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In 2016,Norwood Limited had sales and cost of sales of $250,000 and $62,500 respectively.The company had shareholders equity of $100,000 and its assets were $125,000.The company's gross margin for 2016 was:

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Given the following data,calculate the cost of ending inventory using the FIFO costing method: Given the following data,calculate the cost of ending inventory using the FIFO costing method: A) $400 B) $545 C) $480 D) $560


A) $400
B) $545
C) $480
D) $560

E) A) and C)
F) All of the above

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Historically,perpetual inventory systems have been used to account for inventory items with a low unit cost.

A) True
B) False

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Sales Company Ltd.paid $10 wholesale for one unit of inventory for resale in the retail market.The same inventory can now be purchased for $9.The retail sales price of the inventory is $13,however,it normally costs $2 to sell each unit.Using the lower-of-cost-and-net-realizable-value rule the inventory would be reported on Sales Company Ltd.'s balance sheet at:


A) $9
B) $10
C) $11
D) $13

E) A) and B)
F) A) and C)

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If ending inventory for the year ended December 31,2016,is overstated by $25,000:


A) net income for 2017 will be understated by $25,000
B) net income for 2017 will be overstated by $25,000
C) ending inventory for 2017 will be understated by $25,000
D) beginning inventory for 2017 will be understated by $25,000

E) None of the above
F) A) and D)

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The gross margin percentage can be calculated by dividing cost of goods sold by net sales revenue.

A) True
B) False

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Determine the effect on cost of goods sold,total assets,and gross margin for 2016 and 2017 if the following inventory errors are not corrected.Indicate your answer with (+)for overstated,(-)for understated,and (0)for no effect. a.Beginning inventory for 2016 is understated b.Beginning inventory for 2016 is overstated c.Ending inventory for 2016 is understated d.Ending inventory for 2016 is overstated Determine the effect on cost of goods sold,total assets,and gross margin for 2016 and 2017 if the following inventory errors are not corrected.Indicate your answer with (+)for overstated,(-)for understated,and (0)for no effect. a.Beginning inventory for 2016 is understated b.Beginning inventory for 2016 is overstated c.Ending inventory for 2016 is understated d.Ending inventory for 2016 is overstated a. b. c. d. a. b. c. d. a. b. c. d. Determine the effect on cost of goods sold,total assets,and gross margin for 2016 and 2017 if the following inventory errors are not corrected.Indicate your answer with (+)for overstated,(-)for understated,and (0)for no effect. a.Beginning inventory for 2016 is understated b.Beginning inventory for 2016 is overstated c.Ending inventory for 2016 is understated d.Ending inventory for 2016 is overstated a. b. c. d. a. b. c. d. a. b. c. d.

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Under a perpetual inventory system,which of the following entries would record the purchase of merchandise on credit?


A) Debit Inventory and credit Accounts Payable
B) Credit Purchases and Debit Cost of Goods Sold
C) Credit Sales and debit Accounts Receivable
D) Debit Purchases and credit Accounts Payable

E) All of the above
F) A) and D)

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Cash received from the sale of inventory is shown on a cash flow statement as:


A) an investing activity
B) a financing activity
C) an operating activity
D) either an operating activity or a financing activity

E) A) and B)
F) C) and D)

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Given the following data,calculate the cost of goods sold for the 04/15 sale using the weighted-average method for a perpetual inventory system,rounding to the nearest dollar.(Do not round in the process of your calculations,only round your final answer.) Given the following data,calculate the cost of goods sold for the 04/15 sale using the weighted-average method for a perpetual inventory system,rounding to the nearest dollar.(Do not round in the process of your calculations,only round your final answer.) A) $200 B) $230 C) $280 D) $600


A) $200
B) $230
C) $280
D) $600

E) B) and C)
F) B) and D)

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Inventory errors counter balance in two consecutive periods.

A) True
B) False

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In a merchandising business,gross margin is the difference between sales revenue and the cost of goods sold.

A) True
B) False

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Inventory turnover is calculated by dividing average inventory by cost of goods sold.

A) True
B) False

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Perpetual inventory records provide information helpful in making all the following decisions except:


A) whether immediate delivery of merchandise is possible
B) when to reorder
C) how quickly items of merchandise are selling
D) whether to extend credit to a customer

E) B) and D)
F) B) and C)

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Given the following data,what is the cost of goods sold? Given the following data,what is the cost of goods sold? A) $690,000 B) $770,000 C) $1,290,000 D) $1,210,000


A) $690,000
B) $770,000
C) $1,290,000
D) $1,210,000

E) A) and C)
F) A) and B)

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If ending inventory is overstated,then:


A) cost of goods sold and ending inventory will both be overstated
B) cost of goods sold and ending inventory will both be understated
C) cost of goods sold will be overstated and ending inventory will be understated
D) cost of goods sold will be understated and ending inventory will be overstated

E) B) and C)
F) A) and D)

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FIFO tends to decrease cost of goods sold when:


A) costs are constant
B) costs are decreasing
C) costs are increasing
D) taxes are decreasing

E) B) and C)
F) A) and D)

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Given the following data,what is the cost of purchases? Given the following data,what is the cost of purchases? A) $370,000 B) $465,000 C) $595,000 D) $475,000


A) $370,000
B) $465,000
C) $595,000
D) $475,000

E) C) and D)
F) B) and D)

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State which of the following inventory methods would best attain the goals of management.Indicate your answer by writing the proper letter in the blank beside each specific goal. a.FIFO b.Weighted-averaged. c.Specific identification State which of the following inventory methods would best attain the goals of management.Indicate your answer by writing the proper letter in the blank beside each specific goal. a.FIFO b.Weighted-averaged. c.Specific identification

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Technological advances in computers and inventory tracking have:


A) made perpetual inventory records less expensive to maintain
B) completely eliminated the need to physically count inventory
C) made journal entries unnecessary for inventory purchases
D) made perpetual inventory records more expensive to maintain

E) B) and C)
F) A) and B)

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