Question 1

Inventoriable costs are allocated to ______________ and cost of goods ____________.

Accepted Answer

ending inv

Question 2

The Vogelson Company accumulates the following cost and market value data at December 31. $\begin{array}{ccc}
&&\text { Market }\
 \underline{\text { Inventory Categories } }& \underline{\text { Cost Data } }& \underline{\text { Value Data }}\
\text { Camera } & \$ 11,000 & \$ 9,900 \
\text { Camcorders } & 7,800 & 8,500 \
\text { DVDs } & 14,000 & 12,000
\end{array}$
 What is the lower-of-cost-or-market of the inventory?

Accepted Answer

None

Question 3

Oscar Industries has the following inventory information. $\begin{array}{rll}
\text { July } 1 & \text { Beginning Inventory } & 40 \text { units at } \$ 110 \
5 & \text { Purchases } & 240 \text { units at } \$ 112 \
14 & \text { Sale } & 160 \text { units } \
21 & \text { Purchases } & 120 \text { units at } \$ 115 \
30 & \text { Sale } & 150 \text { units }
\end{array}$
 Assuming that a periodic inventory system is used what is the amount allocated to ending inventory on a LIFO basis?

Accepted Answer

A)  $10350 
B)  $10000 
C)  $35080 
D)  $34730 
A)  $10350 
B)  $10000 
C)  $35080 
D)  $34730

Question 4

Management may choose any inventory costing method it desires as long as the cost flow assumption chosen is consistent with the physical movement of goods in the company.

Accepted Answer

A) True 
 B)False

Question 5

The following accounts are included in the ledger of Bainbridge Company:
Advertising expense
Freight-in
Inventory
Purchases
Purchase returns and allowances
Sales revenue
Sales returns and allowances
Which of the accounts would be included in calculating cost of goods sold?

Accepted Answer

Freight-in
Inventory

Question 6

Glenda Good and Danny Rock are department managers in the house wares and shoe departments respectively for Litwins a large department store. Danny has observed Glenda taking inventory from her own department home apparently without paying for it. He hesitates confronting Glenda because he is due to be promoted and needs Glanda's recommendation. He also does not want to notify the company management directly because he doesn't want an ethics investigation on his record believing that it will give him a "goody-goody" image. This week Glenda tried on several pairs of expensive running shoes in his department before finding a pair that suited her. She did not however buy them. That very pair was missing this morning.
Litwins recently replaced its old periodic inventory system with a perpetual inventory system using scanners and bar codes. In addition the annual inventory is to be replaced by a monthly inventory conducted by an independent firm. On hearing the news of the changes Danny relaxes. "The system will catch Glenda now" he says to himself.
Required:
1. Is Danny's attitude justified? Why or why not?
2. What if any action should Danny take now?

Accepted Answer

1. Danny's attitude is not justified. Th

Question 7

Henri Company's inventory records show the following data: $\begin{array}{llrr}
&&\text { Units }&\text { Unit Cost }\
\text { Inventory,}&\text {  January 1 } & 10,000 & \$ 9.20 \
\text { Purchases: } & \text { June } 18 & 9,000 & 8.00 \
&\text { November 8 } & 6,000 & 7.25
\end{array}$
 A physical inventory on December 31 shows 3000 units on hand. Henri sells the units for $12 each. The company has an effective tax rate of 20%. Henri uses the periodic inventory method. Under the FIFO method the December 31 inventory is valued at

Accepted Answer

A)  $21750. 
B)  $24450. 
C)  $25800. 
D)  $27600. 
A)  $21750. 
B)  $24450. 
C)  $25800. 
D)  $27600.

Question 8

Tipp Topp Company reports the following for the month of June. $\begin{array}{rlcr}
& \underline{\text { Units}}& \underline{\text {  Unit Cost }}& \underline{\text { Total Cost }}\
\text { June } 1 \text { Inventory } & 300 & \$ 5 & \$ 1,500 \
12 \text { Purchase } & 450 & 6 & 2,700 \
23 \text { Purchase } & 750 & 7.60 & 5,700 \
30 \text { Inventory } & 180 & &
\end{array}$
 Instructions
(a) Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO and (2) LIFO.
(b) Compute the cost of the ending inventory and the cost of goods sold using the average-cost method.

Accepted Answer

None

Question 9

Inventories affect

Accepted Answer

A)  only the balance sheet. 
B)  only the income statement. 
C)  both the balance sheet and the income statement. 
D)  neither the balance sheet nor the income statement. 
A)  only the balance sheet. 
B)  only the income statement. 
C)  both the balance sheet and the income statement. 
D)  neither the balance sheet nor the income statement.

Question 10

Under the lower-of-cost-or-market basis in valuing inventory market is defined as

Accepted Answer

A)  current replacement cost. 
B)  selling price. 
C)  historical cost plus 10%. 
D)  selling price less markup. 
A)  current replacement cost. 
B)  selling price. 
C)  historical cost plus 10%. 
D)  selling price less markup.

Question 11

Transactions that affect inventories on hand have an effect on both the balance sheet and the income statement.

Accepted Answer

A) True 
 B)False

Question 12

Inventory written down under lower-of-cost-or market may be written back up to original cost in a subsequent period under $\begin{array} { l l l } 
& \underline{ \text {GAAP  }} & \underline{ \text {  IFRS }} \\end{array}$
A)$\begin{array} { l l l }  &\text { Yes } & &\text { No } \\end{array}$
B)$\begin{array} { l l l } &\text { Yes } && \text { Yes } \\end{array}$
C)$\begin{array} { l l l }& \text { No } && \text {No } \\end{array}$
D)$\begin{array} { l l l } &\text {  No } && \text {Yes  }
\end{array}$

Accepted Answer

The answer of Inventory written down under lower-of-cost-or market may...

Question 13

Overstating ending inventory will overstate all of the following except

Accepted Answer

A)  assets. 
B)  cost of goods sold. 
C)  net income. 
D)  owner's equity. 
A)  assets. 
B)  cost of goods sold. 
C)  net income. 
D)  owner's equity.

Question 14

A new average cost is computed each time a purchase is made in the

Accepted Answer

A)  average-cost method. 
B)  moving-average cost method. 
C)  weighted-average cost method. 
D)  All of these choices are correct. 
A)  average-cost method. 
B)  moving-average cost method. 
C)  weighted-average cost method. 
D)  All of these choices are correct.

Question 15

Bud's Place recorded the following data:   The weighted average unit cost of the inventory at January 31 is:

Accepted Answer

A)  $2.40. 
B)  $2.70. 
C)  $2.80. 
D)  $3.402. 
A)  $2.40. 
B)  $2.70. 
C)  $2.80. 
D)  $3.402.

Question 16

Which of the following should be included in the physical inventory of a company?

Accepted Answer

A)  Goods held on consignment from another company. 
B)  Goods in transit to another company shipped FOB shipping point. 
C)  Goods in transit from another company shipped FOB shipping point. 
D)  Both b and c above. 
A)  Goods held on consignment from another company. 
B)  Goods in transit to another company shipped FOB shipping point. 
C)  Goods in transit from another company shipped FOB shipping point. 
D)  Both b and c above.

Question 17

Cesar Company understated its inventory by $20000 at December 31 2016. It did not correct the error in 2016 or 2017. As a result Cesar's owner's equity was:

Accepted Answer

A)  understated at December 31 2016 and overstated at December 31 2017. 
B)  understated at December 31 2016 and properly stated at December 31 2017. 
C)  overstated at December 31 2016 and overstated at December 31 2017. 
D)  understated at December 31 2016 and understated at December 31 2017. 
A)  understated at December 31 2016 and overstated at December 31 2017. 
B)  understated at December 31 2016 and properly stated at December 31 2017. 
C)  overstated at December 31 2016 and overstated at December 31 2017. 
D)  understated at December 31 2016 and understated at December 31 2017.

Question 18

A company uses the periodic inventory method and the beginning inventory is overstated by $9000 because the ending inventory in the previous period was overstated by $9000. The amounts reflected in the current end of the period balance sheet are $\begin{array}{cc}
&&\text { Assets } && \text { Owner's Equity } \\end{array}$
A)$\begin{array}{cc} \text { Overstated } && \text { Overstated } \\end{array}$ 
B)$\begin{array}{cc}\text { Correct } &&&&\text { Correct } \end{array}$
C)$\begin{array}{cc}\text { Understated }&&\text { Understated } \end{array}$
D)$\begin{array}{cc} \text { Overstated } &&\text { Overstated }  \end{array}$

Accepted Answer

The answer of A company uses the periodic inventory method...

Question 19

Shellhammer Company's inventory records show the following data for the month of September: $$\begin{array} { l c c } 
& \underline { \text { Units} } & \underline { \text { Unit Cost } }  \
\text { Inventory, September 1 } &100& \$ 3.34 \
\text { Purchases: September 8 } & 450 & 3.50 \
\quad\quad\quad\quad\quad\text { September 18 }& 350 & 3.70
\end{array}$$ A physical inventory on September 30 shows 200 units on hand. Calculate the value of ending inventory and cost of goods sold if the company uses FIFO inventory costing and a periodic inventory system.

Accepted Answer

Ending inventory of 200 units: @#LAT-DLM&

Cost of

Question 20

Inventories are reported in the current assets section of the balance sheet immediately below receivables.

Accepted Answer

A) True 
 B)False

Exam 6: Inventories

Inventoriable costs are allocated to ______________ and cost of goods ____________.

The Vogelson Company accumulates the following cost and market value data at December 31. Market Camera \ 11,000 \ 9,900 Camcorders 7,800 8,500 DVDs 14,000 12,000 What is the lower-of-cost-or-market of the inventory?

Management may choose any inventory costing method it desires as long as the cost flow assumption chosen is consistent with the physical movement of goods in the company.

The following accounts are included in the ledger of Bainbridge Company: Advertising expense Freight-in Inventory Purchases Purchase returns and allowances Sales revenue Sales returns and allowances Which of the accounts would be included in calculating cost of goods sold?

Inventories affect

Under the lower-of-cost-or-market basis in valuing inventory market is defined as

Transactions that affect inventories on hand have an effect on both the balance sheet and the income statement.

Inventory written down under lower-of-cost-or market may be written back up to original cost in a subsequent period under A) Yes No B) Yes Yes C) No No D) No Yes

Overstating ending inventory will overstate all of the following except

A new average cost is computed each time a purchase is made in the

Bud's Place recorded the following data: The weighted average unit cost of the inventory at January 31 is:

Which of the following should be included in the physical inventory of a company?

Cesar Company understated its inventory by $20000 at December 31 2016. It did not correct the error in 2016 or 2017. As a result Cesar's owner's equity was:

Inventories are reported in the current assets section of the balance sheet immediately below receivables.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Incremental Analysis and Capital Budgeting

Time Value of Money

Filters

Inventoriable costs are allocated to __ and cost of goods .