Calculation of Various Costs and Account Balances-Multiple Choice Questions
Question
1) Inventoriable costs include all of the following except the
a. cost of the goods purchased.
b. freight in.
c. cost of the beginning inventory.
d. all of the above are included.
2) Abaco Enterprises had beginning inventory of $45,000 at March 1, 2013. During the month, the company made purchases of $360,000. The inventory at the end of the month is $51,000. What is cost of goods available for sale for the month of March?
a. $45,000
b. $51,000
c. $354,000
d. $405,000
3) A check correctly written and paid by the bank for $271 is incorrectly recorded on the company's books for $217. The appropriate adjustment on bank reconciliation would be to
a. deduct $271 from the book's balance.
b. deduct $54 from the book's balance.
c. deduct $54 from the bank's balance.
d. add $54 to the bank's balance.
4) The Petty Cash account should be debited
a. whenever an expense is paid from the fund.
b. when the fund is established.
c. whenever the fund is replenished.
d. when the fund is liquidated.
5) A 90-day promissory note dated May 21 matures on
a. August 21.
b. August 20.
c. August 19.
d. August 18.
6) The basis of estimating expected uncollectible accounts that emphasizes the matching of expenses with revenues is the
a. percentage of receivables basis.
b. percentage of sales basis.
c. lower of cost or market basis.
d. direct write-off method.
7) A company just starting business purchased three merchandise inventory items at the following prices: first purchase $920; second purchase $880; third purchase $830. If two items were sold during the period and the company used the LIFO costing method, the gross profit for the period would be how much greater or less than if the FIFO costing method had been used?
a. Gross profit would be $90 greater.
b. Gross profit would be $90 less.
c. Gross profit would be the same.
d. Gross profit would be $40 greater.
8) An error in the physical count of goods on hand at the end of the current period resulted in a $3,000 understatement of the ending inventory. The effect of this error in the current period is to
a. overstate cost of goods sold.
b. understate cost of goods available for sale.
c. overstate gross profit.
d. overstate net income.
9) In a period of rising prices, the inventory method that will show the highest net income is
a. Average Cost.
b. FIFO.
c. LIFO.
d. Moving Average.
10) Cost of goods available for sale includes each of the following except
a. beginning inventory.
b. freight-in.
c. ending inventory.
d. net purchases.