Chapter 05 - Multiple choice quiz

Which of the following accounts has a normal debit balance?

The Freight-in account

The term "FOB" denotes

On the income statement, purchases, less purchases returns and allowances plus freight-in equals

Sneakers Shoe Store has a beginning inventory of $15,000. During the period, purchases were $70,000; purchase returns $2,000; and freight-in $5,000. A physical count of inventory at the end of the period revealed that $10,000 was still on hand. The cost of goods available for sale was

For the current year, the following data were taken from the accounting records: Sales, $900,000; Sales Returns and Allowances, $30,000; Purchases, $500,000; Purchase Returns and Allowances, $8,000; Discount received, $4,000; Freight-in, $2,000; Beginning Inventory, $90,000; Ending Inventory, $130,000. What was the cost of goods purchased?

The cost of goods available for sale is allocated between

Honest Joe's Used Cars uses the specific identification method of costing inventory. During March, Honest Joe purchased three cars for $5,000, $6,500, and $8,000, respectively. During March, two cars are sold for $7,500 each. Honest Joe determines that at March 31, the $8,000 car is still on hand. What is Honest Joe's gross profit for March?

Of the following companies, which one would not likely employ the specific identification method for inventory costing?

In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the

The manager of Harbour City Ltd is given a bonus based on net profit before taxes. The net profit after taxes is $5,600 for FIFO and $4,900 for LIFO. The tax rate is 30%. The bonus rate is 20%. How much higher is the manager's bonus if FIFO is adopted instead of LIFO?

The consistent application of an inventory costing method is essential for

The following information was available for Riley Ltd at 31 December, 2010: beginning inventory $80,000; ending inventory $120,000; cost of goods sold $600,000; and sales $900,000.
Riley’s days in inventory in 2010 was:

Under the lower of cost and market basis in valuing inventory, market is defined as

An aircraft manufacturing company would most likely have a

If beginning inventory is understated by $10,000, the effect of this error in the current period is
Cost of Goods Sold/ Net Profit

An overstatement of ending inventory in one period results in

An error in the physical count of goods on hand at the end of a period resulted in a $10,000 overstatement of the ending inventory. The effect of this error in the current period is

Cost of Goods Sold/ Net Profit