FALSE If a company uses the periodic inventory system, what is the impact on the current ratio of including goods in transit f.o.b. shipping point in purchases, but not ending inventory? Understate the current ratio. If a company uses the periodic inventory system, what is the impact on net income of including goods in transit f.o.b. shipping point in purchases, but not ending inventory? Understate Net Income Companies must allocate the cost of all the goods available for sale (or use) between the income statement and the statement of financial position. TRUE Companies must allocate the cost of all the goods available for sale (or use) between The income statement and the statement of financial position. Which of the following is not true when a perpetual inventory system is used? The balance in the inventory account should reflect the value of inventory on hand at any time. Cost of goods sold is recorded at the end of the accounting period. The inventory account is debited for purchases of merchandise and freight-in. The inventory account is credited for sales of merchandise.
During 2010 Carne Corporation transferred inventory to Nolan Corporation and agreed to repurchase the merchandise early in 2011. Nolan then used the inventory as collateral to borrow from Norwalk Bank, remitting the proceeds to Carne. In 2011 when Carne repurchased the inventory, Nolan used the proceeds to repay its bank loan. On whose books should the cost of the inventory appear at the December 31, 2010 statement of financial position date? Carne Corporation Briggs Corporation uses the perpetual inventory method. On March 1, it purchased ¥10,000 of inventory, terms 2/10, n/30. On March 3, Briggs returned goods that cost ¥1,000. On March 9, Briggs paid the supplier. On March 9, Briggs should credit Inventory for ¥180. *(¥10,000 - ¥1,000) X 2% = ¥180.* Which of the following accounts would not be used under a periodic system? Inventory short and over. Which of the following is a characteristic of a perpetual inventory system? Cost of goods sold is recorded with each sale. The balance in Moon Co.'s accounts payable account at December 31, 2010 was $700,000 before any necessary year-end adjustments relating to the following: Goods were in transit to Moon from a vendor on December 31, 2010. The invoice cost was $40,000. The goods were shipped f.o.b. shipping point on December 29, 2010 and were received on January 4, 2011. Goods shipped f.o.b. destination on December 21, 2010 from a vendor to Moon were received on January 6, 2011. The invoice cost was $25,000. On December 27, 2010, Moon wrote and recorded checks to creditors totaling $30,000 that were mailed on January 10, 2011. In Moon's December 31, 2010 statement of financial position, the accounts payable should be $770,000. Bell Inc. took a physical inventory at the end of the year and determined that $475,000 of goods were on hand. In addition, the following items were not included in the physical count.
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- Fall '11
- Accounting, Ely Company