ACCT 2121 Ch 6 prac exam with key

1. Practice Question 1
When the terms of a sale are FOB destination, legal title to the goods passes to the buyer when the goods reach the buyer’s place of business.
True
False
2. Practice Question 2
Merchandising firms usually classify their inventory into raw materials, work in process and finished goods.
True
False
3. Practice Question 3
When is a physical inventory usually taken?
When goods are not being sold or received
When a company has its greatest amount of inventory and when goods are not being sold or received.
At the end of the company’s fiscal year
When the company has its greatest amount of inventory
4. Practice Question 4
Which of the following should not be included in the physical inventory of a company?
Goods in transit from another company shipped FOB shipping point
All of the answer choices are correct.
Goods held on consignment from another company
Goods shipped on consignment to another company
Ch 6 Review, Version 1
01.10.2013 05:02 PM
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5. Practice Question 5
As a result of a thorough physical inventory, Railway Company determined that it had inventory worth $180,000 at December 31, 2014. This count did not take into consideration the following transactions:
● Rogers Consignment store currently has goods worth $35,000 on its sales floor that belong to Railway but are being sold on consignment by CityplaceRogers. The selling price of these goods is $50,000.
● Railway purchased $13,000 of goods that were shipped on December 27, FOB destination, that will be received by Railway on January 3.
Determine the correct amount of inventory that Railway should report.
$215,000
$230,000
$228,000
$193,000
6. Practice Question 6
Which of the following is not an inventory account?
Equipment
Raw materials
Work in process
Finished goods
7. Practice Question 7
Which of the following is not a legitimate business reason for taking a physical inventory?
To verify the profitability of individual inventory items
To determine cost of goods sold
To check the accuracy of the perpetual inventory records
To determine if any inventory has been lost from waste, shoplifting, or employee theft
8. Practice Question 8