SAMPLE TEST 2-FORM 2
Kevin’s Kevlar and Kanvas purchased a copy machine on January 3, 2007 from
The following information related to this purchase was available:
Invoice price is $20,000, terms 2/10/n/30
Shipping paid FOB Shipping point,
Sales tax is $1,200
Kevin intends to pay the entire amount in cash by January 12, 2007.
At what cost should Kevin record the copy machine on his books?
None of the above
2. Shilpa’s Shoes ‘R Us had the following information taken from its December 31,
2007, adjusted trial balance:
Compute the gross profit (also called gross margin) that would appear on the income
3. Which of the following statements is
The actual physical flow of goods in a company usually determines a company’s choice
of inventory costing method.
LIFO can be used for tax purposes and FIFO can be used for financial reporting for a
company in a given year.
During a period of rising prices, LIFO results in a lower income tax payable (less tax
paid) than does FIFO.
When the weighted average inventory costing method is used, ending inventory and cost
of goods sold are valued using a different cost per unit.