MULTIPLE CHOICE
1. Identify the TRUE statement regarding non-recurring items on the income statement. (Points : 2)
2. Which of the following is NOT a category of inventory used in a manufacturing company? (Points : 2)
3. The City of Gunnison awarded a $5,000,000 road-construction contract to the Fast Builders Construction Company. Construction was expected to take three years. After one year, Fast Builders had incurred $625,000 of cost and was approximately 20% completed with the road. The company estimated that another $2,500,000 would be expended to complete the contract. The company is confident regarding its estimates. What amount of profit, if any, should Fast Builders recognize for the first year? (Points : 2)
4. Which of the following should be subtracted out to arrive at the proper amount of net sales revenue to be reported on the income statement.
Estimated sales
discounts to be Expected
taken by customers Warranty Costs (Points : 2)
5. Cost of goods sold for a manufacturing company would be calculated as
Beginning finished goods inventory (BFGI)
Ending finished goods inventory (EFGI)
Work-in-process (WIP)
Cost of goods manufactured (CGM)
Raw materials (RM)
Overhead (OH) (Points : 2)
6. Automated Merchandising Company uses the LIFO method of cost assignment. The following data are available:
Date Units Unit Cost Total Cost
Beginning inventory Jan. 1 400 $24 $ 9,600
Purchase Mar. 13 800 28 22,400
Purchase June 20 1,200 32 38,400
Ending inventory Dec. 31 200
The value of the ending inventory will be (Points : 2)
7. Duhany Auto Company sold off a major segment of its business during March of 2007 at a loss. The loss from the sale should be reported in the firm's financial statements as a(n)(Points : 2)
8. Which of the following items is reported on an income statement?
Income from Cash provided
Continuing operations by operations (Points : 2)
9. Which of the following is NOT a deduction on the income statement when computing net income? (Points : 2)
10. Work-in-process includes all of the items below EXCEPT (Points : 2)
11. The FIFO inventory cost method differs from the LIFO method in that the (Points : 2)
12. For most firms, revenue is recognized (Points : 2)
13. Product lines eliminated by a company due to the fact that they no longer generate profits are known as (Points : 2)
14. The Fat Brush Paint Store sold merchandise on 30-day credit in the amount of $1,500. A discount of 3% was offered if the customer would pay within 10 days. What is the minimum amount that should be recorded on the day of sale for Accounts Receivable? (Points : 2)
15. Which inventory method results in the lowest income taxes during periods of increasing prices? (Points : 2)
16. The Philandering Soy Company reported the following accounts receivable balances for 2008:
Beginning of the year $84,000
End of the year 90,000
This information means that (Points : 2)
17. The Food-Mart Grocery is preparing its 2007 income statements. In doing so, cost of goods sold and wages expense are both deducted in computing which of the following?
Operating Income Gross Profit (Points : 2)
18. Certain depreciation costs and the amounts paid to certain employees would be reported on the income statement as part of cost of goods sold if the company (Points : 2)
19. A loss from a natural disaster that is both unusual and infrequent should be reported on a company's income statement (Points : 2)
20. The Big Tobacco Company sells cigars. Inventory information for a recent week is below:
Units Unit Cost Total Cost
Beginning inventory 2 $ 6 $12
Purchase 4 8 32
Purchase 6 10 60
If five units were sold during the week, what is the COST OF GOODS SOLD if the LIFO method is used? (Points : 2)
Click here for the solution: Identify the TRUE statement regarding non-recurring items on the income statement
