116.
Using a perpetual inventory system, the purchase of inventory on account is recorded with
a:
117.
Using a perpetual inventory systems, the sale of inventory on account is recorded with a:
118.
Using a perpetual inventory system, the entry to record the return of inventory previously
purchased on account includes a:
119.
On May 1, Ace Bonding Company purchased inventory costing $2,000 on account with
terms 2/10, n/30. On May 18, Ace pays for this inventory and records which of the
following using a perpetual inventory system?
A.
Accounts Payable
2,000
Cash
2,000
B.
Accounts Payable
1,960
Inventory
40
Cash
2,000
C.
Accounts Payable
2,000
Inventory
40
Cash
1,960
D.
Cash
2,000
Accounts Payable
2,000
120.
Davis Hardware Company uses a perpetual inventory system. How should Davis record the
return of inventory previously purchased on account for $200?
A.
Inventory
200
Accounts Payable
200
B.
Accounts Payable
200
Inventory
200
C.
Purchase Returns
200
Accounts Payable
200
D.
Accounts Payable
200
Purchase Returns
200
121.
On May 1, Ace Bonding Company purchased inventory costing $2,000 on account with
terms 2/10, n/30. On May 8, Ace pays for this inventory and records which of the following
using a perpetual inventory system?
A.
Accounts Payable
2,000
Cash
2,000
B.
Accounts Payable
1,960
Inventory
40
Cash
2,000
C.
Accounts Payable
2,000
Inventory
40
Cash
1,960
D.
Cash
2,000
Accounts Payable
2,000
122.
In a perpetual inventory system, the purchase of inventory is debited to:
123.
In a perpetual inventory system, the entry at the time of a sale to record the cost of the
inventory sold includes a:
124.
Good Inc., sold inventory for $1,200 that was purchased for $700. Good records which of
the following when it sells inventory using a perpetual inventory system?
125.
Davis Hardware Company uses a perpetual inventory system. How should Davis record the
sale of inventory costing $620 for $960 on account?
A.
Inventory
620
Cost of Goods Sold
620
Sales Revenue
960
Accounts Receivable
960
B.
Accounts Receivable
960
Sales Revenue
960
Cost of Goods Sold
620
Inventory
620
C.
Inventory
620
Gain
340
Sales Revenue
960
D.
Accounts Receivable
960
Sales Revenues
620
Gain
340
126.
Ace Bonding Company purchased inventory on account. The inventory costs $2,000 and is
expected to sell for $3,000. How should Ace record the purchase using a perpetual
inventory system?
A.
Inventory
2,000
Accounts Payable
2,000
B.
Cost of Goods Sold
2,000
Deferred Revenue
1,000
Sales Revenue
3,000
C.
Cost of Goods Sold
2,000
Accounts Payable
2,000
D.
Cost of Goods Sold
2,000
Gain
1,000
Accounts Payable
3,000
127.
Merchandise sold FOB destination indicates that:
128.
Merchandise sold FOB shipping point indicates that:
129.
If A sells to B, and B obtains title while goods are in transit, the goods were shipped
_______. If C sells to D, and C maintains title until the goods arrive at D’s door then the
goods were shipped _______.
130.
Ending inventory is equal to the cost of items on hand plus:
131.
Suppose Company A places an order with Company B on May 12. On May 14, Company B
ships the ordered goods to Company A with terms FOB destination. The goods arrive at
Company A on May 17. Company A begins selling the goods to customers on May 19 and
pays Company B on May 20. When would Company B record the sale of goods to Company
A?
132.
Kelton Inc. purchases inventory for $2,000 and incurs shipping costs of $100 for the goods
to be delivered. To record this transaction, the company debits Inventory for $2,000, debits
Selling Expenses for $100, and credits Cash for $2,100. Which of the following statements
is correct?
133.
The inventory method that will always produce the same amount for cost of goods sold in
a periodic inventory system as in a perpetual inventory system would be:
134.
The primary difference between the periodic and perpetual inventory systems is:
135.
In accounting for inventory, net realizable value equals:
136.
The lower of cost and net realizable value rule causes losses in the value of inventory to
be recognized in the period when:
137.
The lower of cost and net realizable value method for inventory was developed to:
138.
Niva Company has the following information for its inventories A, B, C, and D:
Quantity
Historical
Cost
Net Realizable
Value
A
15
20
25
B
20
35
30
C
40
25
40
D
25
50
35
The necessary adjustment associated with the lower of cost and net realizable value
would be:
A.
Inventory
675
Cost of Goods Sold
675
B.
Cost of Goods Sold
675
Inventory
675
C.
Inventory
475
Cost of Goods Sold
475
D.
Cost of Goods Sold
475
Inventory
475
139.
On April 1, Robert LLC purchased two units of inventory, A and B. The cost of unit A was
$650, and the cost of unit B was $625. On April 30, Robert LLC had not sold the inventory.
The net realizable value of unit A was now $685 while the net realizable value of unit B
was $550. The adjustment associated with the lower of cost and net realizable value on
April 30 will be:
A.
Cost of Goods Sold
40
Inventory
40
B.
Inventory
40
Cost of Goods Sold
40
C.
Cost of Goods Sold
75
Inventory
75
D.
Inventory
75
Cost of Goods Sold
75
140.
Consider the following information pertaining to OldWest’s inventory:
Product
Quantity
Cost
Net Realizable
Value
Revolvers
16
$120
$150
Spurs
23
27
22
Hats
12
56
40
At what amount should OldWest report its inventory?
141.
Under the principle of lower of cost and net realizable value, when a company has 10 units
of inventory A with net realizable value of $50 and a cost of $60, what is the adjustment?
142.
Northern Town Equipment has four types of products in its inventory. Northern applies the
rules under lower of cost and net realizable value to its inventory at the end of each year
as shown below:
Product
Quantity
Cost
Net Realizable
Value
A
15
$7
$8
B
10
15
14
C
20
8
6
D
15
11
10
The year-end adjustment based upon the information above would include a:
143.
At the end of a reporting period, Gamble Corporation determines that its ending inventory
has a cost of $300,000 and a net realizable value of $230,000. What would be the effect(s)
of the adjustment to write down inventory to net realizable value?
144.
Using the information below, determine the ending inventory value applying the lower of
cost and net realizable value.
Inventory
Item
Quantity
Cost
Net Realizable
Value
Cutlets
200
$12
$14
Chops
400
$16
$14
Shanks
300
$15
$12
145.
What effect would an adjustment to record inventory at the lower of cost and net
realizable value have on the company’s financial statements?
146.
The practice of using the lower of cost and net realizable value to evaluate inventory
reflects which of the following accounting principles?