FAR — Financial Accounting & Reporting — Quiz 43

Questions in this quiz (10)

1. Which of the following reduces net purchases?

   • Freight-in
   • Purchase returns
   • Inventory purchases
   • Cost of goods sold

2. Which inventory system updates inventory continuously after each transaction?

   • Periodic inventory system
   • Perpetual inventory system
   • Weighted-average system
   • Specific identification system

3. Which account is used to record purchases under the periodic inventory system?

   • Cost of goods sold
   • Inventory
   • Purchases
   • Sales revenue

4. Which transaction decreases the Purchases account?

   • Purchase returns
   • Freight-in
   • Inventory purchases
   • Sales revenue

5. Which account records shipping costs for purchased goods?

   • Freight-out
   • Freight-in
   • Delivery expense
   • Sales discount

6. Which account records shipping costs paid to deliver goods to customers?

   • Freight-in
   • Freight-out
   • Inventory
   • Cost of goods sold

7. Which item is deducted from purchases to determine net purchases?

   • Freight-in
   • Purchase returns
   • Inventory
   • Cost of goods sold

8. How are goods available for sale calculated?

   • Beginning inventory + Net purchases
   • Ending inventory + Purchases
   • Beginning inventory – Purchases
   • Ending inventory – Purchases

9. Which formula calculates ending inventory under the periodic system?

   • Beginning Inventory + Purchases – Cost of Goods Sold
   • Purchases – Beginning Inventory
   • Sales – Purchases
   • Inventory + Expenses

10. Which concept requires inventory to be reported at the lower of cost or market?

    • Matching principle
    • Conservatism principle
    • Revenue recognition principle
    • Periodicity principle