assets in accounting coursera week 2 quiz answers

Merchandise Inventory Quiz

1. The goods held by a business with the intent to sell to customers to earn revenue is defined as:

  • Manufacturing inventory
  • Merchandising inventory
  • Warehouse inventory

2. True or false. A perpetual inventory system is one that updates the inventory account at specified intervals.

  • True
  • False

3. The inventory cost flow assumption which supposes that inventory flows through the system from oldest to newest is defined as what assumption?

  • First In, First Out (FIFO)
  • Last In, First Out (LIFO)

Costing Methods Quiz

4. When raw materials are purchased, the entry is a ____ to raw materials and a _____ to accounts payable or cash.

  • Credit; Debit
  • Debit; Credit

5. The average cost is reached by dividing the total _____ of goods by the total ____ of goods over a specific accounting cycle.

  • Cost; Number
  • Number; Cost

6. True or False: With the average costing method, if we have the total cost for making a good, we can find the average cost of making a finished good and the individual price of the raw materials are not relevant to this costing method.

  • True
  • False

Inventory Errors Quiz

7. If an inventory error overstates the beginning inventory, which of the following is true?

  • The cost of goods sold will be understated and the net income will be overstated.
  • The cost of goods sold will be overstated and the net income will be overstated.
  • The cost of goods sold will be understated and the net income will be understated.
  • The cost of goods sold will be overstated and the net income will be understated.

8. On a balance sheet, which of the following is not affected by an inventory error?

  • Assets
  • Liabilities
  • Equity

9. True or false. Inventory errors will self-correct after two years (assuming no other errors occur).

  • True
  • False

Inventory Accounting Methods Assessment

10. The following is true of inventory in a merchandise business.

Select all that apply.

  • It is considered an asset on the balance sheet
  • When sold, there should always be two journal entries. 
  • It is raw materials used to create a finished product 

11. True or false. Because of the cost principle, inventory is reported on the balance sheet at its selling price, not at what it cost to purchase the merchandise.

  • True
  • False

12. Where is the value of a raw material tracked?

  • Inventory sub-account
  • Equipment
  • Inventory general category
  • Deferred revenue

13. Inventory errors will affect all of the following except:

  • Income Statement
  • Other accrued liabilities
  • The following month’s books
  • Balance Sheet

14. Please use this information for Question 5 - 9:

School’s back in session and Stan at ‘The Bizzy Bee’ has sold 85 of his Fidget Bands this week alone, and at the end of September, he had sold 142 total. He purchased 500 of them in August at $1,200 including shipping, and he is selling them for $12.99 each.

What is the purchase cost (or inventory value cost) for those 500 units before any sales? (Format your answer as $x,xxx)

$1,200

15. (Use info from question 5)

Where would Stan record the 85 Fidget Bands he sold this week?

  • He needs to record the total sale on both the income statement and balance sheet as revenue.
  • As a credit on his journal under the cost of goods sold expense account.
  • As a credit on his journal under the cost of goods sold income account.
  • There is not enough information to answer this question.

16. (Use info from question 5)

What is Stan’s gross revenue from the sale of his 142 Fidget Bands? (Format your answer as $x,xxx.xx)

$1,844.58

17. (Use info from question 5)

What is Stan’s COGS for those 142 Fidget Bands? (Format your answer as $xxx.xx)

$340.80

18. (Use info from question 5)

What is the gross profit on Stan’s income statement for the sale of those 142 Fidget Bands? Remember Revenue - COGS = Gross Profit. (Format your answer as $x,xxx.xx)

$1,503.78

19. When you buy raw materials, and record the purchase of those materials, this entry is a ________________ to raw materials inventory, and a ____________________ to cash or accounts payable.

  • Equipment, Notes Payable
  • Credit, Debit
  • Notes Payable, Equipment
  • Debit, Credit

20. Sarah is the owner of “Pish-Posh,” a bath shoppe with specialty candles, soaps, and bath bombs. She has decided to utilize the average costing method to calculate her raw inventory value. The prices listed are for the amount of ingredient listed (not necessarily per ounce). Looking at the ingredient list below, what would be the average cost per ounce to make her bath bombs? (Format answer x.xx, no words)

$0.79

21. “Leaps and Bounds” is a seller and installer of funky playground equipment. At the beginning of 2019, they had a total of $105,000 of inventory (mostly tire swings, jungle gyms, and suspension bridges). During the year they purchased $60,000 worth of additional inventory (towers and zip lines). At the end of the year, they had a $3,500 inventory balance. What was their cost of goods sold? (Format your answer as $xxx,xxx)

$161,500

22. In order to better keep track of their inventory levels, “Leaps and Bounds” has also just switched from an inventory monitoring system that updates every quarter, to one that updates every week. This kind of system is called ________?

  • Pervasive System
  • Perpetual System
  • Proposed System
  • Periodic System

23. Please use the information below for Question 14 - 18. Please use FIFO inventory method.

Emily is the owner and operator of “Wine Not”, a wine shop for those who like to try wines from lesser-known vintners. She has grown in popularity with her weekly “Wine-down Wednesdays” tastings and inventory is a consistent worry for her. As Emily’s bookkeeper, you have to ensure that her inventory levels are accurately accounted for at the beginning and end of each month.

In March, she ended with a total of 350 bottles with a cost of $15.00 each. In April, she ordered a total of 150 bottles with a cost of $17.00 each. During the month of April, she sold a total of 225 bottles.

Question 14:

What is the opening inventory value for April?

(Format answer with whole number, no decimal, $x,xxx)

$5,250

24. (Use information in Question 14)

What was the additional inventory value for April?

(Format answer with whole number, no decimal)

$2,550

25. (Use information in Question 14)

What was the total inventory value for April? Also known as the cost of goods available?

(Format answer with whole number, no decimal)

$7,800

26. (Use information in Question 14)

What was the cost of goods sold in April?

(Format answer with whole number, no decimal)

$3,375

27. (Use information in Question 14)

What was the closing inventory value in April/opening inventory for May?

(Format answer with whole number, no decimal)

$4,425

28. When raw materials are used to create a final product, that product becomes a finished good. When that good is sold, the journal entry includes _______________ and ______________________.

Select all that apply.

  • Credit to cost of goods sold, Debit of inventory (finished goods)
  • Debit to cost of goods sold, Credit to inventory (finished goods) 
  • Credit to cash/accounts receivable, Debit to sales income
  • Debit to cash/accounts receivable, Credit to sales income

29. To correct inventory errors, a bookkeeper needs to do all of the following except? (select the best answer)

  • Create a reverse journal entry
  • Correct the errors by erasing the old journal entries and make sure the numbers are correct moving forward
  • Create new financial reports pertaining to the affected periods
  • Include a disclaimer explaining why new financial reports are being run

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