Question

2. The term "FIFO" relates to the merchandise in inventory at the end of the accounting period, not to the merchandise sold during the period.

a. True

b. False

25. Under the periodic system of accounting for inventory, the purchases account is debited for the cost of all merchandise purchased.

a. True

b. False

38. When merchandise is acquired on account and the perpetual system of inventory is used, the journal entry for the purchase would include

a. debiting Purchases and crediting Accounts Payable.

b. debiting Accounts Payable and crediting Merchandise Inventory.

c. debiting Merchandise Inventory and crediting Accounts Payable.

d. debiting Accounts Payable and crediting Purchases.

40. Costs of goods sold may include all of the following EXCEPT

a. insurance.

b. shipping costs.

c. manufacturing costs.

d. management salaries.

45. When merchandise is sold and the perpetual system of inventory is used, the journal entry for a sale would include

a. debiting Accounts Receivable and crediting Sales.

b. debiting Accounts Receivable and crediting Merchandise Inventory.

c. debiting Accounts Receivable and crediting Cost of Goods Sold.

d. debiting Cost of Goods Sold and crediting Sales.

47. A method of allocating merchandise cost that assigns the most recent purchased costs to the ending inventory shown

on the balance sheet is called the

a. last-in, first-out method.

b. first-in, first-out method.

c. specific identification method.

d. weighted-average method.

48. A method of allocating merchandise cost that assumes the sales in the period were made from the recently purchased merchandise and its earliest merchandise bought remains in the inventory is called the

a. last-in, first-out method.

b. first-in, first-out method.

c. specific identification method.

d. weighted-average method

Answer 1

2. The term "FIFO" relates to the merchandise in inventory at the end of the accounting period, not to the merchandise sold during the period.

The given statement is false.

FIFO applies to all inventories i.e. inventory at the end of the accounting period, and to the merchandise sold during the period.

25. Under the periodic system of accounting for inventory, the purchases account is debited for the cost of all merchandise purchased.

The given statement is true.

Under the periodic system of accounting for inventory, the purchases account is debited for the cost of all merchandise purchased and Under the perpetual system of accounting for inventory, the inventory account is debited for the cost of all merchandise purchased

38. When merchandise is acquired on account and the perpetual system of inventory is used, the journal entry for the purchase would include

c. debiting Merchandise Inventory and crediting Accounts Payable.

Correct option is (c)

40. Costs of goods sold may include all of the following EXCEPT

d. management salaries.

Correct option is (d)

management salaries is a period cost.

45. When merchandise is sold and the perpetual system of inventory is used, the journal entry for a sale would include

a. debiting Accounts Receivable and crediting Sales.

Correct option is (a)

47. A method of allocating merchandise cost that assigns the most recent purchased costs to the ending inventory shown

on the balance sheet is called the

b. first-in, first-out method.

Correct option is (b)

48. A method of allocating merchandise cost that assumes the sales in the period were made from the recently purchased merchandise and its earliest merchandise bought remains in the inventory is called the

a. last-in, first-out method.

Correct option is (a)