41) If ending inventory for the year ended December 31, 2010, is understated, this error will cause owners' equity to be:
A) overstated at the end of 2010 and understated at the end of 2011
B) understated at the end of 2010 and overstated at the end of 2011
C) correctly stated at the end of 2010 and overstated at the end of 2011
D) understated at the end of 2010 and correctly stated at the end of 2011
42) If ending inventory is overstated, then:
A) cost of goods sold and ending inventory will both be overstated
B) cost of goods sold and ending inventory will both be understated
C) cost of goods sold will be overstated and ending inventory will be understated
D) cost of goods sold will be understated and ending inventory will be overstated
43) Payment for the acquisition of inventory is shown on a cash flow statement as a(n):
A) investing activity
B) operating activity
C) financing activity
D) does not appear on a cash flow statement
44) Cash received from the sale of inventory is shown on a cash flow statement as:
A) an investing activity
B) a financing activity
C) an operating activity
D) either an operating activity or a financing activity
45) Sales commissions are not normally included in the cost of goods sold account.
46)
Freight
-
in
is the transportation cost, paid by the buyer, to move goods from the seller to the buyer.
47) Sales taxes paid by a merchandising company on its sales are normally included in the cost of goods sold account.
48) A purchase allowance is a decrease in the cost of purchases because the purchaser returned goods to the supplier.
49) In a perpetual inventory system, businesses maintain a continuous record for each inventory item.
50) Historically, perpetual inventory systems have been used to account for inventory items with a low unit cost.