Blue Practice Test – Flashcards
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Westcoe Company's goods in transit at December 31 include sales made
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FOB destination and FOB shipping point
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As an incentive for customers to pay their accounts promptly, a business may offer its customers a
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Sales discount
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When the cost of a product is matched with its sales price, the result (difference) is
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Gross profit
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Two companies report the same cost of goods available for sale but each employ a different inventory costing method. If the price of goods has increased during the period, then the company using
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FIFO will have the highest ending inventory
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The LIFO inventory method assumes that the cost of the latest units purchased are
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The first to be allocated to cost of goods sold
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When the sales price rises, the number of units required to be sold to break-even
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decreases
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Two categories of expenses in merchandising companies are
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COGS and operating expenses
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The credit terms offered to a customer by a business firm were 2/10, n/3o, which means that
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The customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date
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The factor which determines whether or not goods should be included in a physical count of inventory is
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legal title
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If goods in transit are shipped FOB destination
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the seller has legal title to the goods until they are delivered
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Which of the following will increase net income
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decrease fixed costs
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Which of the following is the difference between the sales revenue per unit and the variable cost per unit?
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Contribution margin per unit
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Cost behavior analysis focuses on
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how costs change as input changes
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When the sales volume is above break-even point, the company's
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Total revenues exceed total costs
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The excess of a products selling price over its variable costs is referred to as
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contribution margin
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Which of the following should not be recorded as an expense
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Paid factory maintenance costs
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Which of the following is incorrect with regard to product cost?
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Product costs are expensed in the period incurred
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Which of the following statements concerning product costs versus general, selling, and administrative costs is true?
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Product costs may be divided between the balance sheet and income statement
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What is true about a manufacturing company compared to product costs in a service company?
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Service companies are less competitive
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Fixed cost per unit
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decreases as production volume increases
