Acoounting and Merchandising

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Exam 061690 Accounting and Merchandising

 New Technology like the latest cell phones and HDTV would probably be costed using the 

A Lifo method of inventory costing 

B Moving average method of inventory costing 

C Specific identification method of inventory costing

D FIFO method of inventory costing 


2 Which of the following is an incorrect statement if ending inventory is overstated?
 A Net income is overstated

B Cost of goods sold is overstated

C Income tax is overstated

D Gross profit is overstated


3 A company current ratio from 1.23 to 1.45 what does this mean 

A this means that the current assets increased and current liabilities decreased 

B this means that current assets increased and current liabilities increased

C This isn't enough information to explain the increase

D this means that the current assets decreased and current liabilities decreased 


4 A drawback to using___________ when inventory cost are rising is that the company reports lower income

A average costing

B Specific-Identification costing 

C FIFO

D LIFO

5 Bill Bikes had sales for the week of $3569 of which $2900 was on credit and $659 was in cash sales. The cost of the bikes sold was $1888 the journal entries would include a

A Debit to cash for 3569 credit to cost of goods sold for 3569

B Debit to cash for 3569 credit to sales for 3569

C debit to cost of goods sold for 1888 credit to inventory for 1888

D Debit to cost of goods sold for 1888 credit to sales for 1888


 6 which of the following is an incorrect statement if ending inventory is understated? 

A gross profit is overstated 

B Net income is understated 

C Income tax is understated

D Cost of goods sold is overstated 

 7 Casey Company's beginning inventory and purchases during the fiscal year ended December 31, 2012,
were as follows: (
Note: The company uses a perpetual system of inventory.)
What is the cost of goods sold for Casey Company for 2012 using LIFO?
Units Unit Price Total Cost
January 1—Beginning Inventory 20 $12 $240
March 8—Sold 14
April 2—Purchase 30 $13 $390
June 5—Sold 25
Aug 6—Purchase 25 $14 $350
Sept 11—Sold 22
Total Cost of Inventory $980
Ending inventory is 14 units.


8 The major difference in the statement of retaining earnings between a service business and a merchandising business is 

A That the retained earnings statements of a merchandising business the cost of goods sold

B That the retained earnings statements of a merchandising business includes dividends 

C nothing there are not differences the two

D That the retained earnings statements of a service business include dividends

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