Question :
Multiple Choice Questions
1.Portland Supplies Co. mistakenly excluded $3,000 of goods : 1241862
Multiple Choice Questions
1.Portland Supplies Co. mistakenly excluded $3,000 of goods from its December 31, 2015 physical inventory count. Its December 31, 2016 inventory amount was correct. As a result of this error,
a.2015 income is overstated by $3,000.
b.2015 ending inventory is overstated by $3,000.
c.2016 income is overstated by $3,000.
d.2016 cost of goods sold is overstated by $3,000.
2.Which one of the following expenditures should not be included in the cost of inventory?
a.Transportation-out
b.Purchase cost
c.Packaging cost
d.Transportation-in
3.Michael Manufacturers fraudulently overstated its December 31, 2015 and December 31, 2016 inventory by $3,000 and $6,000, respectively. As a result of these overstatements,
a.2015 income is overstated by $3,000 and 2016 income is overstated by $3,000.
b.2015 income is overstated by $3,000 and 2016 income is overstated by $6,000.
c.2015 income is overstated by $3,000 and 2016 income is accurate.
d.2015 and 2016 incomes are not affected.
4.Jackson Roper fraudulently overstated its December 31, 2015 inventory by $8,000. As a result of this overstatement,
a.the 2015 earnings per share is overstated.
b.the 2015 current ratio is understated.
c.the 2015 cost of goods sold amount is overstated.
d.net income is overstated for 2016, and net income for 2015 is correct.
5.If a company desires to increase its inventory, then it should:
a. sell more goods than it purchases during the period.
b. purchase more goods than it sells during the period.
c. purchase the same amount of goods that it sells.
d. increase its selling prices to a level that customers would not be willing to purchase.
6.Cagey Trading Inc. counted $2,000 of inventory twice during its December 31, 2015 physical inventory count. Its December 31, 2016 inventory amount is correct. As a result of this error,
a.2015 ending inventory is overstated by $2,000.
b. 2015 income is understated by $2,000.
c. 2016 income is overstated by $2,000.
d.2016 cost of goods sold is understated by $2,000.
7.WashingtonCo. mistakenly omitted $4,000 of merchandise from its inventory on December 31, 2015. Its December 31, 2016, inventory is correct. As a result of this error,
a.earnings per share is overstated for 2015 and overstated for 2016.
b.total income for 2015 and 2016 combined is correct.
c.the current ratio is overstated on December 31, 2015 and is correct on December 31, 2016.
d.ending inventory is understated at December 31, 2016.
8.Parker Books purchased 200 books, paying $10 each. Parker paid the $40 shipping costs and $30 binding repair fees so that those books could be sold. How much is the cost of inventory?
a.$2,000
b.$2,040
c.$2,030
d.$2,070
9.A company deliberately and inappropriately included interest costs on its December 31 inventory. Which one of the following statements is true for the company’s December 31 financial statements?
a.Earnings per share is understated.
b.Inventory turnover ratio is understated.
c.The current ratio is understated.
d.Cost of goods sold is overstated.
10.Dole Produce Ltd. counted $700 of inventory twice in its December 31, 2015 inventory. On December 31, 2016, it mistakenly omitted $200 of merchandise from its inventory. As a result of these errors:
a.net income is overstated by $700 in 2015 and understated by $200 in 2016.
b.net income in understated by $700 in 2015 and overstated by $200 in 2016.
c.net income is overstated by $700 in 2015 and understated by $900 in 2016.
d.total net income for 2015 and 2016 is correct.
