QUESTION: 2109

The weighted average method is based on the assumption that the cost of merchandise sold should be calculated using the:

average price of beginning inventory plus purchases during the period
average price per unit of ending inventory
average price per unit of beginning inventory
average price of ending inventory plus purchases during the period

Answer(s): A

Explanation:

Under the weighted average method, inventory is priced at the average cost of the goods available for sale (Beginning inventory plus purchases during the period).

Reveal Solution Next Question

QUESTION: 2110

A transaction that is unusual in nature and infrequent in occurrence should be reported separately as a component of income

after cumulative effect of accounting changes and after discontinued operations of a segment of a business.
before cumulative effect of accounting changes and before discontinued operations of a segment of a business.
after cumulative effect of accounting changes and before discontinued operations of a segment of a business.
before income from continuing operations.
before cumulative effect of accounting changes and after discontinued operations of a segment of a business.

Answer(s): E

Explanation:

A transaction that is unusual and infrequent is classified as an extraordinary item. The following is the order of items to be reported separately in the income statement: income from continuing operations, discontinued operations, extraordinary items, cumulative effect of changes in accounting principle, and net income.

Reveal Solution Next Question

QUESTION: 2111

Which of the following is not subject to depreciation?

automobiles
land
machinery
land improvements

Answer(s): B

Explanation:

Land has unlimited useful life and is not consumed when it is used, and therefore not subject to depreciation.

Reveal Solution Next Question

QUESTION: 2112

Which of the following statements are correct?

A company's choice of accounting principles for financial reporting purposes does not affect net cash flow for the accounting period.
II. A company's choice of accounting principles for financial reporting purposes does not affect operating cash flow.
III. If a company sells its receivables this will increase operating cash flow.
IV. If a company sells its receivables this will increase financing cash flow.
I and III
I, II and III
II and IV
I and IV

Answer(s): A

Explanation:

The choice of accounting principles affects only the classification and not the net cash flow, and reducing receivables in considered an increase in operating cash flow.

Reveal Solution Next Question

Free CFA-Level-I Exam Braindumps (page: 528)

QUESTION: 2109

Explanation:

QUESTION: 2110

Explanation:

QUESTION: 2111

Explanation:

QUESTION: 2112

Explanation: