# Shared Flashcard Set

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

## Additional Accounting Flashcards

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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