1 for specific request mail
ACCT 2000 Exam 2 (Chapters 4-7) Questions and
Correct Answers | Latest Update
Companies that want to maximize the balance sheet's assets section will
use which inventory cost flow method during deflationary periods?
Ans: LIFO produces higher net income in a period of falling prices
(deflation) because the most recent, lower-cost units are matched against
revenue. As a result, the earlier, higher-cost units remain in inventory on
the balance sheet.
Assignment Expert
During the year, a company's inventory decreased by $20,000. If the
company's cost of goods sold for the year was $400,000, find the amount
for purchases.
Guru01 - Stuvia
Ans: The formula to calculate the Cost of goods sold is Beginning
inventory + Purchases - Ending inventory. The equation to solve for
purchases is the Cost of goods sold + Increase in inventory (or - Decrease
2026
in inventory). The company's inventory decreased by $20,000. Therefore
the cost of purchases is $380,000 ($400,000 - $20,000).
©
The LIFO conformity rule requires companies using LIFO for tax purposes
to _______________.
Ans: use LIFO for financial reporting purposes.
Where are the freight costs to acquire the inventory included?
Ans: in the cost of inventory
Vargas Industries has a beginning inventory of $38,000 and an ending
inventory of $32,500. If their cost of goods sold for the period was
$547,000, what was their cost of goods purchased for the period?
Ans: $541,500
, 2 for specific request mail
Every winter, Bonnie's Boutique hires 10 seasonal employees to work
from November 15 through January 15. The workers are paid 25% of their
total salary in November, 50% of their total salary in December, and the
remaining 25% of their total salary in January. Bonnie's Boutique
recognizes all salary expenses related to these workers at the end of
January. In this scenario, Bonnie's has
Ans: violated the matching principle because this principle requires the
firm to recognize 25% of the total salary expense in November, 50% in
December, and 25% in January.
Assignment Expert
Maple Leaf Company is a cash-basis advertising firm with a fiscal year-
end of March 31. Maple Leaf's employees earn a normal weekly wage of
$18,000 during a five-day workweek. March 31 falls on a Tuesday for the
Guru01 - Stuvia
current year. Maple Leaf also performs services of $1,875 during the last
two days of March but is not paid until April 13. As a result of using the
cash-basis of accounting rather than following GAAP, Maple Leaf's net
2026
income for the most recent fiscal year will be ________ by __________.
Ans: The accrual method recognizes revenues earned and expenses
©
incurred that were not paid or recorded.Accrued revenues and expenses
are computed as follows:Accrued Wages Expense for the last two
workdays in March, $18,000/5 x 2 days = $7,200Accrued Revenue for
service performed $1,875.Net Loss of $5,325 ($1,875 - $7,200).By using
the Cash-basis of accounting, net income is overstated by $5,325.
On December 31, 2022, before any year-end adjustments, Canterbury
Shoe Repair's Prepaid Insurance account had a balance of $3,500. It was
determined that $2,200 of the Prepaid Insurance had expired. The
adjusted balance for Prepaid Insurance at December 31, 2022, will be
_____________________.
Ans: $1,300
Which account title will accompany Interest Expense in an adjustment?
ACCT 2000 Exam 2 (Chapters 4-7) Questions and
Correct Answers | Latest Update
Companies that want to maximize the balance sheet's assets section will
use which inventory cost flow method during deflationary periods?
Ans: LIFO produces higher net income in a period of falling prices
(deflation) because the most recent, lower-cost units are matched against
revenue. As a result, the earlier, higher-cost units remain in inventory on
the balance sheet.
Assignment Expert
During the year, a company's inventory decreased by $20,000. If the
company's cost of goods sold for the year was $400,000, find the amount
for purchases.
Guru01 - Stuvia
Ans: The formula to calculate the Cost of goods sold is Beginning
inventory + Purchases - Ending inventory. The equation to solve for
purchases is the Cost of goods sold + Increase in inventory (or - Decrease
2026
in inventory). The company's inventory decreased by $20,000. Therefore
the cost of purchases is $380,000 ($400,000 - $20,000).
©
The LIFO conformity rule requires companies using LIFO for tax purposes
to _______________.
Ans: use LIFO for financial reporting purposes.
Where are the freight costs to acquire the inventory included?
Ans: in the cost of inventory
Vargas Industries has a beginning inventory of $38,000 and an ending
inventory of $32,500. If their cost of goods sold for the period was
$547,000, what was their cost of goods purchased for the period?
Ans: $541,500
, 2 for specific request mail
Every winter, Bonnie's Boutique hires 10 seasonal employees to work
from November 15 through January 15. The workers are paid 25% of their
total salary in November, 50% of their total salary in December, and the
remaining 25% of their total salary in January. Bonnie's Boutique
recognizes all salary expenses related to these workers at the end of
January. In this scenario, Bonnie's has
Ans: violated the matching principle because this principle requires the
firm to recognize 25% of the total salary expense in November, 50% in
December, and 25% in January.
Assignment Expert
Maple Leaf Company is a cash-basis advertising firm with a fiscal year-
end of March 31. Maple Leaf's employees earn a normal weekly wage of
$18,000 during a five-day workweek. March 31 falls on a Tuesday for the
Guru01 - Stuvia
current year. Maple Leaf also performs services of $1,875 during the last
two days of March but is not paid until April 13. As a result of using the
cash-basis of accounting rather than following GAAP, Maple Leaf's net
2026
income for the most recent fiscal year will be ________ by __________.
Ans: The accrual method recognizes revenues earned and expenses
©
incurred that were not paid or recorded.Accrued revenues and expenses
are computed as follows:Accrued Wages Expense for the last two
workdays in March, $18,000/5 x 2 days = $7,200Accrued Revenue for
service performed $1,875.Net Loss of $5,325 ($1,875 - $7,200).By using
the Cash-basis of accounting, net income is overstated by $5,325.
On December 31, 2022, before any year-end adjustments, Canterbury
Shoe Repair's Prepaid Insurance account had a balance of $3,500. It was
determined that $2,200 of the Prepaid Insurance had expired. The
adjusted balance for Prepaid Insurance at December 31, 2022, will be
_____________________.
Ans: $1,300
Which account title will accompany Interest Expense in an adjustment?
