Question 1

A company has a beginning inventory of $$60,000, purchases during the period of 380$$,000, and an ending inventory of $$50,000. Using the periodic inventory system, what is the cost of goods sold (COGS)?

$$	ext{COGS} = 	ext{Beginning Inventory} + 	ext{Purchases} - 	ext{Ending Inventory}$

Accepted Answer

$390,000

Question 2

Horne Inc. uses a periodic inventory system. At year-end, a physical count shows 19 units on hand. If the company purchased 30 units at $$9, 25 units at 10$$, and 38 units at $$11, what is the ending inventory value under the FIFO method?

$$	ext{Ending Inventory (FIFO)} = 19 	imes 11$

Accepted Answer

$209

Question 3

Comstock Company purchased 1,000 units at $$6 each and sold 800 units at 10 $$each. What is the gross profit?

$$	ext{Gross Profit} = 	ext{Sales Revenue} - 	ext{COGS}$$

$$	ext{Sales Revenue} = 800 	imes 10$$

$$	ext{COGS} = 800 	imes 6$$

Accepted Answer

$3,200

Question 4

Draper Sales, Inc. had beginning inventory of 600 units at $$30, and made purchases of 1,400 units at 32$$, 1,000 units at $$34, and 500 units at 36. If 2$$,500 units were sold, what is the ending inventory value under the weighted average method?

$$	ext{Weighted Average Cost per Unit} = \frac{\114$$,800}{3,500}$$

$$	ext{Ending Inventory} = 1,000 	imes 	ext{Average Cost per Unit}$

Accepted Answer

$32,800

Question 5

Ken Tuckie TV uses the lower-of-cost-or-market (LCM) approach. If the cost of flat-panel TVs is $$60,000 and the market value is 55$$,000, what amount should be reported for this inventory line?

$$	ext{LCM} = \min(	ext{Cost}, 	ext{Market})$$

Accepted Answer

$55,000

Question 6

Wang, Inc. purchased a machine for $$85,000 with a salvage value of 5$$,000 and a useful life of 5 years. Using the straight-line method, what is the depreciation expense for 2019?

$$	ext{Depreciable Cost} = 85,000 - 5,000 = 80,000$$

$$	ext{Annual Depreciation} = \frac{80,000}{5}$$

Accepted Answer

$16,000

Question 7

A company purchased equipment for $$24,000, paid 1$$,200 in sales taxes, $$200 for insurance during transit, and 400 $$for installation and testing. What is the total cost recorded for the equipment?

$$	ext{Total Cost} = 24,000 + 1,200 + 200 + 400$$

Accepted Answer

$25,800

Question 8

Davidson Electronics has 5,000 units at $$8, 15,000 units at 10$$, and 20,000 units at $$12. If 7,000 units remain at year-end, what is the ending inventory value under the average-cost method?

$$	ext{Average Cost per Unit} = \frac{(5,000 	imes 8) + (15,000 	imes 10) + (20,000 	imes 12)}{40,000}$$

$$	ext{Ending Inventory} = 7,000 	imes 	ext{Average Cost per Unit}$

Accepted Answer

$75,250

Question 9

Which of the following statements about LIFO is NOT true?

Accepted Answer

Ending inventory is based on the price of the most recent units purchased.

Question 10

A company purchased a point-of-sale cash register for $$5,400 with a useful life of 10 years and a salvage value of 400. $$Using the double-declining-balance method, what is the depreciation expense for the second year?

$$	ext{DDB Rate} = 2 	imes \frac{1}{10} = 20\%$$

Year 1: $$5,400 	imes 20\%$$

Year 2: $$(5,400 - 	ext{Year 1 Depreciation}) 	imes 20\%$$

Accepted Answer

$864

Question 11

Which inventory costing method results in the lowest ending inventory during a period of rising merchandise inventory cost?

Accepted Answer

Last-in, first-out (LIFO)

Question 12

Finley Corporation had cost of goods sold of $$256,000, beginning inventory of 58$$,000, and ending inventory of $$107,200. What is the inventory turnover (rounded to one decimal place)?

$$	ext{Inventory Turnover} = \frac{	ext{COGS}}{	ext{Average Inventory}}$$

$$	ext{Average Inventory} = \frac{58,000 + 107,200}{2}$

Accepted Answer

3.1 times per year

Question 13

A company purchased a property for $$150,000 plus a 6% commission and 4$$,000 in closing costs. The property included land appraised at $$87,500, land improvements at 35$$,000, and a building at $$52,500. What is the allocated cost for the building?

$$	ext{Total Cost} = 150,000 + (0.06 	imes 150,000) + 4,000$$

$$	ext{Total Appraised Value} = 87,500 + 35,000 + 52,500$$

$$	ext{Building Allocation} = \frac{52,500}{175,000} 	imes 	ext{Total Cost}$

Accepted Answer

$48,900

Question 14

The Blooming Miracles Flower Shop bought a van for $$18,000 with a salvage value of 3$$,000 and a useful life of 5 years. What is the depreciation expense for the first year using the straight-line method?

$$	ext{Depreciable Cost} = 18,000 - 3,000$$

$$	ext{Annual Depreciation} = \frac{	ext{Depreciable Cost}}{5}$$

Accepted Answer

$3,000

Question 15

Which of the following assets is NOT depreciated over its useful life?

Accepted Answer

Land

Question 16

An ore deposit costing $$800,000 is expected to produce 1,600,000 tons of ore. If 70,000 tons are mined and sold in the current year, what is the depletion expense for the year?

$$	ext{Depletion per ton} = \frac{800,000}{1,600,000}$$

$$	ext{Depletion Expense} = 70,000 	imes 	ext{Depletion per ton}$

Accepted Answer

$35,000

Question 17

Which principle or concept states that a business’s financial statements must report enough information for outsiders to make knowledgeable decisions about the company?

Accepted Answer

Disclosure principle

Question 18

Lake Coffee Company reported net sales of $$180,000, net income of 54$$,000, beginning total assets of $$200,000, and ending total assets of 300$$,000. What was the company's asset turnover?

$$	ext{Average Assets} = \frac{200,000 + 300,000}{2}$$

$$	ext{Asset Turnover} = \frac{180,000}{250,000}$$

Accepted Answer

0.72

Question 19

Which of the following measures provides an indication of how efficient a company is in employing its assets?

Accepted Answer

Asset turnover

Principles of Accounting: Step-by-Step Guidance for Inventory, Depreciation, and Asset-Related Questions

Study Guide - Practice Questions

Study Guide - Flashcards