Question
Concerning purchase discounts, which one of the following statements is true?
The net price method results in recording accounts payable at the maximum value of the liability that the company may be required to pay out.
An advantage of the gross price method is that it isolates purchase discounts lost and thus highlights inefficiencies.
Purchase discounts taken should be deducted from the acquisition cost of the inventory.
Purchase discounts lost should be included in the cost of inventory.
2.
The Purchases Discounts Taken account may appear in the accounting records if which one of the following methods is used to account for purchase discounts?
gross price method
sales price method
allowance method
net price method
Which one of the following types of costs is excluded from the cost of inventory that is routinely manufactured?
interest
normal spoilage
insurance
raw materials
Which one of the following statements is true?
FOB shipping point means the buyer acquires legal title to the goods when they reach the buyer's place of business.
FOB destination means the seller has legal title to the goods until they reach the buyer's place of business.
FOB shipping point means the seller has legal title to the goods while they are in transit.
FOB destination means the buyer has legal title to the goods while they are in transit.
The basic criterion for including items in inventory is
physical possession
economic control
legal ownership
physical control
Which of the following inventory cost flow assumptions produces the same ending inventory values under both the periodic and perpetual systems?
weighted average
FIFO
dollar-value LIFO
LIFO
The cost of goods sold model for a manufacturer is:
Beginning Finished Goods Inventory
+
Purchases (net)
=
Cost of Goods Available for Sale
–
Ending Finished Goods Inventory
=
Cost of Goods Sold
True
False
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a. |
The net price method results in recording accounts payable at the maximum value of the liability that the company may be required to pay out. |
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b. |
An advantage of the gross price method is that it isolates purchase discounts lost and thus highlights inefficiencies. |
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c. |
Purchase discounts taken should be deducted from the acquisition cost of the inventory. |
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d. |
Purchase discounts lost should be included in the cost of inventory. 2. The Purchases Discounts Taken account may appear in the accounting records if which one of the following methods is used to account for purchase discounts?
Which one of the following types of costs is excluded from the cost of inventory that is routinely manufactured?
Which one of the following statements is true?
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