Question

73. Choose one:
    1. Periodic Inventory Accounting is less expensive to maintain than Perpetual Inventory Accounting
    2. Periodic Inventory Accounting is more expensive to maintain than Perpetual Inventory Accounting
    3. There is no difference between the expense of using Periodic Inventory Accounting versus Perpetual Inventory Accounting

74. ABC's beginning inventory is $2,000 and its ending inventory is $1,000. The inventory turnover is 6 times. Cost of goods sold for the year must equal:

A) $6,000.                        B) $12,000.                      C) $18,000.                      D) $9,000.

75. In January, 2018, ABC. sells a gift card for $50 and receives cash. In February, 2018, the customer comes back and spends $20 of their gift card on a water bottle. What would be the appropriate journal entry for the purchase of the water bottle?
    1. Debit Deferred Revenue, $20; credit Sales Revenue, $20.
    2. Debit Deferred Revenue, $50; credit Sales Revenue, $50.
    3. Debit Sales Revenue, $20; credit Deferred Revenue, $20.
    4. No journal entry is necessary.

76. ABC has the following current assets: cash, $102 million; receivables, $94 million; inventory,

$182 million; and other current assets, $18 million. ABC also has the following liabilities: accounts payable, $98 million; current portion of long-term debt, $35 million; and long-term debt,

$23 million. Based on these amounts, what is the acid-test ratio?

A) 3.86.                            B) 1.47.                            C) 2.84.                            D) 2.00.

77. ABC issued a ten-year, $20 million bond with a 10% interest rate for $19,500,000. The entry to record the bond issuance would have what effect on the financial statements?
    1. Increase only assets.                                             B) Increase assets and liabilities.

C) Increase only stockholders' equity.                       D) Increase only liabilities.

Answer 1

Correct answer is A. Periodic Inventory Accounting is less expensive to maintain than Perpetual Inventory Accounting

Explanation: Periodic inventory accounting is less expensive to maintain than perpetual accounting because in periodic inventory we calculate inventory at a specific time interval . Hence, we don’t need to incur expense on daily basis as in the case of perpetual accounting.

Correct Answer is: $ 9000
Explanation:
Inventroy turnover ratio=	Cost of goods sold/ Average inventroy
6=	Cost of goods sold/ 1500
Cost of goods sold=	1500*6
	$9,000
Average Inventory=	$ 2000+1000/2
	1500