Exam 4

Question 1

Inventory refers to the

Answer 1

Assets of a company

Question 2

Inventory intends to sell

Answer 2

During normal course of business

Question 3

Inventory doesnt include

Answer 3

PP&E or office supplies

Question 4

Merchandise inventory

Answer 4

Good purchased in finished form

Question 5

Cost of inventory (Equation) =

Answer 5

Purchase price + Cost to ship

Question 6

Manufacturing Inventory

Answer 6

Goods produced by manufacturing company

Question 7

Manufacturing inventory consist of

Answer 7

Raw materials, WIP, and Finished goods

Question 8

Perpetual system

Answer 8

Continually adjusts inventory for each change in inventory

Question 9

INVENTORY ACCOUNT IS DEBITED DIRECTLY WITH

Answer 9

PURCHASES

Question 10

Periodic inventory system

Answer 10

Adjust inventory account/records COGS at end of each reporting period

Question 11

Records merchandise, purchase returns, discounts and freight-in in (what account)

Answer 11

Temporary accounts

Question 12

COGS (Equation) =

Answer 12

Beginning Inventory + Net Purchases - Ending inventory

Question 13

PURCHASE ACCOUNT IS DEBITED WITH

Answer 13

PURCHASE OF INVENTORY UNDER PERIODIC SYSTEM

Question 14

FOB Shipping point

Answer 14

Title transfers at shipping point

Question 15

FOB Destination

Answer 15

Title transfers at destination

Question 16

Goods on consignment

Answer 16

Included in inventory of consigned until sold by consignee

Question 17

Sale is recorded by consigner when

Answer 17

Goods are sold

Question 18

Average cost - periodic cost is calculated at the end of

Answer 18

end of the period

Question 19

WEIGHTED AVERAGE COST (EQUATION) =

Answer 19

COGS/ NUMBER OF UNITS ON HAND

Question 20

Average cost - perpetual is applied by computing moving average cost

Answer 20

Each time additional inventory is purchased

Question 21

During rising cost, FIFO results in … COGS, and … inventory than LIFO

Answer 21

Lower, Higher

Question 22

During declining Cost: FIFO results in … COGS, and … ending inventory than LIFO

Answer 22

Higher, lower

Question 23

LIFO Conformity group prevents businesses from using LIFO to

Answer 23

Lower taxable income while showing higher profits using different methods

Question 24

LIFO reserves (Equation) =

Answer 24

Inventory account balance under FIFO - Inventory account balance under LIFO

Question 25

Adjustments to the COGS and the LIFO reserve are impacted by the prior balance to the

Answer 25

LIFO reserve account

Question 26

GAAP requires that companies evaluate

Answer 26

Their unsold investor at the end of each reporting period

Question 27

When expected in Peru is estimated to have fallen below cost it is a

Answer 27

Inventory write-down

Question 28

Lower of cost or net realizable value is for companies who

Answer 28

Use FIFO, average cost or any method besides LIFO

Question 29

Lower of cost or market, for companies that use

Answer 29

LIFO or retail inventory method

Question 30

NRV =

Answer 30

Estimated selling price - cost of completion, disposal, and transportation

Question 31

NRV is the amount a company expected

Answer 31

To realize from sale inventory

Question 32

If NRV is lower than cost

Answer 32

Adjustment is needed

Question 33

If cost is Lower than NRV than

Answer 33

No adjustment is needed

Question 34

Lower cost of market

Answer 34

Companies that use LIFO or Retail inventory method report inventory with LCM

Question 35

Gross profit method is useful in situations where estimates of inventory are desirable to

Answer 35

Determine cost of inventory thats been lost or inventory/COGS for interim reports

Question 36

Retail investor method For high volume retailers

Answer 36

selling different items at low unit prices

Question 37

WHEN USING AVERAGE COST RETAIL METHOD

Answer 37

NET MARKUPS AND MARKDOWNS ARE INCLUDED IN THE COST TO RETAIL PERCENTAGE

Question 38

WHEN USING CINVETIONAL RETIAL METHOD, ONLY

Answer 38

NET MARKUPS ARE INCLUDED IN THE COST-TO-RETAIL PERCENTAGE

Question 39

THE COST TO RETIAL PERCENTAGE IS CALCUALTED SEPERATLEY FOR THE BEGINNING INVENTORY AND

Answer 39

THE CURRENT PERIODS LAYER

Question 40

COST-TO-RETAIL METHOF ONLY NET MARKUPS AND MARKDOWNS

Answer 40

ARE INCLUDED IN THE COST-TO-RETAIL PERCENTAGE

Question 41

Financial reporting refers to the process of printing financial information to

Answer 41

External users like investors and creditors

Question 42

GAAP is a dynamic set of both

Answer 42

Broad and specific guidelines

Question 43

Income statement is a

Answer 43

Change statement that covers a period of time

Question 44

Balance sheet provides

Answer 44

Assets, liabilities and equity

Question 45

Limitations of balance sheet

Answer 45

The book value of companies is not a direct meansure of its market value because assets are measured at historical cost, and not all resources are considered assets

Question 46

Single step income statement

Answer 46

All revenues/gains are listed and all expenses + losses are listed

Question 47

Multistep income statement

Answer 47

Separately classifies statements by operating/non-operating, reports series of intermediate subtotals, classifiers revenues + expenses by function

Question 48

Steps to recognize revenue

Answer 48

1) Identify contract 2) identify performance obligations 3) determine price 4) allocate transaction price 5) recognize revenue as/is completed

Question 49

Revenue recognized over time if any of 3 are met

Answer 49

1) Consumer consumes benefit 2) consumer is in control of asset 3) Seller created asset that has no alternative use

Question 50

Cash equilvealnts

Answer 50

Have maturity date of no longer than 3 months

Question 51

CASH AND CASH EQUIVLANTS DOES NOT INCLUDE

Answer 51

RESTRICTED CASH

Question 52

Allowance method (GAAP) Companies use a contra account

Answer 52

Allowance for uncollectible accounts to reduce carrying value of A/R

Question 53

Bad debt expense is not recognized when

Answer 53

Specific accounts are written off, when accounts are stimated to be uncollectable

Question 54

INTEREST ON NOTES (EQUATION) =

Answer 54

FACE AMOUNT * ANNUAL RATE * FRACTION OF THE ANNUAL PERIOD

Question 55

FACTORING ARRANGEMENT IS DONE TO HAVE

Answer 55

QUICKER ACCESS TO CASH