Question 1

Using the perpetual system, what are the three types of inventory cost flow assumptions?

Accepted Answer

The specific identification method assig

Question 2

When businesses apply the lower of cost and net realizable value rule on an item by item basis, they will report the lowest inventory value possible.

Accepted Answer

A) True 
 B)False

Question 3

A form attached to the counted items in the process of taking a physical inventory is a(n)

Accepted Answer

A)  Sales tag 
B)  Subsidiary record 
C)  Inventory ticket 
D)  Credit invoice 
E)  Sales receipt 
A)  Sales tag 
B)  Subsidiary record 
C)  Inventory ticket 
D)  Credit invoice 
E)  Sales receipt

Question 4

To avoid the time-consuming process of taking an inventory each month, some companies use the gross profit method to estimate ending inventory.

Accepted Answer

A) True 
 B)False

Question 5

A company made the following purchases during the year:
 $$\begin{array} { | l | l | l | } 
\hline \text { Jar. 10 } & 15 & \text { units at } \$ 360 \
\hline \text { Mar. 15 } & 25 & \text { units at } \$ 390 \
\hline \text { Apr. 25 } & 10 & \text { units at } \$ 420 \
\hline \text { July 30 } & 20 & \text { units at } \$ 450 \
\hline \text { Oct. 10 } & 15 & \text { units at } \$ 480 \
\hline
\end{array}$$ On December 31, there were 27 units in ending inventory. These 27 units consisted of 4 from the January 10 shipment, 25 from the March 15 shipment, 10 from the April 25 shipment, 20 from the July 30 shipment, and 15 from the October 10 shipment. Using specific identification, calculate the cost of the ending inventory.

Accepted Answer

The answer of A company made the following purchases during...

Question 6

The net realizable value of Majik's ending inventory items at June 30, 2020 are as follows:
   Make the adjusting entry, if needed, to state Majik's inventory at its lower of cost and net realizable value (LCNRV) on an item-by-item basis at June 30, 2020.

Accepted Answer

Need adjus

Question 7

The retail inventory method estimates the cost of ending inventory by applying the gross profit ratio to net sales.

Accepted Answer

A) True 
 B)False

Question 8

The gross profit ratio measures how much of each dollar of net sales is gross profit.

Accepted Answer

A) True 
 B)False

Question 9

The total dollar value of inventory on hand is determined by: (1) estimating the units on hand, (2) multiplying the count by cost per unit, and (3) adding the costs for all products.

Accepted Answer

A) True 
 B)False

Question 10

Normandy Company has collected the following inventory data prior to preparing financial statements for the month of October. All purchases and sales are on credit.
   Assuming the periodic inventory system is used, determine the cost of the ending inventory and cost of goods sold using FIFO. Prepare the appropriate journal entries to record: (A) The October 6 purchase. (B) The October 12 sale. (C) The entries to close the October income statement items to Income Summary. (Assume that sales revenue and the elements of cost of goods sold are the only income statement items.)

Accepted Answer

The answer of Normandy Company has collected the following inventory...

Question 11

Rudd Company made the following merchandise purchases during the current year:
   There was no beginning inventory, but ending inventory consisted of 105 units. If Rudd uses the weighted-average cost method and the periodic inventory system, what would be the cost of the ending inventory?

Accepted Answer

The answer of Rudd Company made the following merchandise purchases...

Question 12

A company's store was destroyed by a fire on February 10. The only information that could be salvaged included the following: (1) Inventory, January 1: $34,000(2) Purchases: $118,000(3) Sales: $140,000The company's gross profit rate was 30%. Calculate the estimated value of the destroyed inventory.

Accepted Answer

The answer of A company's store was destroyed by a...

Question 13

The pricing of an inventory where the purchase invoice of each item in the ending inventory is identified and used to determine the cost assigned to the inventory is

Accepted Answer

A)  Weighted-average inventory method 
B)  First-in, first-out method 
C)  Average costing method 
D)  Specific identification method 
E)  Retail method 
A)  Weighted-average inventory method 
B)  First-in, first-out method 
C)  Average costing method 
D)  Specific identification method 
E)  Retail method

Question 14

An advantage of the moving weighted-average method is that it tends to smooth out price changes.

Accepted Answer

A) True 
 B)False

Question 15

During a period of steadily falling prices, which inventory cost flow assumption results in reporting the lowest net income?

Accepted Answer

A)  Specific identification 
B)  Average cost 
C)  Weighted-average 
D)  FIFO 
E)  Retail method 
A)  Specific identification 
B)  Average cost 
C)  Weighted-average 
D)  FIFO 
E)  Retail method

Question 16

The merchandise turnover ratio

Accepted Answer

A)  Is cost of goods sold divided by average merchandise inventory 
B)  Is average merchandise inventory divided by cost of goods sold 
C)  Is ending inventory divided by cost of goods sold 
D)  Is cost of goods sold divided by ending inventory 
E)  Is cost of goods sold divided by ending inventory times 365 
A)  Is cost of goods sold divided by average merchandise inventory 
B)  Is average merchandise inventory divided by cost of goods sold 
C)  Is ending inventory divided by cost of goods sold 
D)  Is cost of goods sold divided by ending inventory 
E)  Is cost of goods sold divided by ending inventory times 365

Question 17

Because inventory errors are self-correcting in following accounting periods, managers will be able to make correct decisions based on changes in net income and cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 18

The gross profit ratio measures how much of each dollar of gross sales is gross profit.

Accepted Answer

A) True 
 B)False

Question 19

By how much will net income for 2020 be over or understated?

Accepted Answer

A)  $2,000 understated 
B)  $4,000 overstated 
C)  $6,000 understated 
D)  $6,000 overstated 
E)  There is no effect on net income. 
A)  $2,000 understated 
B)  $4,000 overstated 
C)  $6,000 understated 
D)  $6,000 overstated 
E)  There is no effect on net income.

Question 20

Days' sales in inventory is calculated by

Accepted Answer

A)  Dividing average merchandise inventory by cost of goods sold 
B)  Dividing cost of goods sold by average merchandise inventory 
C)  Dividing ending inventory by cost of goods sold times 365 
D)  Dividing cost of goods sold by ending inventory times 365 
E)  Dividing ending inventory by cost of goods sold 
A)  Dividing average merchandise inventory by cost of goods sold 
B)  Dividing cost of goods sold by average merchandise inventory 
C)  Dividing ending inventory by cost of goods sold times 365 
D)  Dividing cost of goods sold by ending inventory times 365 
E)  Dividing ending inventory by cost of goods sold

Using the perpetual system, what are the three types of inventory cost flow assumptions?

When businesses apply the lower of cost and net realizable value rule on an item by item basis, they will report the lowest inventory value possible.

A form attached to the counted items in the process of taking a physical inventory is a(n)

To avoid the time-consuming process of taking an inventory each month, some companies use the gross profit method to estimate ending inventory.

The net realizable value of Majik's ending inventory items at June 30, 2020 are as follows: Make the adjusting entry, if needed, to state Majik's inventory at its lower of cost and net realizable value (LCNRV) on an item-by-item basis at June 30, 2020.

The retail inventory method estimates the cost of ending inventory by applying the gross profit ratio to net sales.

The gross profit ratio measures how much of each dollar of net sales is gross profit.

The total dollar value of inventory on hand is determined by: (1) estimating the units on hand, (2) multiplying the count by cost per unit, and (3) adding the costs for all products.

Rudd Company made the following merchandise purchases during the current year: There was no beginning inventory, but ending inventory consisted of 105 units. If Rudd uses the weighted-average cost method and the periodic inventory system, what would be the cost of the ending inventory?

A company's store was destroyed by a fire on February 10. The only information that could be salvaged included the following: (1) Inventory, January 1: $34,000(2) Purchases: $118,000(3) Sales: $140,000The company's gross profit rate was 30%. Calculate the estimated value of the destroyed inventory.

The pricing of an inventory where the purchase invoice of each item in the ending inventory is identified and used to determine the cost assigned to the inventory is

An advantage of the moving weighted-average method is that it tends to smooth out price changes.

During a period of steadily falling prices, which inventory cost flow assumption results in reporting the lowest net income?

The merchandise turnover ratio

Because inventory errors are self-correcting in following accounting periods, managers will be able to make correct decisions based on changes in net income and cost of goods sold.

The gross profit ratio measures how much of each dollar of gross sales is gross profit.

By how much will net income for 2020 be over or understated?

Days' sales in inventory is calculated by

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Internal Control and Cash

Receivables

Property, Plant and Equipment Intangibles

Payroll Liabilities

Accounting Information Systems

Filters

Exam 6: Inventory Costing and Valuation

Using the perpetual system, what are the three types of inventory cost flow assumptions?

When businesses apply the lower of cost and net realizable value rule on an item by item basis, they will report the lowest inventory value possible.

A form attached to the counted items in the process of taking a physical inventory is a(n)

To avoid the time-consuming process of taking an inventory each month, some companies use the gross profit method to estimate ending inventory.

The net realizable value of Majik's ending inventory items at June 30, 2020 are as follows: Make the adjusting entry, if needed, to state Majik's inventory at its lower of cost and net realizable value (LCNRV) on an item-by-item basis at June 30, 2020.

The retail inventory method estimates the cost of ending inventory by applying the gross profit ratio to net sales.

The gross profit ratio measures how much of each dollar of net sales is gross profit.

The total dollar value of inventory on hand is determined by: (1) estimating the units on hand, (2) multiplying the count by cost per unit, and (3) adding the costs for all products.

Rudd Company made the following merchandise purchases during the current year: There was no beginning inventory, but ending inventory consisted of 105 units. If Rudd uses the weighted-average cost method and the periodic inventory system, what would be the cost of the ending inventory?

A company's store was destroyed by a fire on February 10. The only information that could be salvaged included the following: (1) Inventory, January 1: $34,000(2) Purchases: $118,000(3) Sales: $140,000The company's gross profit rate was 30%. Calculate the estimated value of the destroyed inventory.

The pricing of an inventory where the purchase invoice of each item in the ending inventory is identified and used to determine the cost assigned to the inventory is

An advantage of the moving weighted-average method is that it tends to smooth out price changes.

During a period of steadily falling prices, which inventory cost flow assumption results in reporting the lowest net income?

The merchandise turnover ratio

Because inventory errors are self-correcting in following accounting periods, managers will be able to make correct decisions based on changes in net income and cost of goods sold.

The gross profit ratio measures how much of each dollar of gross sales is gross profit.

By how much will net income for 2020 be over or understated?

Days' sales in inventory is calculated by

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Internal Control and Cash

Receivables

Property, Plant and Equipment Intangibles

Payroll Liabilities

Accounting Information Systems

Filters