Intermediate Acc Ii Ch8-Ch10

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Chapter 8
1) In a perpetual inventory system, the cost of purchases is debited to:
Purchases.
Cost of goods sold.
Inventory.
Accounts payable.

2)In a periodic inventory system, the cost of purchases is debited to:
Purchases.
Cost of goods sold.
Inventory.
Accounts payable.

3)In a periodic inventory system, the cost of inventories sold is:
Debited to accounts receivable.
Credited to cost of goods sold.
Debited to cost of goods sold.
Not recorded at the time goods are sold.

4)Ending inventory is equal to the cost of items on hand plus:
Items in transit sold f.o.b. shipping point.
Purchases in transit f.o.b. destination.
Items in transit sold f.o.b. destination.
None of the above.

5)Using the gross method, purchase discounts lost are:
Included in purchases.
Added to accounts payable.
Included in interest expense.
Deducted from discount income.

6)Inventory does not include:
Materials used in the production of goods to be sold.
Assets intended to be sold in the normal course of business.
The cost of office equipment.
Assets currently in production for normal sales

7)Cost of goods sold is given by:
Beginning inventory - net purchases + ending inventory.
Beginning inventory + accounts payable - net purchases.
Net purchases + ending inventory - beginning inventory.
Net Purchases + beginning inventory - ending inventory.

8)The largest expense on a retailer's income statement is typically:
Salaries and wages.
Cost of goods sold.
Income tax expense.
Depreciation expense.

9)The use of LIFO in accounting for a firm's inventory:
Usually matches the physical flow of goods through the business.
Is usually used for internal management purposes.
Usually provides a better match of expenses with revenues.
None of the above is correct.

10) A company that prepares its financial statements according to International Financial Reporting Standards can use each of the following inventory valuation methods except:
Average cost.
FIFO.
LIFO.
All of the above methods can be used.

Chapter 9
1)In applying LCM, market cannot be:
Less than net realizable value.
Greater than the normal profit.
Less than the normal profit margin.
Greater than net realizable value

2) Under the conventional retail method, the denominator in the cost-to-retail percentage includes:
Net markups and net markdowns.
Neither net markups nor net markdowns.
Net markups, but not net markdowns.
Net markdowns, but not net markups.

3)Under the LIFO retail method, the denominator in the cost-to-retail percentage includes:
Net markups and net markdowns.
Neither net markups nor net markdowns.
Net markups, but not net markdowns.
Net markdowns, but not net markups.

4)Under the retail method, the denominator in the cost-to-retail percentage does not include:
Purchases.
Purchase returns.
Abnormal shortages.
Freight-in.

5)Under the retail inventory method:
A company measures inventory on its balance sheet by converting retail prices to cost.
A company measures inventory on its balance sheet at current selling prices.
A company measures inventory on its balance sheet on a LIFO basis.
None of the above is correct.

6)Under the retail method, in determining the cost-to-retail percentage for the current year:
Net markups are included.
Net markdowns are excluded.
Net sales are included.
All of the above are correct.

7)When computing the cost-to-retail percentage for the average cost retail method, included in the denominator are:
Net markups and net markdowns.
Neither net markups nor net markdowns.
Net markups, but not net markdowns.
Net markdowns, but not net markups.

8)The first step, when using dollar-value LIFO retail method for inventory, is to:
Determine the estimated ending inventory at current year retail prices.
Determine the estimated cost of goods sold for the current year.
Determine the...
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