SampleTest2F1 - SAMPLE TEST 2- FORM 1 1. Which of the...

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SAMPLE TEST 2- FORM 1 1. Which of the following statements is not a characteristic of the LIFO method of pricing inventory? A) During a period of rising prices, LIFO tends to minimize the amounts of income taxes owed. B) The cost of goods sold is measured in relatively current costs. C) Inventory is valued at relatively current costs. D) None of the above; these statements all describe characteristics of the LIFO method. 2. An understatement of the ending inventory in Year 1(only error was in not counting part of inventory and thus understating the amount), if not corrected, will cause A) Year 1 net income to be understated and Year 2 net income to be overstated. B) Year 1 net income to be overstated and Year 2 net income to be overstated. C) Year 1 net income to be overstated and Year 2 net income will be correct. D) Year 1 net income to be overstated and Year 2 net income to be understated. E) Year 1 net income to be understated and Year 2 net income will be correct. 3. Hilliard’s Company uses the periodic FIFO method to value inventory and had the following transactions in the period. What are the cost of goods sold and ending inventory balances in dollars for the period? Date Transaction # of units Cost per unit 1/1 Beginning balance 100 $5 1/2 Purchase 75 $4 1/5 Sale 75 1/6 Sale 50 COGS Ending Inventory A) $625 $175 B) 575 225 C) 550 250 D) 600 200 E) None of the above is correct
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4. Jehl’s Water Polo Corporation had cost of goods sold in 2007 of $8,191 million and $7,710 million in 2006. Their merchandise inventory in 2007 was $1,902 million and $2,464 million in 2006. What was their inventory turnover in 2007? A) 4.31 B) 3.75 C) 3.64 D) None of the above 5. Perry’s Bar and Grill purchased a car for $22,000 on January 1, 2006. The car had an estimated useful life of 80,000 miles and an estimated residual value of $4,000. In the second year of ownership (2007), the car was driven 25,000 miles. Using the units of production method, the amount of depreciation expense for 2007 was A) $5,625. B) $6,875.
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This note was uploaded on 03/12/2012 for the course ACC 201 taught by Professor Bokmier during the Fall '10 term at Michigan State University.

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SampleTest2F1 - SAMPLE TEST 2- FORM 1 1. Which of the...

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