Question 1

Errors in inventory valuation only affect the current period's records and financial statements.

Accepted Answer

A) True 
 B)False

Question 2

Trekking Company's total cost of inventory was $305,000. The net realizable value is$297,000. Under LCNRV, the amount reported should be $305,000.

Accepted Answer

A) True 
 B)False

Question 3

The inventory cost flow assumption that is used cannot have a material impact on the financial statements.

Accepted Answer

A) True 
 B)False

Question 4

Merchandise inventory includes:

Accepted Answer

A) All goods owned by a company and held for sale. 
B) Goods on consignment. 
C) Damaged goods. 
D) Goods in transit. 
E) All of these answers are correct. 
A) All goods owned by a company and held for sale. 
B) Goods on consignment. 
C) Damaged goods. 
D) Goods in transit. 
E) All of these answers are correct.

Question 5

The net realizable value of Majik's ending inventory items at June 30, 2017 are asfollows:   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, 2017.

Accepted Answer

The answer of The net realizable value of Majik's ending...

Question 6

The necessary financial statement disclosure is accomplished if the amount presented is properly calculated.

Accepted Answer

A) True 
 B)False

Question 7

The retail amount of inventory refers to its dollar amount measured using selling prices of inventory items.

Accepted Answer

A) True 
 B)False

Question 8

The retail inventory method of estimating inventory uses the ratio of goods available for sale at cost to goods available for sale at retail.

Accepted Answer

A) True 
 B)False

Question 9

Acceptable inventory cost flow assumptions in Canada include:

Accepted Answer

A) Specific identification. 
B) FIFO and specific identification. 
C) FIFO. 
D) Weighted-average method. 
E) All of these answers are correct. 
A) Specific identification. 
B) FIFO and specific identification. 
C) FIFO. 
D) Weighted-average method. 
E) All of these answers are correct.

Question 10

Explain how inventory management is evaluated using the merchandise turnover and days' sales in inventory ratios.

Accepted Answer

The goal in inventory management is to h

Question 11

Incidental costs of inventory:

Accepted Answer

A) Are subject to the materiality principle. 
B) May be immaterial. 
C) Can be assigned to every unit. 
D) Can be allocated to cost of goods sold. 
E) All of these answers are correct. 
A) Are subject to the materiality principle. 
B) May be immaterial. 
C) Can be assigned to every unit. 
D) Can be allocated to cost of goods sold. 
E) All of these answers are correct.

Question 12

Trekking Company's cost of inventory was $317,500. Due to phenomenal demand the net realizable value has increased to $323,000. Trekking Company should write up the value of inventory under the LCNRV rule.

Accepted Answer

A) True 
 B)False

Question 13

A company that has operated with a 30% average gross profit ratio for a number of years had $110,000 in net sales during the first quarter of this year. If it began thequarter with $28,000 in inventory at cost and purchased $75,000 of merchandise during the quarter, its estimated ending inventory by the gross profit method is:

Accepted Answer

A) $25,000. 
B) $26,000. 
C) $21,000. 
D) $20,000. 
E) $24,000. 
A) $25,000. 
B) $26,000. 
C) $21,000. 
D) $20,000. 
E) $24,000.

Question 14

All material incidental costs of inventory acquisition and handling are assigned to inventory.

Accepted Answer

A) True 
 B)False

Question 15

A company sells a single product and had the following beginning inventory, purchases, and sales during March.   Calculate the cost of the ending inventory under each assumption below:(1)The company uses a periodic inventory system and determines cost on aFIFO basis.Ending inventory cost ____________(2)The company uses a periodic inventory system and determines cost on a weighted average basisEnding inventory cost ____________

Accepted Answer

(1) Period

Question 16

Explain how to calculate the gross profit ratio and interpret its meaning.

Accepted Answer

The gross profit ratio measure

Question 17

The necessary financial statement disclosure is accomplished if the amount disclosed is properly calculated and the costing method used is stated.

Accepted Answer

A) True 
 B)False

Question 18

On March 15, Stark Company's inventory was destroyed by a tornadoInventory, January 1Purchases to Mar 15Sales to Mar 15Sales returns to Mar 15: $7,000Stark's average gross profit ratio is 35%. What is the estimated value of the destroyed inventory?

Accepted Answer

A) $7,300. 
B) $45,000. 
C) $10,525. 
D) $9,250. 
E) $8,500. 
A) $7,300. 
B) $45,000. 
C) $10,525. 
D) $9,250. 
E) $8,500.

Question 19

The principle of faithful representation requires that information be complete, neutral and free from error so that assets and income are not overstated and liabilities andexpenses are not understated.

Accepted Answer

A) True 
 B)False

Question 20

Trekking Company had the following purchases during the year:     On December 31, there were 26 units in ending inventory. These 26 units consisted of 2 from January, 4 from February, 6 from May, 4 from September, and 10 from November. Using the specific identification method, what is the cost of the ending inventory?

Accepted Answer

A) $3,500. 
B) $3,280. 
C) $3,640. 
D) $3,800. 
E) $3,960. 
A) $3,500. 
B) $3,280. 
C) $3,640. 
D) $3,800. 
E) $3,960.

Errors in inventory valuation only affect the current period's records and financial statements.

Trekking Company's total cost of inventory was $305,000. The net realizable value is$297,000. Under LCNRV, the amount reported should be $305,000.

The inventory cost flow assumption that is used cannot have a material impact on the financial statements.

Merchandise inventory includes:

The net realizable value of Majik's ending inventory items at June 30, 2017 are asfollows: 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, 2017.

The necessary financial statement disclosure is accomplished if the amount presented is properly calculated.

The retail amount of inventory refers to its dollar amount measured using selling prices of inventory items.

The retail inventory method of estimating inventory uses the ratio of goods available for sale at cost to goods available for sale at retail.

Acceptable inventory cost flow assumptions in Canada include:

Explain how inventory management is evaluated using the merchandise turnover and days' sales in inventory ratios.

Incidental costs of inventory:

Trekking Company's cost of inventory was $317,500. Due to phenomenal demand the net realizable value has increased to $323,000. Trekking Company should write up the value of inventory under the LCNRV rule.

All material incidental costs of inventory acquisition and handling are assigned to inventory.

Explain how to calculate the gross profit ratio and interpret its meaning.

The necessary financial statement disclosure is accomplished if the amount disclosed is properly calculated and the costing method used is stated.

On March 15, Stark Company's inventory was destroyed by a tornadoInventory, January 1Purchases to Mar 15Sales to Mar 15Sales returns to Mar 15: $7,000Stark's average gross profit ratio is 35%. What is the estimated value of the destroyed inventory?

The principle of faithful representation requires that information be complete, neutral and free from error so that assets and income are not overstated and liabilities andexpenses are not understated.

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

Errors in inventory valuation only affect the current period's records and financial statements.

Trekking Company's total cost of inventory was $305,000. The net realizable value is$297,000. Under LCNRV, the amount reported should be $305,000.

The inventory cost flow assumption that is used cannot have a material impact on the financial statements.

Merchandise inventory includes:

The net realizable value of Majik's ending inventory items at June 30, 2017 are asfollows: 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, 2017.

The necessary financial statement disclosure is accomplished if the amount presented is properly calculated.

The retail amount of inventory refers to its dollar amount measured using selling prices of inventory items.

The retail inventory method of estimating inventory uses the ratio of goods available for sale at cost to goods available for sale at retail.

Acceptable inventory cost flow assumptions in Canada include:

Explain how inventory management is evaluated using the merchandise turnover and days' sales in inventory ratios.

Incidental costs of inventory:

Trekking Company's cost of inventory was $317,500. Due to phenomenal demand the net realizable value has increased to $323,000. Trekking Company should write up the value of inventory under the LCNRV rule.

All material incidental costs of inventory acquisition and handling are assigned to inventory.

Explain how to calculate the gross profit ratio and interpret its meaning.

The necessary financial statement disclosure is accomplished if the amount disclosed is properly calculated and the costing method used is stated.

On March 15, Stark Company's inventory was destroyed by a tornadoInventory, January 1Purchases to Mar 15Sales to Mar 15Sales returns to Mar 15: $7,000Stark's average gross profit ratio is 35%. What is the estimated value of the destroyed inventory?

The principle of faithful representation requires that information be complete, neutral and free from error so that assets and income are not overstated and liabilities andexpenses are not understated.

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