Question :
80. Since an error in the period-end inventory causes an offsetting : 1257911
80. Since an error in the period-end inventory causes an offsetting error in the next period: A. Managers can ignore the error.B. It is said to be self-correcting.C. It affects only income statement accounts.D. If affects only balance sheet accounts.E. Is immaterial for managerial decision making.
81. The understatement of the ending inventory balance causes: A. Cost of goods sold to be overstated and net income to be understated.B. Cost of goods sold to be overstated and net income to be overstated.C. Cost of goods sold to be understated and net income to be understated.D. Cost of goods sold to be understated and net income to be overstated.E. Cost of goods sold to be overstated and net income to be correct.
82. 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.
83. Lucia Company reported cost of goods sold for Year 1 and Year 2 as follows:
Year 1Year 2
Beginning inventory $ 120,000 $ 130,000
Cost of goods purchased 250,000275,000
Cost of goods available for sale 370,000 405,000
Ending inventory 130,000135,000
Cost of goods sold $ 240,000$ 270,000
Lucia Company made two errors: 1) ending inventory at the end of Year 1 was understated by $15,000 and 2) ending inventory at the end of Year 2 was overstated by $6,000. Given this information, the correct cost of goods sold figure for Year 2 would be: A. $291,000B. $276,000C. $264,000D. $285,000E. $249,000
84. Hull Company reported the following income statement information for 2015:
2015
Sales
$410,000
Cost of goods sold:
Beginning inventory
$132,000
Cost of goods purchases
273,000
Cost of goods available for sale
405,000
Ending inventory
144,000
Cost of goods sold
261,000
Gross profit
$149,000
The beginning inventory balance for Year 1 is correct. However, the ending inventory figure for Year 1 was overstated by $20,000. Given this information, the correct gross profit figure for 2015 would be: A. $149,000.B. $169,000.C. $129,000 .D. $142,000.E. $112,000.
85. An understatement 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.
86. The inventory turnover ratio: A. Is used to analyze profitability.B. Is used to measure solvency.C. Reveals how many times a company sells its merchandise inventory during a period.D. Reveals how many days a company can sell inventory if no new merchandise is purchased.E. Calculation depends on the company’s inventory valuation method.
87. 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.
88. 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.
89. Days’ sales in inventory is calculated as: A. Ending inventory divided by cost of goods sold.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 times cost of goods sold.
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