ACCT 325 ch8 review #1

Front

Inventory refers to the assets a company intends to sell in the normal course of business, has in production for future sale (work in process), or uses currently in the production of goods to be sold (raw materials). True or False?

Back

True

Front

Under periodic inventory system, the cost of goods sold account is adjusted each time goods are sold or are returned by a customer.

Back

False

Front

Cost of goods sold = Beginning inventory + gross purchases − Ending inventory

Back

False

Front

If the goods are shipped f.o.b.shipping point, then legal title to the goods does not pass from the seller to the buyer until the goods arrive at their destination (the customer’s location). The seller is responsible for shipping costs and transit insurance. True or False?

Back

False

Front

The goods are physically transferred to the other company (the consignee), but the transferor (consignor) retains legal title.

Back

True

Front

In a periodic system, freight costs generally are recorded in inventory account.

Back

False

Front

FIFO, LIFO, and weighted-average cost assume a particular pattern of inventory cost flows, the actual flow of inventory needs to match the assumed cost flow

Back

False

Front

The weighted-average unit cost in a perpetual inventory system becomes a moving-average unit cost. A new weighted-average unit cost is calculated each time additional units are purchased. True or False?

Back

True

Front

In a perpetual inventory system, the cost of purchases is debited to:

Back

Inventory.

Front

One difference between periodic and perpetual inventory systems is that cost of goods sold is:

Back

not recorded under a periodic system until the end of the period.