1. A common rule of thumb is that a company's acid-test ratio should be at least 2 or a company may face near-term problems. (Points: 6) True False 2. In a perpetual inventory system, the merchandise inventory account must be closed at the end of the accounting period. (Points: 6) True False 3. The cost of an inventory item includes its invoice cost minus any discount, and plus any added or incidental costs necessary to put it in a place and condition for sale. (Points: 6) True False 4. The matching principle requires that the inventory valuation method follow the physical flow of inventory. (Points: 6) True False 5. A company uses the perpetual inventory system and recorded the following entry: 3-7 This entry reflects a: (Points: 6) Purchase. Return. Sale. Payment of the account payable and recognition of a cash discount taken. Purchase and recognition of a cash discount taken. 6. Inventory shrinkage: (Points: 6) Refers to the loss of inventory. Is determined by comparing a physical count of inventory with recorded inventory amounts. Is recognized by debiting Cost of Goods Sold. Can be caused by theft or deterioration. All of the above. 7. A company had the following purchases during the current year: 3-25 On December 31, there were 26 units remaining in ending inventory. These 26 units consisted of 2 from January, 4 from February, 6 from May, 4 from September, and 10 from November. Using the specific identification method, what is the cost of the ending inventory? (Points: 6) $3,500. $3,800. $3,960. $3,280. $3,640. 8. Given the following information, determine the cost of the inventory at June 30 using the LIFO perpetual inventory method. June 1 Beginning inventory: 15 units at $20 each. June 15 Sale of 12 units for $50 each. June 29 Purchase of 8 at $25 each. The cost of the ending inventory is (Points: 6) $200. $220. $260. $275. $300. 9. Generally accepted accounting principles require that the inventory of a company be reported at: (Points: 6) Market value. Historical cost. Lower of cost or market. Replacement cost. Retail value. 10. A company's warehouse was destroyed by a tornado on March 15. The following information was the only information that was salvaged: Inventory, beginning: $28,000 Purchases for the period: $17,000 Sales for the period: $55,000 Sales returns for the period: $700 The company's average gross profit ratio is 35%. What is the estimated cost of the lost inventory? (Points: 6) $9,705. $25,995. $29,250. $44,000. $45,000.
Paper#7773 | Written in 18-Jul-2015Price : $25