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Exam 6: Inventory and Cost of Goods Sold

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Question 61

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Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Cost of inventory sold during the period.

A) Ending inventory
B) Freight-in
C) Cost of goods sold
D) LIFO conformity rule
E) LIFO
F) Freight-out
G) LIFO reserve
H) Specific identification
I) FIFO
J) Average cost

K) None of the above
L) A) and B)

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Question 62

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When inventory costs are declining,__________ generally results in a higher amount of reported net income.

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Question 63

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Listed below are five terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Companies that produce the inventories they sell,rather than buying them from suppliers in finished form.

A company uses a perpetual system to record inventory transactions.The company purchases inventory on account on February 9,2015,for $50,000 and then sells this inventory on account on March 7,2015,for $70,000.Record the transactions for the purchase and sale of the inventory.

Wildwood,an outdoors clothing store,reports the following information for June: What is Wildwood's gross profit for June?

The inventory turnover ratio equals cost of goods sold divided by average inventory.

In a perpetual inventory system,at the time of a sale the cost of inventory sold is:

For inventory that is shipped FOB shipping point,title transfers from the seller to the buyer once the seller ships the inventory.

During periods of rising costs,LIFO generally results in a higher ending inventory balance.

The cost of the goods that a company sold during a period is shown in its financial statements as ___________ and the cost of the goods that a company still has on hand at the end of the year is shown in the financial statements as ____________.

The LIFO conformity rule requires a company that uses LIFO for tax reporting to use FIFO for financial reporting.

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Cost of freight not included in inventory.

__________ is commonly referred to as the balance sheet approach.

In a perpetual inventory system,the purchase of inventory is debited to:

Generally,a lower gross profit ratio reflects positively on a company's ability to manage its inventory.

For each item below,indicate whether FIFO or LIFO will generally result in a higher reported amount when inventory costs are rising versus falling.

LeGrand Corporation reported the following amounts in its income statement: What was LeGrand's net income?

When inventory costs are declining,__________ generally results in a lower amount of reported cost of goods sold.

Using the first-in,first-out method (FIFO),the first units purchased are assumed to be the first ones sold.

For inventory that is shipped FOB destination,title transfers from the seller to the buyer once the seller ships the inventory.