62) The type of income statement that classifies items as operating and nonoperating is the
________ income statement.
A) Consolidated.
B) Multiple-step.
C) Classified.
D) Single-step.
63) The type of income statement that reports a series of subtotals such as gross profit, operating
income, and income before taxes is a ________ income statement.
A) Single-step.
B) Subtotaled.
C) Multiple-step.
D) Classified.
64) The primary distinction between operating activities and nonoperating activities in a
multiple-step income statement is whether the activity is:
A) A large or small dollar amount.
B) Part of primary business operations.
C) Related to current versus long-term assets.
D) Reported as a revenue or an expense.
65) The distinction between operating and nonoperating income relates to:
A) Current versus noncurrent.
B) Primary versus peripheral activities of the reporting entity.
C) Revenues versus expenses.
D) Reliability of measurements.
66) Which of the following items may be classified as nonoperating revenues and expenses?
A) Interest expense.
B) Loss on the sale of equipment.
C) Interest revenue.
D) All of the other answers are classified as nonoperating revenues and expenses.
67) Gross profit is calculated as net sales minus:
A) Nonoperating expenses and income tax expense.
B) Operating expenses.
C) Cost of goods sold.
D) All of the other answers are subtracted from net sales to calculate gross profit.
68) A company has net sales of $200,000, cost of goods sold of $120,000, selling expenses of
$6,000, and nonoperating expenses of $2,000. What is the company’s gross profit?
A) $76,000.
B) $80,000.
C) $74,000.
D) $72,000.
69) Given the information below, what is the gross profit?
Sales revenue
$
320,000
Accounts receivable
50,000
Ending inventory
100,000
Cost of goods sold
250,000
Sales returns
20,000
A) $250,000.
B) $70,000.
C) $220,000.
D) $50,000.
70) Given the information in the table below, what is the company’s gross profit?
Sales revenue
$
350,000
Accounts receivable
$
280,000
Ending inventory
$
230,000
Cost of goods sold
$
180,000
Sales returns
$
50,000
Sales discounts
$
20,000
A) $280,000.
B) $170,000.
C) $50,000.
D) $100,000.
71) A company reports the following information for June:
Sales revenue
$
104,000
$
11,000
Operating expenses
22,000
65,000
Deferred revenues
15,000
12,000
What is the company’s gross profit for June?
A) $18,000.
B) $39,000.
C) $104,000.
D) $17,000.
72) Operating income is calculated as net sales minus:
A) Utilities expense.
B) Salaries expense.
C) Cost of goods sold.
D) All of the other answers are subtracted from net sales to calculate operating income.
73) Which measure reflects profitability from normal operations and a key performance measure
for predicting the future profit-generating ability of a company?
A) Gross profit.
B) Operating income.
C) Income before income taxes.
D) Net income.
26
74) Consider the following year-end information for a company:
Cost of goods sold
$
420,000
Sales revenue
800,000
Nonoperating expenses
10,000
Operating expenses
170,000
Income tax expense
80,000
What amount will the company report for operating income?
A) $200,000.
B) $210,000.
C) $380,000.
D) $120,000.
75) LeGrand Corporation reported the following amounts in its income statement:
Sales revenue
$
440,000
Advertising expense
60,000
Interest expense
10,000
Salaries expense
55,000
Utilities expense
25,000
Income tax expense
45,000
Cost of goods sold
180,000
What was LeGrand’s gross profit?
A) $260,000.
B) $180,000.
C) $220,000.
D) $120,000.
76) LeGrand Corporation reported the following amounts in its income statement:
Sales revenue
$
440,000
Advertising expense
60,000
Interest expense
10,000
Salaries expense
55,000
Utilities expense
25,000
Income tax expense
45,000
Cost of goods sold
180,000
What was LeGrand’s operating income?
A) $120,000.
B) $260,000.
C) $110,000.
D) $65,000.
77) LeGrand Corporation reported the following amounts in its income statement:
Sales revenue
$
440,000
Advertising expense
60,000
Interest expense
10,000
Salaries expense
55,000
Utilities expense
25,000
Income tax expense
45,000
Cost of goods sold
180,000
What was LeGrand’s net income?
A) $120,000.
B) $60,000.
C) $110,000.
D) $65,000.
78) The inventory costing method that matches each unit of inventory with its actual cost is
referred to as the ________ method.
A) Weighted-average.
B) Specific identification.
C) Actual cost.
D) Matching unit.
79) A company is most likely to utilize the specific identification method if its inventory consists
of:
A) Unique products.
B) Very expensive products.
C) A relatively small number of products.
D) All of the other answers are reasons to utilize the specific identification method.
80) The inventory cost flow assumption that generally best matches the physical flow of inventory
is:
A) FIFO.
B) LIFO.
C) Weighted-average.
D) Lower of cost and net realizable value.
81) The inventory cost flow assumption that results in a random mixture of goods being included
in the balance of inventory and cost of goods sold is:
A) FIFO.
B) LIFO.
C) Weighted-average.
D) Lower of cost and net realizable value.
82) The inventory cost flow assumption that is least likely to match the physical flow of inventory
for most companies is:
A) FIFO.
B) LIFO.
C) Weighted-average.
D) Specific identification.
83) The following information relates to inventory for Shoeless Joe Inc.
Date
Quantity
Price
March
1
Beginning Inventory
20
$
2
March
7
Purchase
15
3
March
11
Sale
25
7
March
12
Purchase
20
4
At what amount would Shoeless report ending inventory using FIFO cost flow assumptions?
A) $55.
B) $170.
C) $110.
D) $70.
84) The following information relates to inventory for Shoeless Joe Inc.
Date
Quantity
Price
March
1
Beginning Inventory
20
$
2
March
7
Purchase
15
3
March
11
Sale
25
7
March
12
Purchase
20
4
At what amount would Shoeless report gross profit using LIFO cost flow assumptions?
A) $105.
B) $80.
C) $175.
D) $120.
85) The following information relates to inventory for Shoeless Joe Inc.
Date
Quantity
Price
March
1
Beginning Inventory
20
$
2
March
7
Purchase
15
3
March
11
Sale
30
7
March
12
Purchase
15
6
At what amount would Shoeless report cost of goods sold using the weighted-average cost flow
assumption?
A) $110.
B) $73.
C) $70.
D) $105.
86) Inventory records for Dunbar Incorporated revealed the following:
Date
Transaction
Number of
Units
Unit Cost
Apr.
1
Beginning Inventory
500
$
2.40
Apr.
20
Purchase
400
2.50
Dunbar sold 700 units of inventory during the month. Ending inventory assuming FIFO would be:
A) $500.
B) $490.
C) $470.
D) $480.
87) Inventory records for Dunbar Incorporated revealed the following:
Date
Transaction
Number of
Units
Unit Cost
Apr.
1
Beginning Inventory
500
$
2.40
Apr.
20
Purchase
400
2.50
Dunbar sold 700 units of inventory during the month. Cost of goods sold assuming FIFO would
be:
A) $1,730.
B) $1,700.
C) $1,720.
D) $1,710.
88) Inventory records for Dunbar Incorporated revealed the following:
Date
Transaction
Number of
Units
Unit Cost
Apr.
1
Beginning Inventory
500
$
2.40
Apr.
20
Purchase
400
2.50
Dunbar sold 700 units of inventory during the month. Ending inventory assuming LIFO would be:
A) $500.
B) $490.
C) $470.
D) $480.
89) Inventory records for Dunbar Incorporated revealed the following:
Date
Transaction
Number of
Units
Unit Cost
Apr.
1
Beginning Inventory
500
$
2.40
Apr.
20
Purchase
400
2.50
Dunbar sold 700 units of inventory during the month. Cost of goods sold assuming LIFO would
be:
A) $1,730.
B) $1,700.
C) $1,720.
D) $1,710.
36
90) Inventory records for Dunbar Incorporated revealed the following:
Date
Transaction
Number of
Units
Unit Cost
Apr.
1
Beginning Inventory
500
$
2.40
Apr.
20
Purchase
400
2.50
Dunbar sold 700 units of inventory during the month. Ending inventory assuming
weighted-average cost would be: (Round weighted-average unit cost to 4 decimals)
A) $502.
B) $490.
C) $489.
D) $480.
91) Inventory records for Dunbar Incorporated revealed the following:
Date
Transaction
Number of
Units
Unit Cost
Apr.
1
Beginning Inventory
500
$
2.40
Apr.
20
Purchase
400
2.50
Dunbar sold 700 units of inventory during the month. Cost of goods sold assuming
weighted-average cost would be: (Round weighted-average unit cost to 4 decimals)
A) $1,711.
B) $1,700.
C) $1,720.
D) $1,708.
92) Inventory records for Marvin Company revealed the following:
Date
Transaction
Number of
Units
Unit Cost
Mar.
1
Beginning Inventory
1,000
$
7.20
Mar.
10
Purchase
600
7.25
Mar.
16
Purchase
800
7.30
Mar.
23
Purchase
600
7.35
Marvin sold 2,300 units of inventory during the month. Ending inventory assuming FIFO would
be:
A) $5,140.
B) $5,080.
C) $5,060.
D) $5,050.
93) Inventory records for Marvin Company revealed the following:
Date
Transaction
Number of
Units
Unit Cost
Mar.
1
Beginning Inventory
1,000
$
7.20
Mar.
10
Purchase
600
7.25
Mar.
16
Purchase
800
7.30
Mar.
23
Purchase
600
7.35
Marvin sold 2,300 units of inventory during the month. Cost of goods sold assuming FIFO would
be:
A) $16,800.
B) $16,760.
C) $16,540.
D) $16,660.
94) Inventory records for Marvin Company revealed the following:
Date
Transaction
Number of
Units
Unit Cost
Mar.
1
Beginning Inventory
1,000
$
7.20
Mar.
10
Purchase
600
7.25
Mar.
16
Purchase
800
7.30
Mar.
23
Purchase
600
7.35
Marvin sold 2,300 units of inventory during the month. Ending inventory assuming LIFO would
be:
A) $5,040.
B) $5,055.
C) $5,075.
D) $5,135.