Question : 81. The understatement of the beginning inventory balance causes: A. Cost of goods : 1256859

 

 

81. The understatement of the beginning inventory balance causes: 

A. Cost of goods sold to be understated and net income to be understated.

B. Cost of goods sold to be understated and net income to be overstated.

C. Cost of goods sold to be overstated and net income to be overstated.

D. Cost of goods sold to be overstated and net income to be understated.

E. Cost of goods sold to be overstated and net income to be correct.

 

 

 

82. An overstatement of ending inventory will cause 

A. An overstatement of assets and equity on the balance sheet.

B. An understatement of assets and equity on the balance sheet.

C. An overstatement of assets and an understatement of equity on the balance sheet.

D. An understatement of assets and an overstatement of equity on the balance sheet.

E. No effect on the balance sheet.

 

 

 

 

 

 

 

 

83. The inventory turnover ratio: 

A. Is used to analyze profitability.

B. Is used to measure solvency.

C. Measures how quickly a company turns over its merchandise inventory.

D. Validates the acid-test ratio.

E. Calculation depends on the company’s inventory valuation method.

 

84. Days’ sales in inventory: 

A. Is also called days’ stock on hand.

B. Focuses on average inventory rather than ending inventory.

C. Is used to measure solvency.

D. Is calculated by dividing cost of goods sold by ending inventory.

E. Is a substitute for the acid-test ratio.

 

85. The inventory turnover ratio is calculated as: 

A. Cost of goods sold divided by average merchandise inventory.

B. Sales divided by cost of goods sold.

C. Ending inventory divided by cost of goods sold.

D. Cost of goods sold divided by ending inventory.

E. Cost of goods sold divided by ending inventory times 365.

 

86. Days’ sales in inventory is calculated as: 

A. Ending inventory divided by sales times 365.

B. Cost of goods sold divided by ending inventory.

C. Ending inventory divided by cost of goods sold times 365.

D. Cost of goods sold divided by ending inventory times 365.

E. Ending inventory divided by cost of goods sold.

 

 

 

 

87. Toys “R” Us had cost of goods sold of $9,421 million, ending inventory of $2,089 million, and average inventory of $1,965 million. The inventory turnover equals: 

A. 0.21

B. 4.51

C. 4.79

D. 76.1 days

E. 80.9 days

 

 

 

 

 

 

88. A company had gross profit of $134,200 on net sales of $205,000. If ending inventory was $8,000 and average inventory was $7,080, what is the company’s inventory turnover? 

A. 10.0

B. 8.85

C. 16.77

D. 18.95

E. 28.95

 

89. Toys “R” Us had cost of goods sold of $9,421 million, ending inventory of $2,089 million, and average inventory of $1,965 million. Its days’ sales in inventory equals: 

A. 0.21

B. 4.51

C. 4.79

D. 76.1 days

E. 80.9 days

 

 

 

 

90. The inventory valuation method that identifies the invoice cost of each item in ending inventory to determine the cost assigned to that inventory is the: 

A. Weighted-average inventory method,

B. First-in, first-out method,

C. Last-in, first-out method,

D. Specific identification method,

E. Retail inventory method,