Inventory and Cost of Goods Sold(Quick Test #1)

1. Sales minus the cost of good sold equals __________ __________.

2. The main revenue account of a retail store is __________.

3. Purchases minus purchase discounts and purchase returns and allowances equals __________ __________.

4. The cost of goods sold is the net purchases plus or minus the change in __________ from the beginning to the end of the period.

5. Goods in transit at the end of the year should be reported as inventory by the seller when the terms are FOB __________.

6. FIFO is an inventory __________ __________ assumption.

7. When a company uses FIFO, its inventory might be reported at the lower of __________ or __________ __________ __________.

8. The inventory turnover ratio is computed by dividing the annual cost of __________ __________ by the __________ amount of inventory during the year.

9. One method for estimating the ending inventory is the __________ profit method.

10. JIT is the acronym for __________– __________ – __________ inventory.

11. If the sole proprietorship of Amy Ott understates the ending balance in its inventory account, another balance sheet account, __________ __________, __________, will also be understated.

12. The amount assigned to an item in inventory might be less than its cost when the item’s __________ __________ __________ is lower than its original cost.

13. Companies using the LIFO cost flow assumption often use the account LIFO __________ to report the amount by which inventory cost would have been higher under FIFO.

14. Generally, the amount reported in the Inventory account will be the __________ of the unsold goods owned by the company.

15. Under the periodic system for inventory, the buyer will record the purchase of merchandise with a debit to the account __________.

16. Under the perpetual system for inventory, the buyer will record the purchase of merchandise with a debit to the account __________.

17. The cost of inventory and the cost of goods sold should include which of these costs?

18. The account Freight-out can be used under which inventory system?

19. Goods in transit at the end of an accounting period should be reported on the balance sheet of the buyer when the terms are __________.

20. If a company overstates its ending inventory under the periodic system, the company’s gross profit and net income will be __________.

21. The inventory cost flow that results in the most recent costs being matched first with sales of the current accounting period is __________.

22. During periods of inflation this cost flow assumption will generally mean less reported profits and less taxable income.

23. The cost flow assumption that results in the recent costs being reported on the balance sheet is __________.

24. The cost flow assumption where costs are expensed in the reverse order of when the goods were purchased is __________.

25. The inventory account will be credited with the cost of each product sold under which inventory system?

26. If the periodic inventory at December 31, 2023 is overstated, the profit in the year 2024 will __________.

27. If the costs of items held in inventory continually decline, which cost flow assumption provides the greatest tax advantage?

28. You would NOT expect to find a general ledger account Cost of Goods Sold under the __________ inventory system.

29. Susie’s Crafts has some of its items out on consignment at Smith’s Pharmacy. The cost of these items should be reported as Inventory on the balance sheet of __________.

30. The cost-to-retail ratio is __________%

31. The ending inventory at cost is $__________. (omit cents)

32. ABC Co.’s gross profit is consistently 30% of sales. During the most recent accounting period its beginning inventory had a cost of $60,000 and it made purchases with a net cost of $340,000. ABC’s sales amounted to $500,000. The estimated cost of its ending inventory using the gross profit method is $__________.

33. Smith Company had the following information during the past year:
Beginning inventory cost  $40,000
Cost of net purchases  $400,000
Ending inventory cost  $52,000
Smith Company’s cost of goods sold for the year was $__________.

34. The cost assigned to the 65 units in ending inventory under the periodic FIFO cost flow assumption is $__________. (omit cents)

35. The cost assigned to the 65 units in ending inventory under the periodic LIFO cost flow assumption is $__________ . (omit cents)

36. The cost assigned to the 65 units in ending inventory under the periodic weighted average cost flow assumption is $__________. (Rounded to the nearest dollar.)

37. The cost of goods sold for the year using the periodic FIFO cost flow assumption is $__________. (omit cents)

38. The cost of goods sold for the year using the periodic LIFO cost flow assumption is $__________. (omit cents)

39. The gross profit for the year using periodic FIFO is $__________. (omit cents)

40. The gross profit for the year using periodic LIFO is $__________. (omit cents)