Question :
31. Pollet Company started business at the beginning of 2012. Pollet : 1224927
31. Pollet Company started business at the beginning of 2012. Pollet selected the FIFO method for its inventory costing. The profits will maximize for 2012 under this method, in a period of: A. rising prices.B. declining prices.C. stable prices.D. prices fluctuating up and down at the same amount consistently throughout the year.
32. Which one of the following statements regarding changing inventory costing methods is true? A. A change in inventory costing methods can be justified if the change is made after the completed financial period.B. Changing inventory costing methods violates consistency.C. One place that the reader of an annual report would be able to identify that a company changed inventory costing methods is the statement of stockholders’ equity.D. Tax advantages are valid justification for changing inventory costing methods.
33. If the amount assigned to ending inventory is incorrect, then: A. the balance sheet is affected, but the income statement is not.B. the income statement is affected, but the balance sheet is not.C. the balance sheet is affected, but cost of goods sold is not.D. both the balance sheet and income statement are affected.
34. If a company understates its inventory, what are the effects on cost of goods sold and net income for the current year? A. Cost of goods sold will be understated and net income will be overstated.B. Cost of goods sold will be overstated and net income will be understated.C. Both cost of goods sold and net income will be understated.D. Both cost of goods sold and net income will be overstated.
35. Ronn IndustriesRonn Industries reported net income of $95,000 for 2012. Early in 2013, Ronn discovered that its 2012 ending inventory was overstated by $5,000. Refer to the information provided for Ronn Industries. Determine the effects of the inventory errors for 2012. A. Assets and equity would have been overstated by $5,000 on the balance sheet; expenses and net income would have been understated by $5,000 on the income statement.B. Assets and equity would have been overstated by $5,000 on the balance sheet; expenses would have been overstated by $5,000 on the income statement, thus net income would have been understated by $5,000.C. Assets and equity would have been understated by $5,000 on the balance sheet; expenses would have been overstated by $5,000 on the income statement, thus net income would have been understated by $5,000.D. Assets and equity would have been overstated by $5,000 on the balance sheet; expenses would have been understated by $5,000 on the income statement, thus net income would have been overstated by $5,000.
36. Ronn IndustriesRonn Industries reported net income of $95,000 for 2012. Early in 2013, Ronn discovered that its 2012 ending inventory was overstated by $5,000. Refer to the information provided for Ronn Industries. Determine the financial statement effects of the inventory error for 2013. A. Expenses will be understated and net income will be overstated.B. Expenses will be overstated and net income will be understated.C. Both expenses and net income will be overstated.D. Both expenses and net income will be understated.
37. Filmore EnterprisesThe following information is from Filmore’s 2012 accounting records.
Sales
$182,000
Beginning inventory
28,800
Purchases
126,500
Gross profit percentage
40%
Refer to the information provided for Filmore Enterprises. Using the gross profit method, estimate Filmore’s cost of goods sold at year-end. A. $109,200B. $102,900C. $72,800D. $78,200
38. Filmore EnterprisesThe following information is from Filmore’s 2012 accounting records.
Sales
$182,000
Beginning inventory
28,800
Purchases
126,500
Gross profit percentage
40%
Refer to the information provided for Filmore Enterprises. Using the gross profit method, estimate Filmore’s ending inventory at year end. A. $41,600B. $53,700C. $72,800D. $46,100
39. Sadler EnterprisesThe following information is from Filmore’s 2012 accounting records.
Sales
$203,000
Beginning inventory
32,800
Purchases
125,500
Gross profit percentage
45%
Refer to the information provided for Sadler Enterprises. Using the gross profit method, estimate Sadler’s cost of goods sold at year-end. A. $111,650B. $116,100C. $91,350D. $93,150
40. Sadler EnterprisesThe following information is from Filmore’s 2012 accounting records.
Sales
$203,000
Beginning inventory
32,800
Purchases
125,500
Gross profit percentage
45%
Refer to the information provided for Filmore Enterprises. Using the gross profit method, estimate Filmore’s ending inventory at year end. A. $41,600B. $46,650C. $46,560D. $46,100
