In: Accounting
Please correct the asnwer as soon as possible
27. During a period of increasing cost prices, which inventory costing method will yield the lowest cost of goods sold?
a. |
Any method in which the company uses a periodic inventory system |
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b. |
Weighted Average Cost |
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c. |
LIFO |
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d. |
FIFO |
29. A company fails to record one storeroom full of inventory in its year-end inventory records. As a result, this will cause:
a. |
an overstatement of cost of goods sold for the current year. |
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b. |
an overstatement of inventory on the year-end balance sheet. |
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c. |
an overstatement of retained earnings at the end of the year. |
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d. |
an understatement of gross profit in the following year. |
30. Hawk Store counted some of its inventory twice. As a result, its operating expenses will be
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31. The set of items below was identified in preparing a bank reconciliation for Mars Corp. as of August 31, 2016.
Bank statement balance |
$19,500 |
Mars’s book balance (before adjustments) |
? |
Outstanding checks |
2,700 |
Customer's NSF checks |
350 |
Service Charges |
100 |
Deposits in transit |
1,000 |
Interest earned on checking account |
60 |
Mars Corp.’s balance per books before the reconciliation is
a. |
$17,410 |
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b. |
$17,900 |
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c. |
$18,190 |
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d. |
$18,310 |
--The correct answer is Option ‘D’ FIFO Method will give the lowest cost of goods sold in case of increasing cost prices.
--This is because, the cost of goods sold are first taken from the earliest purchases (which are at low cost prices).
--The correct answer is Option ‘A’ An Overstatement of Cost of Goods Sold for the current year will result if inventory of one storeroom is not considered.
--This is because: Beginning Inventory + Purchases – Ending Inventory = Cost of Goods Sold.
--If Ending Inventory is LESS or understated, Cost of Goods will be Over stated.
--Correct answer is Option ‘D’ Operating expense will be CORRECT since Operating expenses are not affected by Inventory Costs.
Bank Statement Balance |
$ 19,500.00 |
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Add: |
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Service charges |
$ 100.00 |
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Deposits in Transits |
$ 1,000.00 |
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Customer's NSF Checks |
$ 350.00 |
$ 1,450.00 |
Less: |
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Outstanding checks |
$ 2,700.00 |
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Interest earned on checking account |
$ 60.00 |
$ 2,760.00 |
Balance as per books before the reconciliation |
$ 18,190.00 |
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Correct Answer |
Option 'C' $ 18,190 |