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Flashcards in Mod 10 Wrong Answers Deck (29):
0

When the shipping terms are FOB destination the seller bears all costs of transporting the goods of the buyer including...3

1 packaging costs
2 shipping costs
3 special handling charges

1

When shipping terms are FOB destinTion, the only amount to be included in the buyer's cost of inventory is...

It's purchase price

2

Purchases are always recorded net of...

Trade discounts

3

When more than one trade discount is applied to a list price it is called...

A chain discount

4

Chain discounts are applied in...

Steps

5

Under FOB Shipping point, Remittance from buyer would include...

Any shipping expenses paid by seller

6

If inventory is written off it should be...

Subtracted to get cost of goods sold

7

Under the net method, purchase discounts not taken are recorded in...

Purchase discounts lost account

8

When the net method is used, purchase discounts lost are...

Considered a financial expense and are excluded from cost of inventory

9

Normal capacity refers to...

Range in production levels that will vary based on business
And industry specific factors

10

For normal capacity actual production may only be used if...

It approximates normal capacity

11

Under LIFO perpetual ending inventory includes...

Any purchases made after the last sale

12

The moving average method requires a new unit cost be computed each time goods are...

Purchased

13

When calculating inventory using the moving average method divide total cost of inventory by...

Number of units of inventory

14

4 steps in gross profit method

1 compute COGAS
2 compute estimated COGS = sales - (sales x GP%)
3 compute ending inventory = COGAS - estimated COGS
4 notice difference

15

How is the buyer's accounts payable affected if, goods are lost in transit, when they were shipped FOB shipping point?

The cost of those goods should be added to accounts payable

16

How is accounts payable in year 2, treated if goods are shipped to the buyer FOB destination and arrive in year 3.

Accounts payable is unaffected

17

How is accounts payable affected by returned goods supplied by vendor?

Decreases when credited by vendor

18

A consignee's payment of reimbursable freight costs results in...

Accounts receivable for the consignor

19

Which accounts are cumulative/are not cumulative:

Construction expenses

Construction in progress

Construction expenses are not cumulative

Construction in progress is cumulative

20

The equation used to recognize income on the cost to cost basis

Revenue (Profit) =
((Cost to date/total expected cost) x expected profit)
- profit recognized in previous periods

21

In the construction industry contract related assets and liabilities are usually classified as...

Current

22

On the balance sheet, construction in progress (CIP) account is netted with...

The contra account: progress billings

23

If construction in progress exceeds progress billings, the excess is reported as...

A current asset

24

On the balance sheet construction in progress and billings only include...

Numbers from profitable contracts

25

Calculation for construction in progress

Construction in progress = costs incurred to date + profits recognized

26

Calculation for: costs and estimated earnings in excess of billings
(Just for profitable projects)

Costs and estimated earnings in excess of billings =

Construction in progress - billings

27

Billings in excess of costs and estimated earnings is reported for...

Unprofitable LT construction projects

28

Calculation for: billings in excess of costs and estimated earnings

billings in excess of costs and estimated earnings =
Billings - costs incurred to date