Note: Some of the excel spreadsheets below may be hard to read on the screen. They are very clear when you print them out.
1. Return on sales shows the relationship between
a. Gross margin and sales.
b. Net income and sales.
c. Net income and gross margin.
d. Gross margin and cost of goods sold.
2. Which of the following inventory categories would not be used by a
manufacturing company?
a. Finished goods inventory.
b. Raw materials inventory.
c. Merchandise inventory.
d. Work-in-process inventory.
3. Shown below is a perpetual inventory card for Terry's tire store.
What cost flow assumption does the tire store use?
a. FIFO
b. LIFO
c. Specific Identification
d. Cannot determine from information given
4. Shown below is a perpetual inventory card for Terry's tire store.
What amount should Terry's tire store show on their income statement as cost of goods sold for 2000?
a. $25,615
b. $62,975
c. $37,360
d. $3,215
5. Shown below is a perpetual inventory card for Terry's tire store for the year 2000.
If Terry purchased 5 more units on 1/5/2001 at $330 each and then sold 10 units the next day, ending inventory after the sale would be:
a. $35,760
b. $36,010
c. $3,250
d. $35,710
6. Which cost flow assumption must correspond with the physical movement of the goods?
a. LIFO
b. FIFO
c. Specific Identification
d. Weighted Average
7. The major division of expenses in a traditional income statement is between which types of expenses?
a. variable and fixed
b. perpetual and periodic
c. LIFO and FIFO
d. cost of goods sold and selling, general and administrative
8. A company had sales of $30,000, cost of goods sold of $21,000 and other expenses of $6,000. The gross margin ratio would be:
a. 30%
b. 70%
c. 10%
d. 90%
9. Which of the following statements about a perpetual inventory system is false?
a. the number of companies using a perpetual inventory system vs. a periodic system is increasing.
b. keeps track of each purchase and the cost of each sale in the inventory account.
c. a physical inventory is generally taken annually to verify the ending balance in the inventory account
d. a perpetual inventory system cannot be used with FIFO or LIFO.
10. The Applebee Company sold 5 widgets at a sales price of $1,500 apiece during the month. 3 of those widgets were sold on the 10th of the month and the remaining 2 were sold on the 20th. Other information follows:
a. FIFO net income will be $70 more after tax.
b. LIFO net income will be $140 more after tax.
c. LIFO net income will be $70 more after tax.
d. FIFO net income will be $140 more after tax.
11. The Applebee Company sold 5 widgets at a sales price of $1,500 apiece during the month. 3 of those widgets were sold on the 10th of the month and the remaining 2 were sold on the 20th. Other information follows:
Assuming a tax rate of 30%, what effect will the use of FIFO vs. LIFO have on cash during the period?
a. FIFO cash will be $30 more after tax.
b. LIFO cash will be $30 more after tax.
c. LIFO cash will be $60 more after tax.
d. FIFO cash will be $60 more after tax.
12. Following are several statements regarding the use of FIFO vs. LIFO.
The dollar amount recorded for sales is the same under LIFO and FIFO
The dollar amount recorded for COGS is the same under LIFO and FIFO
The dollar amount recorded for purchases is the same under LIFO and FIFO
The dollar amount recorded for income taxes is the same under LIFO and FIFO
How many of the above four statements are true?
a. One
b. Two
c. Three
d. Four
13. Assuming a period of rising prices, which of the following statements about LIFO is false?
a. LIFO will generally have a higher COGS than FIFO
b. LIFO will generally have a higher ending inventory than FIFO
c. The physical movement of the goods does not have to suggest LIFO in order to use that method.
d. LIFO will generally require the payment of less taxes.