Question 1

If the supplier pays freight charges, then ownership of inventory passes when goods arrive at their destination.

Accepted Answer

A) True 
 B)False

Question 2

Goods on consignment:

Accepted Answer

A) Are reported on the consignor's books as inventory. 
B) Are goods shipped by the owner to the consignee who sells the goods for the owner. 
C) Are reported in the consignee's books as inventory. 
D) Are goods shipped by the owner to the consignee who sells the goods for the owner and are reported in the consignee's books as inventory. 
E) Are goods shipped by the owner to the consignee who sells the goods for the owner and are reported on the consignor's books as inventory. 
A) Are reported on the consignor's books as inventory. 
B) Are goods shipped by the owner to the consignee who sells the goods for the owner. 
C) Are reported in the consignee's books as inventory. 
D) Are goods shipped by the owner to the consignee who sells the goods for the owner and are reported in the consignee's books as inventory. 
E) Are goods shipped by the owner to the consignee who sells the goods for the owner and are reported on the consignor's books as inventory.

Question 3

Describe the accounting aspects of a periodic inventory system.

Accepted Answer

Each purchase of merchandise is debited

Question 4

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

Question 5

Provide calculations to find how many days it will take to convert inventory onhand into cash.

Accepted Answer

The answer of Provide calculations to find how many days...

Question 6

An inventory error carried forward into the next period causes misstatements in:

Accepted Answer

A) Gross profit and net income. 
B) Cost of goods sold. 
C) Net income. 
D) Gross profit. 
E) All of these answers are correct. 
A) Gross profit and net income. 
B) Cost of goods sold. 
C) Net income. 
D) Gross profit. 
E) All of these answers are correct.

Question 7

Trekking Company's inventory in its River Oaks store was destroyed by a flood. Its gross profit ratio was 65% and net sales were $30,000. The estimated cost of goodsavailable for sale was $32,500. The estimated value of the lost inventory was $18,000.

Accepted Answer

A) True 
 B)False

Question 8

Trekking Company markets a climbing kit and uses a perpetual inventory system to account for its merchandise. The beginning balance of the inventory and transactions during January were as follows:   If the ending inventory is valued at $357, what inventory cost flow assumption was used?

Accepted Answer

A) FIFO. 
B) Average costing. 
C) Weighted-average. 
D) Retail. 
E) Specific identification. 
A) FIFO. 
B) Average costing. 
C) Weighted-average. 
D) Retail. 
E) Specific identification.

Question 9

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 10

Which inventory cost flow assumption results in the highest tax expense in a period of inflation?

Accepted Answer

A) FIFO. 
B) Retail method. 
C) Moving weighted average. 
D) Specific identification. 
E) Average cost. 
A) FIFO. 
B) Retail method. 
C) Moving weighted average. 
D) Specific identification. 
E) Average cost.

Question 11

Apply the retail method to the following information and calculate the cost of the ending inventory:

Accepted Answer

The answer of Apply the retail method to the following...

Question 12

During the current year, Carter Company reported $600,000 in sales, andpurchased merchandise that cost $384,000. The company's beginning inventory and ending inventory was $60,000. Calculate the gross profit ratio.

Accepted Answer

$600,000 - $384,000

Question 13

Most businesses apply the lower of cost and net realizable value rule to groups of similar or related items.

Accepted Answer

A) True 
 B)False

Question 14

Damaged goods are not counted in inventory if they cannot be sold.

Accepted Answer

A) True 
 B)False

Question 15

The principle of faithful representation is used by some companies to justify allocating incidental inventory costs to cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 16

During January, a company that uses a perpetual inventory system had beginning inventory, purchases, and sales as follows:   Prepare a schedule to show the cost of goods sold and ending inventory using theFIFO cost flow assumption.

Accepted Answer

The answer of During January, a company that uses a...

Question 17

Most businesses use expected sales price minus the cost of making the sale as the definition of net realizable value.

Accepted Answer

A) True 
 B)False

Question 18

The materiality principle requires that the inventory valuation method follow the flow of goods.

Accepted Answer

A) True 
 B)False

Question 19

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

Question 20

Because an inventory error causes an offsetting error in the next period:

Accepted Answer

A) It affects only income statement accounts. 
B) If affects only balance sheet accounts. 
C) Managers can ignore the error. 
D) It is sometimes said to be self-correcting. 
E) Managers can ignore the error and it is sometimes said to be self-correcting. 
A) It affects only income statement accounts. 
B) If affects only balance sheet accounts. 
C) Managers can ignore the error. 
D) It is sometimes said to be self-correcting. 
E) Managers can ignore the error and it is sometimes said to be self-correcting.

If the supplier pays freight charges, then ownership of inventory passes when goods arrive at their destination.

Goods on consignment:

Describe the accounting aspects of a periodic inventory system.

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:

Provide calculations to find how many days it will take to convert inventory onhand into cash.

An inventory error carried forward into the next period causes misstatements in:

Trekking Company's inventory in its River Oaks store was destroyed by a flood. Its gross profit ratio was 65% and net sales were $30,000. The estimated cost of goodsavailable for sale was $32,500. The estimated value of the lost inventory was $18,000.

Trekking Company markets a climbing kit and uses a perpetual inventory system to account for its merchandise. The beginning balance of the inventory and transactions during January were as follows: If the ending inventory is valued at $357, what inventory cost flow assumption was used?

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.

Which inventory cost flow assumption results in the highest tax expense in a period of inflation?

Apply the retail method to the following information and calculate the cost of the ending inventory:

During the current year, Carter Company reported $600,000 in sales, andpurchased merchandise that cost $384,000. The company's beginning inventory and ending inventory was $60,000. Calculate the gross profit ratio.

Most businesses apply the lower of cost and net realizable value rule to groups of similar or related items.

Damaged goods are not counted in inventory if they cannot be sold.

The principle of faithful representation is used by some companies to justify allocating incidental inventory costs to cost of goods sold.

During January, a company that uses a perpetual inventory system had beginning inventory, purchases, and sales as follows: Prepare a schedule to show the cost of goods sold and ending inventory using theFIFO cost flow assumption.

Most businesses use expected sales price minus the cost of making the sale as the definition of net realizable value.

The materiality principle requires that the inventory valuation method follow the flow of goods.

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

Because an inventory error causes an offsetting error in the next period:

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

Appendix

Filters

Exam 6: Inventory Costing and Valuation

If the supplier pays freight charges, then ownership of inventory passes when goods arrive at their destination.

Goods on consignment:

Describe the accounting aspects of a periodic inventory system.

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:

Provide calculations to find how many days it will take to convert inventory onhand into cash.

An inventory error carried forward into the next period causes misstatements in:

Trekking Company's inventory in its River Oaks store was destroyed by a flood. Its gross profit ratio was 65% and net sales were $30,000. The estimated cost of goodsavailable for sale was $32,500. The estimated value of the lost inventory was $18,000.

Trekking Company markets a climbing kit and uses a perpetual inventory system to account for its merchandise. The beginning balance of the inventory and transactions during January were as follows: If the ending inventory is valued at $357, what inventory cost flow assumption was used?

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.

Which inventory cost flow assumption results in the highest tax expense in a period of inflation?

Apply the retail method to the following information and calculate the cost of the ending inventory:

During the current year, Carter Company reported $600,000 in sales, andpurchased merchandise that cost $384,000. The company's beginning inventory and ending inventory was $60,000. Calculate the gross profit ratio.

Most businesses apply the lower of cost and net realizable value rule to groups of similar or related items.

Damaged goods are not counted in inventory if they cannot be sold.

The principle of faithful representation is used by some companies to justify allocating incidental inventory costs to cost of goods sold.

During January, a company that uses a perpetual inventory system had beginning inventory, purchases, and sales as follows: Prepare a schedule to show the cost of goods sold and ending inventory using theFIFO cost flow assumption.

Most businesses use expected sales price minus the cost of making the sale as the definition of net realizable value.

The materiality principle requires that the inventory valuation method follow the flow of goods.

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

Because an inventory error causes an offsetting error in the next period:

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

Appendix

Filters