Which of the following statements is incorrect? Group of answer choices A)Ending inventory exceeds beginning inventory when purchases are greater than cost of goods sold. B)Cost of goods sold exceeds purchases when ending inventory is less than beginning inventory. C)Cost of goods available for sale will always be equal to or greater than cost of goods sold. D)Ending inventory is greater than beginning inventory when purchases are less than cost of goods sold. E)All of the above are correct

Which of the following statements is incorrect? Group of answer choices A)Ending inventory exceeds beginning inventory when purchases are greater than cost of goods sold. B)Cost of goods sold exceeds purchases when ending inventory is less than beginning inventory. C)Cost of goods available for sale will always be equal to or greater than cost of goods sold. D)Ending inventory is greater than beginning inventory when purchases are less than cost of goods sold. E)All of the above are correct

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter11: Auditing Inventory, Goods And Services, And Accounts Payable: The Acquisition And Payment Cycle

Section: Chapter Questions

Problem 12CYBK

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Which accounting rule serves as the primary basis for the lower-of-cost-or-market methodology for inventory valuation? A. conservatism B. consistency C. optimism D. pessimism
Which of the following statements is incorrect? Group of answer choices A)Ending inventory exceeds beginning inventory when purchases are greater than cost of goods sold. b)Cost of goods sold exceeds purchases when ending inventory is less than beginning inventory. C)Cost of goods available for sale will always be equal to or greater than cost of goods sold. D)Ending inventory is greater than beginning inventory when purchases are less than cost of goods sold.
Which of the following is not affected by an error related to ending inventory? Multiple Choice O O O O O Sales. Net income. Current assets. Gross profit. Cost of goods sold.
If beginning inventory is understated, cost of goods sold would also be understated. True False
An overstatement of ending inventory results in: Select one: a. an understatement of COGS and an overstatement of net income. b. an overstatement of COGS and an overstatement of net income. c. an understatement of COGS and an understatement of net income. d. an overstatement of COGS and an understatement of net income.
If beginning inventory is understated, then: a. goods available for sale will be overstated. b. gross profit will be overstated. c. net income will be understated. d. stockholders' equity will be correct because the error will have been reversed.
Which of the following regarding the lower of cost ormarket rule for inventory are true?(i) The lower of cost or market rule is an example of thehistorical cost principle.(ii) When the market value of inventory drops belowthe original cost of inventory shown in the financialrecords, net income is reduced.(iii) When the market value of inventory drops belowthe original cost of inventory shown in the financialrecords, total assets are reduced.a. (i) only c. (ii) and (iii)b. (ii) only d. All of the above
a. What is the estimated cost of the ending inventory if the conservative approach was used? b. What is the estimated cost of the ending inventory if the average cost approach was used? c. What is the estimated cost of the ending inventory if the FIFO approach was used? Please present the solution in good accounting form.
2. Which of the following may not result to the amount of cost of sales? a. Net purchases less net increase in inventory. b. Net decrease in inventory plus net purchases. c. Total goods available for sale less beginning inventory. d. Total goods available for sale less ending inventory. 3. Which of the following is equal to the cost of goods sold? a. net purchases plus the excess of ending inventory over beginning inventory. b. total goods available for sale plus ending inventory. c. net purchases minus the increase in inventory. d. net purchases minus the decrease in inventory.
Do you agree with the following statements? Express your opinion on each statement. An inventory error that causes an understatement (or overstatement) for net income in one accounting period, if not corrected, will cause an overstatement (or understatement) in the next. Since an understatement (overstatement) of one period offsets the overstatement (understatement) in the next, such errors are said to correct themselves. Market usually means replacement cost of inventory when applied in the LCM. Cost of goods available for sale equals ending inventory plus cost of sales.
Do you agree with the following statements? Express your opinion on each statement. An inventory error that causes an understatement (or overstatement) for net income in one accounting period, if not corrected, will cause an overstatement (or understatement) in the next. Since an understatement (overstatement) of one period offsets the overstatement (understatement) in the next, such errors as said to correct themselves. Market usually means replacement cost of inventory when applied in the LMC. Cost of goods available for sale equals the inventory plus cost of sales.
Which one of the following statements is true? a. Under conditions of rising prices, the LIFO method results in lower income than the FIFO method. b. In most cases, the LIFO method approximates the physical flow of items in inventory. c. The LIFO mthod produces a higher ending inventory value than the FIFO method. d. The FIFO method excludes holding gains from income