In a perpetual inventory system, the purchase of inventory is debited to:
Inventory
The practice of using the lower-of-cost-or-market to evaluate inventory reflects which of the following accounting principles?
Conservative
Davis Hardware Company uses a perpetual inventory system. How should Davis record the return of inventory previously purchased on accounts for $200?
Accounts Payable 200
Inventory 200
In a perpetual inventory system, at the time of a sale the cost of inventory sold is:
Debited to Cost of Goods Sold
Inventory does not include:
Equipment used in the manufacturing of assets for sale
T/F: Freight-In is included in the cost of inventory
T
T/F: Cost of goods sold is an expense reported in the income statement and represents the cost of inventory sold during the period
True
T/F: Using the first-in, first-out method, the first units purchased are assumed to be the first ones sold
True
T/F: Companies are free to choose FIFO, LIFO, or weighted-average cost to report inventory and cost of goods sold
True
T/F: Sales Revenue minus cost of goods sold is referred to as operating income
False: Sales revenue minus cost of goods sold equals gross profit
On April 1, Robert LLC purchased two units of inventory, A and B. The cost of unit A was $625, and the cost of unit B was $570. On April 30, Robert LLC had not sold the inventory. The market value of unit A was now $650 while the market value of unit B wa
Cost of Goods Sold 50
Inventory 50
Cost of Goods Sold Equals:
Beginning Inventory - Net Purchases + Ending Inventory
In a period when inventory costs are rising, the inventory method that most likely results in the highest ending inventory is:
FIFO
In a period when inventory costs are falling, the lowest taxable income is most likely reported by using the inventory method of:
LIFO
In a perpetual inventory system, the purchase of inventory is debited to:
Inventory
In a perpetual inventory system, at the time of a sale the cost of inventory sold is:
credited to cost of goods sold