Intermediate Acct Review for Test 2

3035 words 13 pages
Exam 2 Ch 6

p 26. If you invest $50,000 to earn 8% interest, which of the following compounding approaches would return the lowest amount after one year? (you aren’t earning interest on interest)
a. Daily.
b. Monthly.
c. Quarterly.
d. Annually.

p41. An amount is deposited for eight years at 8%. If compounding occurs quarterly, then the table value is found at (adjust rate and number of periods!)
a. 8% for eight periods.
b. 2% for eight periods.
c. 8% for 32 periods.
d. 2% for 32 periods.

YOU WILL BE GIVEN A CHOICE OF (ABOUT 4) FACTORS p81. Angie invested $100,000 she received from her grandmother today in a fund that is expected to earn 10% per annum. To what amount should the
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d. Cost of goods sold is determined as the amount of purchases less the change in inventory. (periodic or fifo or lifo)

p33. Goods in transit which are shipped f.o.b. destination should be
a. included in the inventory of the seller.
b. included in the inventory of the buyer. (Fob shipping point)
c. included in the inventory of the shipping company.
d. none of these.

***p66. In a period of rising prices, the inventory method which tends to give the highest reported net income is inventory prices are rising, if you’re costing things out at higher prices…looking for lowest cogs, highest income fifo is grabbing the older cheaper stuff.
a. base stock.
b. first-in, first-out.
c. last-in, first-out. x
d. weighted-average.

***p86. Elkins Corporation uses the perpetual inventory method. On March 1, it purchased $20,000 of inventory, terms 2/10, n/30. On March 3, Elkins returned goods that cost $2,000. On March 9, Elkins paid the supplier. On March 9, Elkins should credit (still within discount period) inventory 20,000 A/P 20,000 A/P (down) 2,000 Inventory (down) 2,000 A/P 18,000 Cash 17,640 Inventory (down) 360 (adj to value) *purchase discounts is not on exam
a. purchase discounts for $400.
b. inventory for $400.
c. purchase discounts for $360. x
d. inventory for $360.

Use the following information for the next two