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Questions and Answers
Which of the following would not be reported as
inventory?
Which of the following would not be reported as inventory?
- Land acquired for resale by a real estate firm
- Agricultural produced held by a farm
- Partially completed goods held by a manufacturing company
- Machinery required by a manufucturing company for us in the production process (correct)
Income from operations is gross profit less
Income from operations is gross profit less
- administrative expenses.
- operating expenses. (correct)
- other expenses and losses.
- selling expenses.
- Two categories of expenses for merchandising companies are
- Two categories of expenses for merchandising companies are
- cost of goods sold and financing expenses.
- operating expenses and financing expenses.
- cost of goods sold and operating expenses. (correct)
- sales and cost of goods sold.
- Sales revenue less cost of goods sold is called
- Sales revenue less cost of goods sold is called
51 Cost of goods sold is determined only at the end of the accounting period in
51 Cost of goods sold is determined only at the end of the accounting period in
A perpetual inventory system would likely be used by a(n
A perpetual inventory system would likely be used by a(n
In a perpetual inventory system, cost of goods sold is recorded
In a perpetual inventory system, cost of goods sold is recorded
Under a perpetual inventory system, acquisition of merchandise for resale is debited to the
Under a perpetual inventory system, acquisition of merchandise for resale is debited to the
The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit
The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit
The Merchandise Inventory account is used in each of the following except the entry to
record
The Merchandise Inventory account is used in each of the following except the entry to record
Study Notes
Inventory Reporting
- Income from operations is gross profit less expenses, which implies that inventory is not reported as income.
Merhcandising Companies
- Two categories of expenses exist for merchandising companies.
Gross Profit Calculation
- Sales revenue less cost of goods sold is called gross profit.
Inventory Systems
- Cost of goods sold is determined only at the end of the accounting period in a periodic inventory system.
Perpetual Inventory System
- A perpetual inventory system would likely be used by a large retail company.
- In a perpetual inventory system, cost of goods sold is recorded each time a sale is made.
- Under a perpetual inventory system, acquisition of merchandise for resale is debited to the Merchandise Inventory account.
Recording Purchases and Returns
- The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit the Merchandise Inventory account and debit Accounts Payable or Cash.
Merchandise Inventory Account
- The Merchandise Inventory account is used in each of the following except the entry to record cost of goods sold.
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Description
Test your knowledge on inventory reporting by identifying which items would not be reported as part of inventory.
