(Multiple choice)
1. Oceanside Software began January with $3,400 of merchandise inventory. During January, Oceanside made the following entries for its inventory transactions:

How much was Oceanside€™s inventory at the end of January?
a. $10,100
b. Zero
c. $4,600
d. $6,700

2. What was Oceanside€™s gross profit for January?
a. $5,500
b. $2,200
c. $7,700
d. $Zero

3. When does the cost of inventory become an expense?
a. When payment is made to the supplier
b. When inventory is delivered to a customer
c. When cash is collected from the customer
d. When inventory is purchased from the supplier

The next two questions use the following facts. Perfect Picture Frame Shop wants to know the effect of different inventory costing methods on its financial statements. Inventory and purchases data for June follow:

4. If Perfect Picture uses the FIFO method, the cost of the ending inventory will be
a. $15,700.
b. $21,500.
c. $13,800.
d. $15,400.

5. If Perfect Picture uses the LIFO method, cost of goods sold will be
a. $16,000.
b. $15,400.
c. $13,800.
d. $15,700.

6. In a period of rising prices,
a. net income under LIFO will be higher than under FIFO.
b. gross profit under FIFO will be higher than under LIFO.
c. cost of goods sold under LIFO will be less than under FIFO.
d. LIFO inventory will be greater than FIFO inventory.

7. The income statement for Nature€™s Way Foods shows gross profit of $153,000, operating expenses of $123,000, and cost of goods sold of $213,000. What is the amount of net sales revenue?
a. $366,000
b. $489,000
c. $276,000
d. $336,000

8. The word €œmarket€ as used in €œthe lower of cost or market€ generally means
a. replacement cost.
b. retail market price.
c. original cost.
d. liquidationprice.

Transcribed Image Text:

Inventory 6,700 Accounts Payable 6,700 Accounts Receivable Sales Revenue 7,700 7,700 Cost of Goods Sold 5,500 Inventory 5,500 Units Unit Cost Total Cost $23,100 13,800 Jun 1 Beginning inventory 2,100 $11.00 1,200 $11.50 4 Purchase 9 Sale (1,400)