ACC 201 Exam Practice Questions with 100% Correct Verified Answers
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Course
ACC 201
Institution
ACC 201
two forms of income statements - Answer single-step in- come statement and multiple-
step income statement.
Single-step income statement: - Answer Net Income = Total Revenues - Total Expenses
IN INCOME STATEMENT: REVENUE AND EXPENSES then NET INCOME
Multiple-Step Income Statement: - Answer it H...
ACC 201 Exam Practice Questions with 100%
Correct Verified Answers
two forms of income statements - Answer single-step in- come statement and multiple-
step income statement.
Single-step income statement: - Answer Net Income = Total Revenues - Total Expenses
IN INCOME STATEMENT: REVENUE AND EXPENSES then NET INCOME
Multiple-Step Income Statement: - Answer it Highlights the components of net income
Three important line items:
o (1) Gross profit, (2) income from operations, and (3) net income
Inventory (Current Assets) = - Answer Cost of goods NOT yet sold (Reported on B/S)
Cost of goods sold (Selling Expenses) = - Answer Cost of goods ALREADY sold (Reported
on I/S)
Inventory Income Statement - Answer Beginning inventory
+ Net Purchases
= Goods available for sale
− Ending inventory
= Cost of goods sold
Cost Flow Assumptions - Answer o First-in, First-out (FIFO)
o Last-in, First-out (LIFO)
, o Average-cost method
Specific identification method - Answer requires that companies keep records of the
original cost of each individual inventory item
Average cost/unit - Answer Cost of goods available / total units available for sale
Comparative effects net incomes) of LIFO AVRG and FIFO - Answer Fifo: Highest
AVRG: Middle
Lifo:Lowest
lower of cost or market (LCM) method: - Answer When the value of inventory is lower
than its cost, the inventory is written down to its market value
Inventory Turnover= - Answer Cost of Goods Sold ÷ Average Inventory
Days in inventory= - Answer Days in Year (365) / Inventory Turnover
When legal title of the goods remains with the seller until the goods reach the buyer the
terms are said to be: - Answer FOB destination.
Considerations that affect the selection of an inventory costing method do not in- clude:
- Answer perpetual versus periodic inventory system.
causes inventory turnover to increase the most - Answer Decreasing the amount of
inventory on hand and increasing sales.
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