Question Details

Goods in transit which are shipped f.o.b. destination should be



1.	When using a perpetual inventory system,
a.	no Purchases account is used.
b.	a Cost of Goods Sold account is used.
c.	two entries are required to record a sale.
d.	all of these.

	2.	Goods in transit which are shipped f.o.b. shipping point should be
a.	included in the inventory of the seller.
b.	included in the inventory of the buyer.
c.	included in the inventory of the shipping company.
d.	none of these.

	3.	Goods in transit which are shipped f.o.b. destination should be
a.	included in the inventory of the seller.
b.	included in the inventory of the buyer.
c.	included in the inventory of the shipping company.
d.	none of these.

	4.	Which of the following items should be included in a company's inventory at the statement of financial position date?
a.	Goods in transit which were purchased f.o.b. destination.
b.	Goods received from another company for sale on consignment.
c.	Goods sold to a customer which are being held for the customer to call for at his or her convenience.
d.	None of these.

Use the following information for questions 5 and 6.
During 2010 Carne Corporation transferred inventory to Nolan Corporation and agreed to repurchase the merchandise early in 2011. Nolan then used the inventory as collateral to borrow from Norwalk Bank, remitting the proceeds to Carne. In 2011 when Carne repurchased the inventory, Nolan used the proceeds to repay its bank loan.

	5.	This transaction is known as a(n)
a.	consignment.
b.	installment sale.
c.	assignment for the benefit of creditors.
d.	product financing arrangement.

	6.	On whose books should the cost of the inventory appear at the December 31, 2010 statement of financial position date?
a.	Carne Corporation
b.	Nolan Corporation
c.	Norwalk Bank
d.	Nolan Corporation, with Carne making appropriate note disclosure of the transaction



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