ACC 556 Week 3 Quiz

ACC 556 Week 3 Quiz  | Assignment Help | Strayer University 

Question 1

 A merchandiser that sells directly to consumers is a

o   Retailer.

o   Wholesaler.

o   Service enterprise.

o   Broker.

Question 2

 Two categories of expenses in merchandising companies are

o   Cost of goods sold and operating expenses.

o   Other expenses and cost of goods sold.

o   Cost of goods sold and financing expenses.

o   Operating expenses and financing expenses.

Question 3

The primary source of revenue for a wholesaler is

o   The sale of merchandise.

o   Service revenue.

o   The sale of plant assets the company owns.

o   Investment income.

Question 4

 If a purchaser using a perpetual inventory system pays the transportation costs for goods purchased, then the

o   Delivery Expense account is increased.

o   Inventory account is increased.

o   Freight-out account is increased.

o   Inventory account is not affected.

Question 5

Freight costs incurred by a seller on merchandise sold to customers will cause an increase

o   In operating expenses for the seller.

o   In the selling expenses of the buyer.

o   To the cost of goods sold of the seller.

o   To a contra-revenue account of the seller.

Question 6

 A buyer borrows money at 5% interest to pay a $9600 invoice with terms 1/10, n/30 on the 10th day of the discount period. The loan is repaid on the 30th day of the invoice. What is the buyer’s net savings for these two transactions?

o   $70.53

o   $0

o   $69.33

o   $122.67

Question 7

 Pina Colada Corp. purchased merchandise inventory with an invoice price of $11400 and credit terms of 2/10, n/30. What is the net cost of the goods if Pina Colada Corp. pays within the discount period?

o   $10488

o   $11400

o   $11172

o   $10260

Question 8

Vaughn Manufacturing purchased merchandise with an invoice price of $1800 and credit terms of 2/6, n/30. Assuming a 360-day year, what is the implied annual interest rate inherent in the credit terms?

o   60%

o   4%

o   28%

o   30%

Question 9

Bramble Corp. purchased merchandise inventory with an invoice price of $15000 and credit terms of 2/9, n/30. What is the net cost of the goods if Bramble Corp. pays within the discount period?

o   $14700

o   $11700

o   $14766

o   $15000

Question 10

 A credit sale of $4800 is made on April 25, terms 2/10, net/30, on which a return of $200 is granted on April 28. What amount will be received as payment in full if collected on May 4?

o   $4800

o   $4704

o   $4600

o   $4508

Question 11

 If a company is given credit terms of 2/10, n/30, it should

o   Pay within the discount period and recognize a savings.

o   Pay within the credit period but don't take the trouble to invest the cash while waiting to pay the bill.

o   Recognize that the supplier is desperate for cash and withhold payment until the end of the credit period while negotiating a lower sales price.

o   Hold off paying the bill until the end of the credit period, while investing the money at 10% annual interest during this time.

Question 12

 A purchase invoice is a document that

o   Provides evidence of credit purchases.

o   Provides evidence of incurred operating expenses.

o   Serves only as a customer receipt.

o   Provides support for goods purchased for cash.

Question 13  

A company just starting in business purchased three merchandise inventory items at the following prices. First purchase $60; Second purchase $70; Third purchase $65. If the company sold 2 units for a total of $210 and used FIFO costing, the gross profit for the period would be

o   $75.

o   $70.

o   $85.

o   $80.

Question 14

 Novak Corp. had beginning inventory of $18300 at March 1, 2022. During the month, the company made purchases of $79300. The inventory at the end of the month is $21110. What is cost of goods sold for the month of March?

o   $79300

o   $97600

o   $100410

o   $76490

Question 15

 Nash's Trading Post, LLC had the following inventory transactions occur during 2022:

                                                Units               Cost/unit

Feb. 1, 2022              Purchase                    67                    $67

Mar. 14, 2022                       Purchase                    115                 $70

May 1, 2022              Purchase                    81                    $73

The company sold 189 units at $93 each and has a tax rate of 30%. Assuming that a periodic inventory system is used and operating expenses of $1850, what is the company’s after-tax income using FIFO?

o   $2254.00

o   $2677.00

o   $1873.90

o   $1577.80

Question 16

Whispering Winds Corp. had the following inventory transactions occur during 2022:

                                                Units               Cost/unit

Feb. 1, 2022              Purchase                    83                    $83

Mar. 14, 2022                       Purchase                    143                 $86

May 1, 2022              Purchase                    101                 $90

The company sold 235 units at $116 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company’s gross profit using FIFO?

o   $7263

o   $6646

o   $20614

o   $19997

Question 17

Concord Corporation had the following inventory transactions occur during 2022:

                                                Units               Cost/unit

Feb. 1, 2022              Purchase                    72                    $72

Mar. 14, 2022                       Purchase                    124                 $75

May 1, 2022              Purchase                    88                    $78

The company sold 204 units at $101 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, and operating expenses of $2000, what is the company’s after-tax income using LIFO?

o   $2714.60

o   $3040.00

o   $3878.00

o   $2128.00

Question 18

 In periods of rising prices, which is an advantage of using the LIFO inventory costing method?

o   Phantom profits are reported.

o   Net income will be the highest and thus reflect the prosperity of the company.

o   Cost of goods sold will include the latest (most recent) costs and thus will be more realistic.

o   Ending inventory will include latest (most recent) costs and thus be more realistic.

Question 19

Which inventory costing method should a gasoline retailer use?

o   FIFO

o   Either LIFO or FIF

o   Average cost

o   LIFO

Question 20

 Given equal circumstances, which inventory method would probably be the most time-consuming?

o   LIFO

o   Average-cost

o   Specific identification

o   FIFO

Question 21

 Which of the following statements is correct with respect to inventories?

o   The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold.

o   FIFO seldom coincides with the actual physical flow of inventory.

o   It is generally good business management to sell the most recently acquired goods first.

o   Under FIFO, the ending inventory is based on the latest units purchased.

Question 22

 Which of the following statements is true regarding inventory cost flow assumptions?

o   A company may never change its inventory costing method once it has chosen a method.

o   A company may use more than one costing method concurrently.

o   A company must use the same method for domestic and foreign operations.

o   A company must comply with the method specified by industry standards.

Question 23

 Which of the following is not a common cost flow assumption used in costing inventory?

o   Average-cost

o   First-in, first-out

o   Last-in, first-out

o   Middle-in, first-out

Question 24

 The selection of an appropriate inventory cost flow assumption for an individual company is made by

o   The SEC.

o   The internal auditors.

o   Management.

o   The external auditors.

Question 25

Of the following companies, which one would not likely employ the specific identification method for inventory costing?

o   Farm implement dealership

o   Music store specializing in organ sales

o   Antique shop

o   Hardware store