Chapter 6 Quiz

Navigation » List of Schools » Glendale Community College » Accounting » Accounting 101 – Financial Accounting » Spring 2021 » Chapter 6 Quiz

Need help with your exam preparation?

Existing Quiz Clients Login here

Below are the questions for the exam with the choices of answers:

Try The Exam

Question #1

Using a periodic inventory system, recording the sale of inventory on account would include:

A Debit Inventory; credit Sales Revenue.

B Debit Inventory; credit Accounts Receivable.

C Debit Accounts Receivable; credit Sales Revenue.

D Debit Sales Revenue; credit Accounts Receivable.

Question #2

At the end of a reporting period, Gaston Corporation determines that its ending inventory has a cost of $6,500 and a net realizable value of $5,800. The adjustment to write down inventory to net realizable value would include:

A A debit to cost of goods sold for $5,800.

B A credit to cost of goods sold for $700.

C A credit to inventory for $700.

D A debit to inventory for $5,800.

Question #3

Fan Company purchases inventory on account. The entry to record this purchase using a periodic inventory system would include a debit to:

A Purchases.

B Cost of Goods Sold.

C Inventory.

D Accounts Payable.

Question #4

A company’s inventory turnover ratio measures:

A The profitability on sales of inventory during the year.

B The average cost at which inventory was purchased during the year.

C The number of times the company sells its average inventory balance during the year.

D The quantity of inventory remaining at the end of the year.

Question #5

Which inventory cost flow assumption generally results in the lowest reported amount for inventory when inventory costs are rising?

A Specific identification.

B Average cost.

C Last-in, first-out (LIFO).

D First-in, first-out (FIFO).

Question #6

If a company understates its ending inventory in the current period, what effect will this have on cost of goods sold in the following period?

A Have no effect on cost of goods sold.

B Overstate cost of goods sold.

C Not possible to determine with information given.

D Understate cost of goods sold.

Question #7

If a company understates its ending inventory in the current period, what effect will this have on the balance of Retained Earnings at the end of the following period?

A Not possible to determine with information given.

B Have no effect on retained earnings.

C Understate retained earnings.

E Overstate retained earnings.

Question #8

At the end of the year, Marline Corporation determines that its ending inventory has a cost of $2,000 and a net realizable value of $1,900. What would be the effect of the adjustment to write down inventory to net realizable value?

A No effect on net income or ending inventory.

B Increase in cost of ending inventory.

C Decrease in net income.

D Increase in net income.

Question #9

At the beginning of the year, Johnson Supply has inventory of $5,200. During the year, the company purchases an additional $20,000 of inventory. An inventory count at the end of the year reveals remaining inventory of $3,000. What amount will Bennett report for cost of goods sold?

A $20,000

B $8,200

C $17,800

D $22,200

Question #10

Fan Company sells inventory on account. The entry to record this sale using a periodic inventory system would include a:

A Debit to Cost of Goods Sold.

B Credit to Inventory, Debit to Cost of Goods Sold and Credit to Sales Revenue.

C Credit to Inventory.

D Credit to Sales Revenue.

Question #11

Inventory is defined as:

A Any assets of the company that can be sold.

B The amount of cash received from the sale of goods to customers during the year.

C The cost of goods sold to customers during the year.

D Items a company intends for sale to customers.

Question #12

Which of following best describes a merchandising company?

A A company whose revenues exceed expenses.

B A company that produces products from raw materials, labor, and overhead.

C A company that purchases products that are primarily in finished form for resale to customers.

D A company that provides services to its customers.

Question #13

Which cost flow assumption must be used for financial reporting if it is also used for tax reporting?

A Any assumption can be used regardless of the tax reporting.

B FIFO.

C LIFO.

D Weighted-average.

Question #14

For the year, Sealy Incorporated reports net sales of $50,000, cost of goods sold of $40,000, and an average inventory balance of $5,000. What is Sealy’s gross profit ratio?

A 25%

B 10%

C 20%

D 30%

Question #15

Fan Company sells inventory on account. The entry or entries to record this sale using a perpetual inventory system would include a:

A Debit to Cost of Goods Sold.

B Credit to Sales Revenue

C Debit to Accounts Receivable.

D Credit to Sales Revenue, Debit to Cost of Goods Sold and Debit to Accounts Receivable.

Question #16

A multiple-step income statement provides the advantage of:

A Placing all revenues before all expenses.

B Excluding the effects of income taxes in the calculation of net income.

C Separating revenues and expenses based on their different types of activities.

D Placing all revenues after all expenses.

Question #17

Gross profit is defined as:

A Income before Income Tax Expense.

B All revenues minus all expenses.

C Sales Revenue minus Operating Expenses.

D Sales Revenue minus Cost of Goods Sold.

Question #18

Which cost flow assumption generally results in the highest reported amount of net income in periods of rising inventory costs?

A LIFO.

B Income will be the same under each assumption.

C Weighted-average.

D FIFO.

Question #19

Which of the following levels of profitability in a multiple-step income statement represents all revenues less all expenses?

A Gross profit.

B Net income.

C Operating income.

D Income before income taxes.

Question #20

Net income is defined as:

A Income before Income Tax Expense.

B Gross Profit minus Operating Expenses.

C Sales Revenue minus Cost of Goods Sold.

D All revenues minus all expenses.

Question #21

The entry to write down inventory from cost to net realizable value at the end of the year includes a:

A Credit to Accounts Payable.

B Debit to Cost of Goods Sold.

C Debit to Inventory.

D Credit to Sales Revenue.

Question #22

Under a perpetual inventory system:

A Inventory purchases are recorded only at the end of the period.

B Cost of good sold is recorded with a period-end adjusting entry.

C Purchase discounts are not recorded.

D Cost of goods sold is recorded with each sale.

Question #23

A company’s gross profit ratio measures:

A The amount by which the sale of inventory exceeds its cost per dollar of sales.

B The number of times the company sells its average inventory balance during the year.

C The average amount of sales revenue per unit of inventory sold during the year

D The number of days the average inventory is held.

Question #24

Which of the following represents the balance of Cost of Goods Sold at the end of the year?

A The cost of inventory at the beginning of the year.

B The cost of inventory not yet sold by the end of the year.

C The cost of inventory purchased during the year.

D The cost of inventory sold during the year.

Question #25

Operating income is defined as:

A Gross Profit minus Operating Expenses.

B Sales Revenue minus Cost of Goods Sold.

C Income before Income Tax Expense.

D All revenues minus all expenses.

Question #26

Fan Company purchases inventory on account. The entry to record this purchase using a perpetual inventory system would include a debit to:

A Cost of Goods Sold.

B Inventory.

C Accounts Payable.

D Purchases.

Try The Exam

Fresh Grad Lands Job as Real Estate Agent With Help from Professional Writers

Need help with your exam preparation?

Below are the questions for the exam with the choices of answers:

Christian S.

Tyra

Linda

Manush

We accept payment