ACCT 115 Chapter Notes - Chapter 8: Gross Profit, Purch Group, Historical Cost

64 views4 pages

silvergiraffe603

18 May 2016

School

Department

Course

Professor

For unlimited access to Textbook Notes, a Class+ subscription is required.

Document Summary

Chapter 8: inventories and cost of goods sold. In a merchandising company, inventory consists of all goods owned and held for sale to customers. Inventory is expected to be converted into cash within the company"s operating cycle. In the balance sheet, inventory is listed immediately after accounts receivable, because it is just one step farther removed from conversion into cash than customer receivables. As items are sold from inventory, their costs are removed from the balance sheet and transferred to the cost of goods sold, which is offset against sales revenue in the income statement. In a perpetual inventory system, entries in the accounting records parallel this flow of costs. When merchandise is purchased, its cost (net of allowable cash discounts) is added to the asset account inventory. As the merchandise is sold, its cost is removed from the inventory account and transferred to the cost of goods sold account.

Related Questions

16) Petty cash payments are recorded in the accounting systemwhen:

the petty cash fund needs to be replenished

a payment is made out of petty cash

a bank reconciliation is prepared for the petty cash fund

cash is received from returns of merchandise

21)

In a perpetual system, when inventory is sold on account:

Sales Revenue is increased and Accounts Receivable isdecreased.

Sales Revenue, Cost of Goods Sold, and Accounts Receivable areincreased while Inventory is decreased.

Sales Revenue and Accounts Receivable are increased, and Cost ofGoods Sold and Inventory are decreased.

Sales Revenue is increased and Inventory is decreased.

22 )

Multistep income statements:

are required for merchandise companies.

contain more detail than just listing revenues and expenses.

are required when the perpetual inventory method is used.

classify Cost of Goods Sold as a selling expense.

rubykangaroo214

1-If period 1 ending inventory is understated , than :
A. Both cost if goods sold and net income are understated in period1.
B. Cost of goods sold is understated and net income is overstatedin period 1.
C. Cost of goods sold is overstated and net income in understatedin period 1.
D. Both cost of goods sold and net income are overstated in period1.

2-One a lot of merchandise was counted at $566.34. A second countof the same merchandise showed 566.82. The difference could beignored due to :
A . Conservation C. Entity
B. Materiality D. Consistency

3- The Journal entry to record the purchase of $ 7,400 of inventoryon account under the perpetual inventory method is :
A. Debit inventory , $ 7400 ; Credit cash $ 7400.
B. Debit Purchase , $ 7400 ; Credit account payable , $ 7400.
C. Debit inventory , $ 7400 ; Credit accounts payable, $7400.
D. Debit cost of goods sold, $ 7400 ; Credit inventory , $7400.

4- . Under LIFO method , the flow of goods through the accountingrecords will:
A. have no relationship to the physical flow of goods through thebusiness.
B. Exactly match the physical flow goods through thebusiness.
C. Closely match the physical flow goods through thebusiness.
D. Be nearly the opposite of the physical flow of goods through thebusiness.

skysnake33

Altira Corporation uses a periodic inventory system. Thefollowing information related to its merchandise inventory duringthe month of August 2013 is available:


Aug.1	Inventory on handâ6,000 units; cost $7.70each.
8	Purchased 18,000 units for $6.3 each.
14	Sold 14,000 units for $12.8 each.
18	Purchased 10,000 units for $5.8 each.
25	Sold 13,000 units for $11.8 each.
31	Inventory on handâ7,000 units.

Required:

Determine the inventory balance Altira would report in itsAugust 31, 2013, balance sheet and the cost of goods sold it wouldreport in its August 2013 income statement using each of thefollowing cost flow methods: (Do not round intermediatecalculations.)

Cost Flow Method		Inventory Balance	Cost of Goods Sold
1.	First-in,first-out (FIFO)	$	$
2.	Last-in,first-out (LIFO)	$	$
3.	Averagecost	$	$

sapphireotter885

ACCT 115 Chapter Notes - Chapter 8: Gross Profit, Purch Group, Historical Cost

Document Summary

Get access

Related Documents

ACCT 115 Chapter 6: Accounting Chapter Six

ACCT 115 Chapter Notes - Chapter 6: Uch, Product Return, Perpetual Inventory

ACCT 115 Chapter Notes - Chapter 4: Porton, Deferred Income, Deferral

Related Questions