Question

5.If ending inventory for the year ended December​ 31, 2016, is​ understated, this error will cause​ owners' equity to​ be:
A.
understated at the end of 2016 and overstated at the end of 2017
B.
correctly stated at the end of 2016 and overstated at the end of 2017
C.
overstated at the end of 2016 and understated at the end of 2017
D.
understated at the end of 2016 and correctly stated at the end of 2017
6.The gross margin percentage is one of the most closely watched profitability measures. It can be calculated​ by:
A.
dividing cost of goods sold by average inventory
B.
dividing gross margin by net accounts receivable
C.
dividing gross margin by net sales revenue
D.
dividing cost of goods sold by net sales revenue
7.The gross margin rate is equal​ to:
A.
net sales revenue minus gross margin on sales
B.
net sales revenue minus cost of goods sold
C.
gross margin divided by net sales revenue
D.
cost of goods sold divided by net sales revenue
8.Given the following​ data, calculate the cost of ending inventory using the weightedminusaverage method for a periodic inventory​ system, rounding to the nearest dollar.​ (Do not round in the process of your​ calculations, only round your final​ answer.)
​1/1 Beginning inventory 50 units at​ $10 per unit
​3/5 Purchases 30 units at​ $14 per unit
​5/30 Purchases 25 units at​ $15 per unit
​10/25 Purchases 20 units at​ $16 per unit
​12/31 Ending inventory 45 units
A.
​$720
B.
​$581
C.
​$450
D.
​$619
9.A business offers credit terms of​ 2/15, n/30. These terms indicate​ that:
A.
a discount of​ 2% can be taken if the invoice is paid within 15 days of the invoice date
B.
no discount is offered for early payment
C.
the buyer can take a​ 2% discount if the bill is paid within 30 days of the invoice date
D.
the total amount of the invoice must be paid within 15 days of the invoice date
10.King Size International buys beds from a manufacturer for sale overseas. A shipment of beds to King Size was received slightly damaged. The manufacturer agreed to take an extra​ 10% off of its invoice price to King Size if it will keep and sell the beds to its customers. In this​ situation, King Size has received​ a:
A.
purchase allowance
B.
purchase discount
C.
sales allowance
D.
purchase return

Answer 1

5.D.understated at the end of 2016 and correctly stated at the end of 2017

6.C.dividing gross margin by net sales revenue

7.B.net sales revenue minus cost of goods sold

8.B.$581

9.A.a discount of​ 2% can be taken if the invoice is paid within 15 days of the invoice date

10.A.purchase allowance

WORKING NOTE:

6.gross margin percentage=gross profit/net sales

7.gross margin=net sales-cost of goods sold

8.under weighted average method for periodic inventory valuation,the value of ending inventory can be calculated as follows:-

date	particulars	quantity	rate($)	amount($)
01-Jan	opening stock	50	10	500
03-May	purchase	30	14	420
May-30	purchase	25	15	375
Oct-25	purchase	20	16	320
Dec-31	closing stock	125		1615

​weighted average cost per unit=$1615/125=$12.92

hence value of ending inventory=45 units x $12.92=$581.