Quiz chap 6

Cost of goods sold=

• Beginning inventory+Purchases-ending inventory

• FIFO-LIFO

• Beginning inventory-ending inventory

On September 12, beginning inventory of company A were 100 units, each unit cost $2. On September 14, the company purchased 200 units, each unit cost $3. On September 19, the company sold 240 units of product with a price of $5. Calculate COGs under FIFO method

• $620

• $680

• $1200

• $580

On September 12, beginning inventory of company A were 100 units, each unit cost $2. On September 14, the company purchased 200 units, each unit cost $3. The company sold 240 units of product with a price of $5. Calculate COGs under LIFO method

• $620

• $680

• $1200

• $580

When inventory is understated

• COGs is understated, Net income understated

• COGs is overstated, net income understated

• COGs is understated, net income overstated

• COGs is understated, net income is overstated

Inventory is classified as

• Long Term asset

• Current asset

• Long term liability

• Owner’s equity

What is the true formula

• Inventory turnover=COGs/average inventory

• Beginning inventory - ending inventory= COGs

• Net sales=sale revenue + sales discount

• Net income/loss= revenue - operating expense

Wal-Mart reported in its 2014 annual report a beginning inventory of $43,803 million, an ending inventory of $44,858 million, and a cost of goods sold for the year ended January 31, 2014, of $358,069 million. inventory turnover is:

• 8.1 times

• 7 times

• 9 times

• 7.5 times

Inventory errors affect the computation of COGs and net income in two periods

• True

• False

Under fifo, the net income of income statement will

• Higher than LIFO method

• Lower than Average method

• Equal to LIFO method

• Lower than LIFO method

When the terms are FOB (free on board) shipping point, ownership of the

goods pass to the buyer when the public carrier accepts the goods from the seller.

• True

• False