ACCT 3001 Exam 2 Questions and Verified
Correct Answers
The acquisition cost of a heavily used raw material changes frequently. The inventory amount of
this material at year end will be the same if perpetual records (units and costs) are kept as it
would be under a periodic inventory method only if the inventory amount is computed under
which of the following methods? answer - first-in, first-out method
Tim's Company has a LIFO inventory of $33,500. Their LIFO reserve is $56,000. What is the FIFO
inventory for the company? answer - 89500
The use of the account Purchase Discounts Lost implies that the recorded cost of a purchased
inventory item is which of the following? answer - its invoice price less the purchase discount
allowable whether taken or not
Goods out on consignment at another company store answer - Inventory, BS
Goods sold on an installment basis (bad debts can be reasonably estimated) answer - COGS, IS
As of dec 31 goods purchased fob shipping point that are in transit at dec 31 answer -
inventory, BS
goods purchased fob destination that are in transit at dec 31 answer - Not reported, not
reported
Goods sold to another company for which our company has signed an agreement to repurchase
at a set price that covers all cost related to the inventory. also fraud answer - inventory, BS
, goods sold where large returns are predictable answer - COGS, IS
goods sold fob shipping point that are in transit at dec 31 answer - COGS, IS
Freight on Board or fob answer - just here to make sure i can pick it
means the seller takes responsibility till goods are received answer - FOB destination
means the buyer takes responsibility once it leaves the factor answer - FOB shipping point
purchase discount implies what in a JE? answer - That they are using the gross method
purchase discount lost implies what in a JE? answer - that they are using the net method
What is the owner of consigned goods called answer - consignor
Cost of Goods Sold highest under blank answer - LIFO method
Why is Cost of Goods Sold highest under the LIFO method? This is because the price of
inventory was rising in the Zen Life example. answer - LIFO allocated the most expensive (most
recent) items purchased.
When prices are rising blank results in the lowest gross profit, income tax, and net income.
answer - LIFO
Correct Answers
The acquisition cost of a heavily used raw material changes frequently. The inventory amount of
this material at year end will be the same if perpetual records (units and costs) are kept as it
would be under a periodic inventory method only if the inventory amount is computed under
which of the following methods? answer - first-in, first-out method
Tim's Company has a LIFO inventory of $33,500. Their LIFO reserve is $56,000. What is the FIFO
inventory for the company? answer - 89500
The use of the account Purchase Discounts Lost implies that the recorded cost of a purchased
inventory item is which of the following? answer - its invoice price less the purchase discount
allowable whether taken or not
Goods out on consignment at another company store answer - Inventory, BS
Goods sold on an installment basis (bad debts can be reasonably estimated) answer - COGS, IS
As of dec 31 goods purchased fob shipping point that are in transit at dec 31 answer -
inventory, BS
goods purchased fob destination that are in transit at dec 31 answer - Not reported, not
reported
Goods sold to another company for which our company has signed an agreement to repurchase
at a set price that covers all cost related to the inventory. also fraud answer - inventory, BS
, goods sold where large returns are predictable answer - COGS, IS
goods sold fob shipping point that are in transit at dec 31 answer - COGS, IS
Freight on Board or fob answer - just here to make sure i can pick it
means the seller takes responsibility till goods are received answer - FOB destination
means the buyer takes responsibility once it leaves the factor answer - FOB shipping point
purchase discount implies what in a JE? answer - That they are using the gross method
purchase discount lost implies what in a JE? answer - that they are using the net method
What is the owner of consigned goods called answer - consignor
Cost of Goods Sold highest under blank answer - LIFO method
Why is Cost of Goods Sold highest under the LIFO method? This is because the price of
inventory was rising in the Zen Life example. answer - LIFO allocated the most expensive (most
recent) items purchased.
When prices are rising blank results in the lowest gross profit, income tax, and net income.
answer - LIFO
