Ending Inventory on A FIFO Basis Accounting MCQS
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Ending Inventory on A FIFO Basis Accounting MCQS
The accounting process is correctly sequenced as
Question 1 options:
identification, communication, recording. recording, communication, identification. identification, recording, communication. communication, recording, identification. Question 2 (2 points)
The historical cost of an asset and its fair value are
Question 2 options:
never the same. the same when the asset is sold. irrelevant when the asset is used by the business in its operations. the same on the date of acquisition. Question 3 (2 points)
George and Ringo met at law school and decide to start a small law practice after graduation. They agree to split revenues and expenses evenly. The most common form of business organization for a business such as this would be a
Question 3 options:
joint venture. partnership. corporation. proprietorship. Question 4 (2 points)
Owner’s equity is best depicted by the following:
Question 4 options:
Assets = Liabilities. Liabilities + Assets. Residual equity + Assets. Assets – Liabilities. Question 5 (2 points)
If total liabilities decreased by $40,000 and owner’s equity decreased by $30,000 during a period of time, then total assets must change by what amount and direction during that same period?
Question 5 options:
$70,000 decrease $10,000 decrease $10,000 increase $70,000 increase Question 6 (2 points)
Collection of a $1,500 Accounts Receivable
Question 6 options:
increases an asset $1,500; decreases an asset $1,500. increases an asset $1,500; decreases a liability $1,500. decreases a liability $1,500; increases owner’s equity $1,500. decreases an asset $1,500; decreases a liability $1,500. Question 7 (2 points)
As of December 31, 2016, Cancon Company has assets of $42,000 and owner’s equity of $22,000. What are the liabilities for Cancon Company as of December 31, 2016?
Question 7 options:
$22,000. $20,000. $42,000. $64,000. Question 8 (2 points)
Eli’s Electronic Repair Shop started the year with total assets of $300,000 and total liabilities of $200,000. During the year, the business recorded $400,000 in electronic repair revenues, $300,000 in expenses, and Eli withdrew $50,000. Eli’s Owner’s Capital balance at the end of the year was
Question 8 options:
$200,000. $100,000. $150,000. $350,000. Question 9 (2 points)
All of the financial statements are for a period of time except the
Question 9 options:
income statement. owner’s equity statement. balance sheet. statement of cash flows. Question 10 (2 points)
Mirah Company compiled the following financial information as of December 31, 2016:
Revenues $340,000
Owner’s Capital (1/1/16) 140,000
Equipment 80,000
Expenses 240,000
Cash 90,000
Owner’s Drawings 20,000
Supplies 20,000
Accounts payable 40,000
Accounts receivable 70,000
Mirah’s assets on December 31, 2016 are
Question 10 options:
$190,000 $260,000 $360,000 $480,000 Question 11 (2 points)
Which of the following correctly identifies normal balances of accounts?
Question 11 options:
Assets Debit, Liabilities Credit, Owner’s Capital Credit, Revenues Debit, Expenses Credit Assets Debit, Liabilities Credit, Owner’s Capital Credit, Revenues Credit,Expenses Credit Assets Credit, Liabilities Debit, Owner’s Capital Debit, Revenues Credit, Expenses Debit Assets Debit, Liabilities Credit, Owner’s Capital Credit, Revenues Credit, Expenses Debit Question 12 (2 points)
Boise Co. pays its employees twice a month, on the 7th and the 21st. On June 21, Boise Co. paid employee salaries of $6,000. This transaction would
Question 12 options:
increase owner’s equity by $6,000. decrease the balance in Salaries and Wages Expense by $6,000. decrease net income for the month by $6,000. be recorded by a $6,000 debit to Salaries and Wages Payable and a $6,000 credit to Salaries and Wages Expense. Question 13 (2 points)
Qwik Company showed the following balances at the end of its first year:
Cash $ 8,700
Prepaid insurance 9,400
Accounts receivable 7,000
Accounts payable 5,800
Notes payable 9,400
Owner’s Capital 2,300
Owner’s Drawings 1,400
Revenues 44,000
Expenses 35,000
Question 13 options:
$52,400 $61,500 $62,900 $70,900 Question 14 (2 points)
A complete journal entry does not show
Question 14 options:
the date of the transaction. the new balance in the accounts affected by the transaction. a brief explanation of the transaction. the accounts and amounts to be debited and credited. Question 15 (2 points)
Which of the following journal entries is recorded correctly and in the standard format?
Question 15 options:
Salaries and Wages Expense ………………………………………. 500 Cash ……………………………………………………………………. 2,500
Advertising Expense ……………………………………………………. 2,000
Salaries and Wages Expense ………………………………………. 500 Advertising Expense ……………………………………………………. 2,000
Cash ……………………………………………………………………. 2,500
Cash …………………………………………………………………………. 2,500 Salaries and Wages Expense …………………………………. 500
Advertising Expense ………………………………………………. 2,000
Salaries and Wages Expense ………………………………………. 500 Advertising Expense ……………………………………………………. 2,000
Cash ……………………………………………………………………. 2,500
Question 16 (2 points)
A chart of accounts for a business firm
Question 16 options:
is a graph. indicates the amount of profit or loss for the period. lists the accounts and account numbers that identify their location in the ledger. shows the balance of each account in the general ledger. Question 17 (2 points)
Orange County Shop follows the revenue recognition principle. Orange County services a bicycle on July 31. The customer picks up the bike on August 1 and mails the payment to Orange County on August 5. Orange County receives the check in the mail on August 6. When should Orange County show that the revenue was recognized?
Question 17 options:
July 31 August 1 August 5 August 6 Question 18 (2 points)
Depreciation is the process of
Question 18 options:
valuing an asset at its fair value. increasing the value of an asset over its useful life in a rational and systematic manner. allocating the cost of an asset to expense over its useful life in a rational and systematic manner. writing down an asset to its real value each accounting period. Question 19 (2 points)
Failure to prepare an adjusting entry at the end of a period to record an accrued revenue would cause
Question 19 options:
net income to be overstated. an understatement of assets and an understatement of revenues. an understatement of revenues and an understatement of liabilities. an understatement of revenues and an overstatement of liabilities. Question 20 (2 points)
The closing entry process consists of closing
Question 20 options:
all asset and liability accounts. out the owner’s capital account. all permanent accounts. all temporary accounts. Question 21 (2 points)
The balance in the income summary account before it is closed will be equal to
Question 21 options:
the net income or loss on the income statement. the beginning balance in the owner’s capital account. the ending balance in the owner’s capital account. zero. Question 22 (4 points)
The income statement for the month of June, 2016 of Snap Shot, Inc. contains the following information:
Revenues $7,300
Expenses:
Salaries and Wages Expense $3,000
Rent Expense 1,300
Advertising Expense 700
Supplies Expense 200
Insurance Expense 100
Total expenses 5,300
Net income $2,000
After the revenue and expense accounts have been closed, the balance in Income Summary will be
Question 22 options:
a debit balance of $7,300. a debit balance of $2,000. a credit balance of $2,000. a credit balance of $7,300. Question 23 (4 points)
On March 8, Saltwater Taffy Company bought supplies on account from the Sweet Honey Company for $440. Saltwater Taffy Company incorrectly debited Equipment for $400 and credited Accounts Payable for $400. The entries have been posted to the ledger. The correcting entry should be:
Question 23 options:
Supplies……………………………………………………………………… 440 Accounts Payable…………………………………………………… 440
Supplies……………………………………………………………………… 440 Accounts Payable…………………………………………………… 400
Equipment…………………………………………………………….. 40
Supplies……………………………………………………………………… 440 Equipment…………………………………………………………….. 440
Supplies……………………………………………………………………… 440 Equipment…………………………………………………………….. 400
Accounts Payable…………………………………………………… 40
Question 24 (4 points)
The following information is for Qwik Auto Supplies:
Qwik Auto Supplies
Balance Sheet
December 31, 2016
Cash $ 45,000 Accounts Payable $ 140,000
Prepaid Insurance 80,000 Salaries and Wages Payable 60,000
Accounts Receivable 110,000 Mortgage Payable 150,000
Inventory 140,000 Total Liabilities 350,000
Land Held for Investment 185,000
Land 250,000
Building $200,000
Less Accumulated Owner’s Capital 750,000
Depreciation (50,000) 150,000
Trademark 140,000 Total Liabilities and
Total Assets $1,100,000 Owner’s Equity $1,100,000
he total dollar amount of assets to be classified as property, plant, and equipment is
Question 24 options:
$400,000. $450,000. $585,000. $635,000. $400,000. $450,000. $585,000. $635,000. Question 25 (2 points)
The use of reversing entries
Question 25 options:
is a required step in the accounting cycle. changes the amounts reported in the financial statements. simplifies the recording of subsequent transactions. is required for all adjusting entries. Question 26 (2 points)
Cost of goods sold is determined only at the end of the accounting period in
Question 26 options:
a perpetual inventory system. a periodic inventory system. both a perpetual and a periodic inventory system. neither a perpetual nor a periodic inventory system. Question 27 (2 points)
Under a perpetual inventory system, acquisition of merchandise for resale is debited to the
Question 27 options:
Inventory account. Purchases account. Supplies account. Cost of Goods Sold account. Question 28 (3 points)
A credit sale of $4,000 is made on April 25, terms 3/10, n/30, on which a return of $300 is granted on April 28. What amount is received as payment in full on May 4?
Question 28 options:
$3,589 $3,700 $3,880 $4,000 Question 29 (3 points)
When the physical count of Barr Company inventory had a cost of $4,380 at year end and the unadjusted balance in Inventory was $4,600, Barr will have to make the following entry:
Question 29 options:
Cost of Goods Sold……………………………………………………… 220 Inventory…………………………………………………………….. 220
Inventory…………………………………………………………………….. 220 Cost of Goods Sold……………………………………………… 220
Income Summary………………………………………………………… 220 Inventory…………………………………………………………….. 220
Cost of Goods Sold……………………………………………………… 4,600 Inventory…………………………………………………………….. 4,600
Question 30 (4 points)
During August, 2016, Shelby’s Supply Store generated revenues of $65,000. The company’s expenses were as follows: cost of goods sold of $33,000 and operating expenses of $7,000. The company also had rent revenue of $2,000 and a loss on the sale of a delivery truck of $3,000. Shelby’s operating income for the month of August, 2016 is
Question 30 options:
$25,000. $27,000. $24,000. $32,000. Question 31 (4 points)
During the year, Bolt’s Pet Shop’s inventory decreased by $35,000. If the company’s cost of goods sold for the year was $600,000, purchases must have been
Question 31 options:
$565,000. $600,000. $635,000. Unable to determine. Question 32 (2 points)
In a periodic inventory system, a return of defective merchandise to a supplier is recorded by crediting
Question 32 options:
Accounts Payable. Inventory. Purchases. Purchase Returns and Allowances. Question 33 (2 points)
An auto manufacturer would classify vehicles in various stages of production as
Question 33 options:
finished goods. merchandise inventory. raw materials. work in process. Question 34 (4 points)
As a result of a thorough physical inventory, Greeley Company determined that it had inventory worth $325,000 at December 31, 2016. This count did not take into consideration the following facts: Walker Consignment currently has goods worth $47,000 on its sales floor that belong to Greeley but are being sold on consignment by Walker. The selling price of these goods is $75,000. Greeley purchased $22,000 of goods that were shipped on December 27. FOB destination, that will be received by Greeley on January 3. Determine the correct amount of inventory that Greeley should report.
Question 34 options:
$325,000. $347,000. $372,000. d. Question 35 (2 points)
The LIFO inventory method assumes that the cost of the latest units purchased are
Question 35 options:
the last to be allocated to cost of goods sold. the first to be allocated to ending inventory. the first to be allocated to cost of goods sold. not allocated to cost of goods sold or ending inventory. Question 36 (4 points)
Storme Shutters has the following inventory information.
Nov. 1 Inventory 30 units @ $8.00
8 Purchase 120 units @ $8.30
17 Purchase 60 units @ $8.70
25 Purchase 90 units @ $8.80
A physical count of merchandise inventory on November 30 reveals that there are 80 units on hand. Assume a periodic inventory system is used. Ending inventory under FIFO is
Question 36 options:
$655. $704. $1,758. $1,812. Question 37 (2 points)
An error in the physical count of goods on hand at the end of a period resulted in a $18,000 overstatement of the ending inventory. The effect of this error in the current period is
Question 37 options:
COGS: Understated Net Income: Understated COGS: Overstated Net Income: Overstated COGS: Understated Net Income: Overstated COGS: Overstated Net Income: Understated Question 38 (2 points)
Days in inventory is calculated by dividing
Question 38 options:
the inventory turnover by 365 days. average inventory by 365 days. 365 days by the inventory turnover. 365 days by average inventory. Question 39 (4 points)
- Didee has the following inventory information.
July 1 Beginning Inventory 20 units at $90
5 Purchases 120 units at $92
14 Sale 90 units
21 Purchases 60 units at $95
30 Sale 58 units
Assuming that a perpetual inventory system is used, what is the ending inventory on a FIFO basis?
Question 39 options:
$4,744 $5,860 $4,940 $6,346 Question 40 (4 points)
Ortiz Department Store utilizes the retail inventory method to estimate its inventories. It calculated its cost to retail ratio during the period at 70%. Goods available for sale at retail amounted to $600,000 and goods were sold during the period for $440,000. The estimated cost of the ending inventory is
Question 40 options:
$112,000. $160,000. $308,000. $420,000.
RUBRIC
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