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# 1. A low gross profit percentage means that A. general

### Resolved Question:

1. A low gross profit percentage means that
A. general and administrative expenses are very high.

B. selling expenses are very low.

C. the cost of goods sold was relatively low.

D. the cost of goods sold was relatively high.

2. Casey Company's beginning inventory and purchases during the fiscal year ended December 31, 2012, were as follows: (Note: The company uses a perpetual system of inventory.)
Units Unit Price Total Cost
January 1—Beginning Inventory 20 \$12 \$240
March 8—Sold 14
April 2—Purchase 30 \$13 \$390
June 5—Sold 25
Aug 6—Purchase 25 \$14 \$350
Total Cost of Inventory \$980
Ending inventory is 14 units.

What is the cost of goods sold for Casey Company for 2012 using LIFO?
A. \$264

B. \$801

C. \$308

D. \$784

3. Isaiah Sporting Goods uses the perpetual average cost method of determining inventory costs. Below is the inventory record for Product C124:
April 22 534 \$6.58 \$3,513.72
May 17 433 \$6.70 \$2,901.10
June 21 389 \$6.76 \$2,629.64
August 2 436 \$6.44 \$2,807.84

What is the average cost per unit after the receipt of the May 17 inventory (rounded to the nearest cent)?
A. \$6.55

B. \$7.40

C. \$6.00

D. \$6.63

4. Goods available for sale are \$350,000; beginning inventory is \$24,000; ending inventory is \$32,000; and cost of goods sold is \$275,000. The inventory turnover is
A. 9.82.

B. 8.59.

C. 11.46.

D. 12.50.

5. Isaiah Sporting Goods uses the perpetual average cost method of determining inventory costs. Below is the inventory record for Product C124:
April 22 534 \$6.58 \$3,513.72
May 17 433 \$6.70 \$2,901.10
June 21 389 \$6.76 \$2,629.64
August 2 436 \$6.44 \$2,807.84

What is the average cost per unit after the receipt of the June 21 inventory?
A. \$6.61

B. \$6.62

C. \$6.67

D. \$6.72

6. Which of the following is an incorrect statement if ending inventory is overstated?
A. Income tax is overstated.

B. Net income is overstated.

C. Cost of goods sold is overstated.
D. Gross profit is overstated.

7. Casey Company's beginning inventory and purchases during the fiscal year ended December 31, 2012, were as follows: (Note: The company uses a perpetual system of inventory.)
Units Unit Price Total Cost
January 1—Beginning Inventory 20 \$12 \$240
March 8—Sold 14
April 2—Purchase 30 \$13 \$390
June 5—Sold 25
Aug 6—Purchase 25 \$14 \$350
Total Cost of Inventory \$980
Ending inventory is 14 units.

What is the ending inventory of Casey Company for 2012 using FIFO?
A. \$175

B. \$196

C. \$182

D. \$168

8. New technology, like the latest cell phones and HDTV, would probably be costed using the
A. moving-average method of inventory costing.

B. FIFO method of inventory costing.

C. LIFO method of inventory costing.

D. specific-identification method of inventory costing
.

9. Which of the following may not limit the effectiveness of internal control systems in an organization?
A. Duties not segregated

B. Poorly designed controls

C. Costs not worth benefits

D. Understanding of policies and procedures

10. A company's gross profit percentage decreases from 58% to 51%. What does this mean?
A. We can't determine anything definite from the information given.
B. This means that net income will be lower.

C. This means that there will be a net loss.

D. This means that net income will be higher
.

11. Goods available for sale are \$118,000; beginning inventory is \$37,000; ending inventory is \$42,000; and cost of goods sold is \$77,000. The inventory turnover is
A. 2.99.

B. 1.95.

C. 1.83.

D. 1.53
.

12. In a balance sheet prepared in report form, liabilities must be listed after
A. assets with long-term liabilities listed first.
B. assets with current liabilities listed first.

C. stockholders' equity.

D. assets in alphabetical order.

13. Physical inventory counts must be done
A. regardless of method inventory.

B. when using bar-code scan technology.

C. when using the periodic method of inventory.

D. when using the perpetual method of inventory.

14. Nick Company reports the following inventory information:
Inventory Number Inventory Quantity Unit Cost Unit Market Value
APD 4837 440 \$51.29 \$51.48
CPZ 2837 290 \$76.59 \$77.02
IXL 9291 310 \$42.34 \$42.47
EOD 1717 200 \$22.19 \$21.75
DKS 3088 180 \$31.22 \$31.17

What is the total value of the merchandise under LCM (lower-of-cost or market)?
A. \$67,864.70

B. \$68,210.30

C. \$67,961.70

D. \$68,113.30

15. Bill's Bikes had sales for the week of \$3,569, of which \$2,900 was on credit and \$659 was in cash sales. The cost of the bikes sold was \$1,888. The journal entries would include a
A. debit to Cash for \$3,569; credit to Cost of Goods Sold for \$3,569.

B. debit to Cost of Goods Sold for \$1,888; credit to Inventory for \$1,888.
C. debit to Cost of Goods Sold for \$1,888; credit to Sales of \$1,888.

D. debit to Cash for \$3569; credit to Sales for \$3,569.

16. When a company repays the seller for shipping costs on an FOB shipping transaction, which of the following is true?

A. The shipping costs don't affect the invoice cost.

B. A purchase discount can still be taken net of the prepaid shipping charges.
C. A purchase discount can still be taken on the gross amount of the invoice.
D. A purchase discount cannot be taken when shipping charges are prepaid.

17. Besides using an overstatement of earnings to inflate a company's stock price, overstating earnings may also be used to
A. avoid paying dividends to stockholders.

B. ensure larger bonuses to upper management at year-end.

C. avoid paying raises to employees.

D. deflate the amount of taxes the corporation pays
.

18. A company's current ratio increased from 1.23 to 1.45. What does this mean?
A. This means that current assets increased and current liabilities increased.

B. This means that current assets decreased and current liabilities decreased.

C. This means that current assets increased and current liabilities decreased.

D. There isn't enough information to explain the increase.

9. Which of the following is an incorrect statement if ending inventory is understated?
A. Gross profit is overstated.

B. Cost of goods sold is overstated.
C. Net income is understated.

D. Income tax is understated.

20. Meranda Corporation purchases \$3,500 of inventory on account from Ashley Corporation. The journal entry to record this purchase for Meranda under a perpetual inventory system is
A. debit Inventory; credit Accounts Payable—Meranda.
B. debit Accounts Payable—Ashley; credit Inventory.

C. debit Inventory; credit Accounts Payable—Ashley.

D. debit Inventory; credit Cash.
Submitted: 3 years ago.
Category: Multiple Problems
Expert:  F. Naz replied 3 years ago.

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