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test 2
ch 5 6 7
57
Accounting
Undergraduate 3
10/13/2011

Additional Accounting Flashcards

 


 

Cards

Term
the largest expense on the income statement of most merchandising compaanies is
Definition
cost of goods sold
Term
a perpetual inventory system offers all the following advantages except
Definition
it is less expensive than a periodic system
Term
if a company uses perpetual inventory system, which of the following entries are required to record the purchase of merchandise on credit?
Definition

Dr Inventory

Cr Accounts Payable

Term
if a company uses a perpetual inventory system, which of the following entries are required to record the cost of merchandise sold on credit?
Definition

1. Accounts Receivable (Dr)

Sales (Cr)

 

2. Cost Of Goods Sold (Dr)

Inventory (Cr)

Term
In a periodic inventory system the quantity of ending inventory is determined by:
Definition
a physical inventory count
Term

Given the following data, what is the COGS

 

Sales Revenue

950,000

Beg. Invt.

120,000

End. Invt.

250, 000

Purchases

800,000

Definition
$670,000
Term

What is the cost of Beg. Invt.

 

Sales revenue 

650,000

cost of goods sold

475,000

end. invt.

150,000

purchases

620,000

Definition
$5,000
Term

Given the following data, what is the weighted-average cost of end. invt. rounded to the nearest dollar.


sales revenue

100 units at $15 per unit

beg invt

40 units at $9 per unit

purchases

80 units at $10 per unit

Definition
$193
Term

Given the following data, what is the COGS at the determinded under the FIFO method?


sales revenue

100 units at $15 per unit

beg invt.

40 units at $9 per unit

purchases

80 units at $10 per unit

Definition
$960
Term

What is the end. invt. as determined under the LIFO costing method?


sales revenue

100 units at $15 per unit

beg. invt.

40 units at $9 per unit

purchases

80 units at $10 per unit

Definition
$180
Term

Calculate the cost of end. invt. using the periodic LIFO method


1/1 Beg Invt.---20 units at $10 per unit

3/5 Purchases---50 units at $12 per unit

5/30 Purchases---40 units at $13 per unit

10/25 Purchases---60 units at $14 per unit

12/31 End. Invt.---35 units

Definition
$380
Term

Calculate the cost of End Invt. using the weighted-average method:


1/1 Beg Invt---70 units at $10 per unit

3/5 Purchases---50 units at $12 per unit

5/30 Purchases--- 40 units at $13 per unit

10/25 Purchases---60 units at $14 per unit

12/31 End Invt---35 units

Definition
$423
Term
when the FIFO method is used, End Invt. is assumed to consist of:
Definition
the most recently purchased units
Term
When the LIFO method is used, COGS is assumed to consist of:
Definition
the most recently purchased units
Term
When inventory prices are falling, the FIFO method will generally yield a gross margin that is:
Definition
less than under the LIFO method
Term
When prices are rising, the End. Invt. balance reported on a LIFO basis is generally
Definition
lower than on a FIFO basis
Term
when prices are decreasing, the End. Invt. balance reported on a FIFO basis is generally:
Definition
lower than on a LIFO basis
Term

which of the following statements is generally true when prices are rising?

a. LIFO produces taxable income that exceeds taxable income under FIFO

b. FIFO results in paying less taxes than under LIFO

c. managers will use LIFO if they want to maximize income reported to sharholders.

d. the use of LIFO will result in paying less taxes than under FIFO

Definition
D. the use of LIFO will result in paying less taxes than under FIFO
Term
FIFO tends to decrease taxes when:
Definition
cost are decreasing
Term
The lower-of-cost-or-market rule is an application of:
Definition
accounting conservatism
Term
an error in the End. Invt. of a given accounting period:
Definition
automatically creates errors in COGS for the current and next period.
Term
If ending inventory for the current period is overstated by $3,500:
Definition
net income of the next period will be understated by $3,500
Term
Inventory turnover is calculated as:
Definition
COGS / avg inventory fr the period
Term
which of the following statements about inventory turnover is the most appropriate?
Definition
the most profitable turnover ratio may not necessarily be the highest
Term
in a period of increasign prices, which inventory flow assumption will result in the lowest amount of income tax expence
Definition
LIFO
Term
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 the this error in the current period is
Definition

COGS--Understated

NI--Overstated

Term
Trane Co. purchased merchandise inventory with an invoice price of $4,000 and credit terms of 2/10 n/30. what is the net cost of the goods if trane co. pays within the discount period?
Definition
$3,920
Term
when a customer returns merchandise purchased on credit, the retailer debits
Definition
sales returns and allowances and credits accounts receivable
Term
the respective normal account balances of sales, sales returns, and allowances, and sales discounts are
Definition
credit, debit, debit
Term
gross profit for a merchandiser is net sales minus
Definition
COGS
Term
beginning inventory plus the COGP equals the 
Definition
COGAvailable for Sale
Term

West Co. has the following acct balances

Purchases---35,000

sales R&A---4,000

purchase discount---2,500

freight-in---1,875

delivery expense---2,500

 

The COGP is

Definition
$34,375
Term

using the LIFO inventory method, the value of the ending inventory on June 30 is

June 1---150 Units---$750

June 10---200 Units---$1,200

June 15---200 Units---$1,260

June28---150 Units---$990

$4,200

Definition
$1,350
Term

Using FIFO, the amount allocated of COGS for June is

June 1---150 Units---$750

June 10---200 Units---$1,200

June 15---200 Units---$1,260

June28---150 Units---$990

$4,200

Definition
$2,580
Term

Using the average cost, the amount allocated to the End Invt on June 30 is

June 1---150 Units---$750

June 10---200 Units---$1,200

June 15---200 Units---$1,260

June28---150 Units---$990

$4,200

Definition
$1,500
Term
two categories of expenses in merchandising companies are
Definition
cost of goods sold and operating exp
Term
sales revenue less cost of goods sold is called
Definition
Gross Profit
Term
after gross profit is calculated, operating expenses are deducted to determine
Definition
net income
Term
detailed records of goods held for retail are not maintained under a
Definition
periodic inventory system
Term
in a perpetual inventory system, cost of goods sold is recorded
Definition
with each sale
Term
if a company determines COGS each time a sale occurs, it
Definition
uses perpetual inventory system
Term
the journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit
Definition
merchandise inventory
Term
if a purchaser using a perpetual system agrees to freight terms of FOB shipping point, then the
Definition
merchandise inventory acct will be increased
Term
stone company purchased merchandise inventory with an invoice prise of $6,000 and credit of 2/10 n/30. what is the net of cost of goods if stone co. pays within the disocunt period?
Definition
$5,880
Term
the sales returns and allowances acct is classsified as
Definition
a contra revenue acct
Term
when goods are returned that relate to a prior cash sale
Definition
the cash acct will be credited
Term
the credit terms offered to a customer by a business firm were 2/10 n/30 which means that 
Definition
the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date
Term
on the classified balance sheet, merchandise inventory is classified as 
Definition
a current asset
Term
a recommended internal control procedure for taking physical inventories is that the counting should be done by employees who do not have custodial responsibility for the inventory. this is an example of what type of internal control procedure?
Definition
segregation of duties
Term

Beginning Inventory

+ Purchases

- Ending Inventory

=

Definition
COGS
Term

Sales

- Sales Returns

- Sales Allowances

- Sales Discounts

=

Definition
Net Sales
Term

Net Sales

- COGS

=

Definition
Gross Profit
Term

Beg. Invt.

+ Purchases

=

Definition
Net Income/Loss
Term
On dec. 28, 2008, alpha co. submitted a purchase order to beta co. for goods costing $12,000. the terms of the perchase/sale were "FOB shipping point". on Dec 30the the goods were picked up at the betas warehouse by trucking co. the goods were delivered to alpha co. on Jan 4 2009. as of dec 31 2008 the goods should be included in the inventory of
Definition
Alpha Co.
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