LSU ACCT 2001 EXAMINATION QUESTIONS WITH CORRECT DETAILED ANSWERS GRADED A+
When legal title of goods remains with the seller until the goods reach the buyer the terms are __________ and the ___________ has legal title.
a) Consigned goods, seller
b) FOB destination, seller
c) FOB shipping po...
LSU ACCT 2001 EXAMINATION
QUESTIONS WITH CORRECT
DETAILED ANSWERS GRADED A+
When legal title of goods remains with the seller until the goods reach the buyer the
terms are __________ and the ___________ has legal title.
a) Consigned goods, seller
b) FOB destination, seller
c) FOB shipping point, buyer
d) None of the above. - Answer-b) FOB destination, seller
Title transfer when goods reach the purchaser
Which of the following is correct about FIFO?
a) Produces lowest net income in periods of rising prices.
b) Produces lowest income taxes in periods of rising prices.
c) Ending inventory reflects most recent purchases and is closest to replacement cost.
d) Assumes the last units purchased are the first units sold. - Answer-c) Ending
inventory reflects most recent purchases and is closest to replacement cost.
The rest are all LIFO
Which of the following accounts has a normal credit balance?
a) Sales discounts
b) Sales returns & allowances
c) Purchase returns & allowances
d) Sales - Answer-d) Sales
a) Debit (contra revenue account)
b) Debit (contra revenue account)
c) Not used; Record purchase returns to Inventory
Jones Company has merchandise for sale on consignment with Smith Corporation.
Which of the following statements is true?
a) Jones owns the goods and must include the merchandise in ending inventory.
b) Jones does not own the goods and does not include the merchandise in ending
inventory.
c) Smith owns the goods and must include the merchandise in ending inventory.
, d) Neither Jones nor Smith should include the items in ending inventory. - Answer-a)
Jones owns the goods and must include the merchandise in ending inventory.
Smith Company had Beginning Inventory of $50,000, Ending Inventory of $80,000, Cost
of Goods Sold of $320,000, and Sales of $500,000. Smith's Inventory Turnover is:
a) 4 times
b) 4.9 times
c) 7.7 times
d) 6.25 times - Answer-b) 4.9 times
Cost of Goods Sold/Average Inventory
Smith Company had Beginning Inventory of $50,000, Ending Inventory of $80,000, Cost
of Goods Sold of $320,000, and Sales of $500,000. Smith's Days in Inventory is:
a) 148 days
b) 91 days
c) 74 days
d) 47 days - Answer-c) 74 days
365/Inventory Turnover
Weighted Average Cost per Unit - Answer-Total Cost/Total Units
(Beginning Inventory and Purchased)
Cost of ending inventory, assuming the LIFO method is used? - Answer-Find ending
inventory, split up ending inventory among the earliest costs
Cost of ending inventory, assuming the FIFO method is used? - Answer-Find ending
inventory, split up ending inventory among the latest costs
What is cost of goods sold, assuming the FIFO method is used? - Answer-Total cost of
beginning inventory and purchases - FIFO Cost of ending inventory
What is cost of goods sold, assuming the LIFO method is used? - Answer-Total cost of
beginning inventory and purchases - LIFO Cost of ending inventory
Gross profit percentage (rounded) for the year - Answer-Ending inventory/Purchases
Which statement is false regarding the lower of cost or market (LCM) method of
inventory?
a) Market is defined as current replacement cost, not selling price.
b) LCM is an example of an accounting concept of conservatism.
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