravention of which of the following generally accepted accounting principles? a) Matching principle b) Consistency principle c) Cost principle d) Going-concern principle 2. Donny Company’s unadjusted merchandise inventory account balance at year end was $23,000, but a physical count of the inventory revealed a balance of $22,500. Donny uses a perpetual inventory system. Which of the following would be included in the adjusting entry? a) A debit of $500 to merchandise inventory b) A debit of $500 to cost of goods sold c) A credit of $500 to purchase allowances d) A credit of $500 to purchases 3. Bayview Swim Company had accumulated the following cost and market data at November 30. Inventory Categories Cost Market Swim suits $ 10,000 $10,500 Swim caps 3,000 2,000 Goggles 5,000 6,000 What is the lower-of-cost-or-market value for the inventory by major category? a) $17,000 b) $18,000 c) $18,500 d) $19,500 4. Clarence Corporation’s ending inventory is understated by $5,000. What are the effects of this error on the current year’s assets and cost of goods sold? a) Assets are understated; cost of goods sold are understated. b) Assets are overstated; cost of goods sold are understated. c) Assets are understated; cost of goods sold are overstated. d) Assets are overstated; cost of goods sold are overstated.
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5. In a periodic inventory system, a purchase return would be recorded by which of the following journal entries? a) Inventory. ................................................................................................... XX Accounts payable. ............................................................................... XX b) Purchase returns. ........................................................................................ XX Accounts payable. ............................................................................... XX c) Accounts payable. ...................................................................................... XX Inventory. ............................................................................................ XX d) Accounts payable. ...................................................................................... XX
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This note was uploaded on 12/29/2011 for the course MANAGEMENT MGTB05 taught by Professor Georgequanfun during the Fall '11 term at University of Toronto- Toronto.

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Chapter_8_Inventory_Review_Question_only_V2 - Question 1 1....

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