sing the moving-average cost formula with a perpetual system heted-average cost
ID: 2596937 • Letter: S
Question
sing the moving-average cost formula with a perpetual system heted-average cost is calculated at year end. a) A An updated unit cost is calculated each time a sale is made. b) An updated cost is calculated each time a purchase is made c) d) Both (b) and (c) e) None of the above. 25) Which of the following does NOT correctly describe a periodic inventory syst em? a) Cost of goods sold is calculated every time a sale is made. b) Cost of goods sold is a residual amount c) Inventory purchases are recorded in the inventory account in the ger d) Inventory and cost of goods sold must be updated e) Both (a) and (c). at the end of the 26) ABC Co. has inventory on consignment at Xyz Co. Which of the following is correet? a) Goods on shoul b) Goods on consignment should be included in ABC Co.'s invetory c) XYZ Co. has the risks and rewards of ownership. d) ABC Co. has the risks and rewards of ownership. e) Both (b) and (d). nsignment should be included in XYz Co.'s inventory inventory system. Tools shipped to a customer FOB shipping on Dec in transit at Dec 31/2016. The customer was billed $50,000 when the inventory 27) Assume a periodici 6 were was received on January 3/2017. The inventory count. The effect of the errors on net income for 2016 is: a) Understated by $20,000 b) Understated by $30,000 c) Understated by $50,000 d) Overstated by $30,000 e) Overstated by $50,000 inventory costing $30,000 was not included in the 28) Assume a periodic inventory system. If inventory at December 31, 2016 is understated by $1,050 but purchases are correctly recorded, the error in retained earnings on December 31, 2017 betate1000 a) Understated by $1050 b) Overstated by $1050 c) Understated by $2100 d) Overstated by $2100 e) No error in retained earningsExplanation / Answer
24. C. Both b and c option is correct
25. e. both a and c option is correct
26. e. both b and d option is correct
27. c. under stated by 50000
because FOB shipping should be recognised once goods are handed over to common carrier, here shipping is complete from seller end in 2016 itselt but billed next year only. but inventory cost is not inclued in inventory balance which means 30000 is charged to expense. hence only revenue is not recognised hence net income understated by 50000
28. e. No error in retained earnings.
again in 2017 physical count will be taken and appropriate adjustments will be given in the books, hence retained earnings will be error free
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