Question 1

Which of the following is not a common cost flow assumption used in costing inventory?

Accepted Answer

A) First-in, first-out 
B) Middle-in, first-out 
C) Last-in, first-out 
D) Average-cost 
A) First-in, first-out 
B) Middle-in, first-out 
C) Last-in, first-out 
D) Average-cost

Question 2

Ace Company is a retailer operating in an industry that experiences inflation (rising prices).Ace wants to maintain a high current ratio.Which inventory costing method should Ace consider using?

Accepted Answer

A) LIFO 
B) Average 
C) FIFO 
D) No inventory costing method directly affects the current ratio. 
A) LIFO 
B) Average 
C) FIFO 
D) No inventory costing method directly affects the current ratio.

Question 3

Laser Listening has the following inventory data:   A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand.Assuming that the specific identification method is used and that ending inventory consists of 30 units from each of the three purchases and 10 units from the November 1 inventory, cost of goods sold is

Accepted Answer

A) $640. 
B) $1,286 
C) $1,281 
D) $1,254 
A) $640. 
B) $1,286 
C) $1,281 
D) $1,254

Question 4

In periods of inflation, phantom or paper profits may be reported as a result of using the

Accepted Answer

A) perpetual inventory method. 
B) FIFO costing assumption. 
C) LIFO costing assumption. 
D) periodic inventory method. 
A) perpetual inventory method. 
B) FIFO costing assumption. 
C) LIFO costing assumption. 
D) periodic inventory method.

Question 5

Hogan Industries had the following inventory transactions occur during 2022:   The company sold 306 units at $63 each and has a tax rate of 30%.Assuming that a periodic inventory system is used, what is the company's gross profit using FIFO? (rounded to whole dollars)

Accepted Answer

A) $14,646 
B) $14,190 
C) $5,088 
D) $4,632 
A) $14,646 
B) $14,190 
C) $5,088 
D) $4,632

Question 6

A company purchased inventory as follows: 200 units at $6.00
300 units at $6.60
The average unit cost for inventory is

Accepted Answer

A) $6.00. 
B) $6.30. 
C) $6.36. 
D) $6.60. 
A) $6.00. 
B) $6.30. 
C) $6.36. 
D) $6.60.

Question 7

Barnett Company had the following records:   What is Barnett's inventory turnover for 2022? (rounded)

Accepted Answer

A) 9.4 times 
B) 9.7 times 
C) 9.9 times 
D) 10.0 times 
A) 9.4 times 
B) 9.7 times 
C) 9.9 times 
D) 10.0 times

Question 8

Dole Industries had the following inventory transactions occur during 2022:   The company sold 255 units at $126 each and has a tax rate of 30%.Assuming that a periodic inventory system is used, what is the company's gross profit using LIFO? (rounded to whole dollars)

Accepted Answer

A) $24,410 
B) $23,650 
C) $8,480 
D) $7,720 
A) $24,410 
B) $23,650 
C) $8,480 
D) $7,720

Question 9

Inventory methods such as FIFO and LIFO deal more with the flow of costs than with the flow of goods.

Accepted Answer

A) True 
 B)False

Question 10

The LIFO reserve is the difference between ending inventory using LIFO and ending inventory if FIFO were used instead.

Accepted Answer

A) True 
 B)False

Question 11

Which inventory costing method should a gasoline retailer use?

Accepted Answer

A) Average cost 
B) LIFO 
C) FIFO 
D) Either LIFO or FIFO. 
A) Average cost 
B) LIFO 
C) FIFO 
D) Either LIFO or FIFO.

Question 12

Under the periodic inventory system, both the sales amount and the cost of goods sold amount are recorded when each item of merchandise is sold.

Accepted Answer

A) True 
 B)False

Question 13

On May 1, 2022, Heineken Company had beginning inventory consisting of 300 units with a unit cost of $7.During May, the company purchased inventory as follows: 600 units at $7
900 units at $8
The company sold 1,500 units during the month for $12 per unit.Heineken uses the average-cost method.Heineken's gross profit for the month of May is

Accepted Answer

A) $6,750 
B) $11,250 
C) $13,500 
D) $18,000 
A) $6,750 
B) $11,250 
C) $13,500 
D) $18,000

Question 14

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 15

Hogan Industries had the following inventory transactions occur during 2022:   The company sold 306 units at $63 each and has a tax rate of 30%.Assuming that a periodic inventory system is used, and operating expenses of $1,800, what is the company's after-tax income using LIFO? (rounded to whole dollars)

Accepted Answer

A) $2,832 
B) $3,288 
C) $2,302 
D) $1,982 
A) $2,832 
B) $3,288 
C) $2,302 
D) $1,982

Question 16

The specific identification method of costing inventories is used when the

Accepted Answer

A) physical flow of units cannot be determined. 
B) company sells large quantities of relatively low-cost homogeneous items. 
C) company sells large quantities of relatively low-cost heterogeneous items. 
D) company sells a limited quantity of high-unit cost items. 
A) physical flow of units cannot be determined. 
B) company sells large quantities of relatively low-cost homogeneous items. 
C) company sells large quantities of relatively low-cost heterogeneous items. 
D) company sells a limited quantity of high-unit cost items.

Question 17

Automobile Audio has the following inventory data:   A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand.Ending inventory under FIFO is

Accepted Answer

A) $657 
B) $1,269 
C) $632 
D) $1,295 
A) $657 
B) $1,269 
C) $632 
D) $1,295

Question 18

Technology has made the periodic inventory system more popular and easier to apply.

Accepted Answer

A) True 
 B)False

Question 19

Which statement concerning lower-of-cost-or-net-realizable-value (LCNRV) is incorrect?

Accepted Answer

A) LCNRV is an example of a company choosing the accounting method that will be least likely to overstate assets and income. 
B) Under the LCNRV basis, market does not apply because assets are always recorded and maintained at cost. 
C) The LCNRV basis is justified because of a decline in the selling price of the inventory item. 
D) LCNRV is applied after one of the cost flow assumptions has been applied. 
A) LCNRV is an example of a company choosing the accounting method that will be least likely to overstate assets and income. 
B) Under the LCNRV basis, market does not apply because assets are always recorded and maintained at cost. 
C) The LCNRV basis is justified because of a decline in the selling price of the inventory item. 
D) LCNRV is applied after one of the cost flow assumptions has been applied.

Question 20

Ace Company is a retailer operating in an industry that experiences inflation (rising prices).Ace wants the most realistic cost of goods sold.Which inventory costing method should Ace consider using?

Accepted Answer

A) Average-cost because all inventory costs will then represent an average amount. 
B) Specific identification is the most realistic method because it involves the actual costs. 
C) LIFO because the cost of goods sold represents the latest costs. 
D) FIFO because the cost of goods sold represents the earliest costs. 
A) Average-cost because all inventory costs will then represent an average amount. 
B) Specific identification is the most realistic method because it involves the actual costs. 
C) LIFO because the cost of goods sold represents the latest costs. 
D) FIFO because the cost of goods sold represents the earliest costs.

Which of the following is not a common cost flow assumption used in costing inventory?

Ace Company is a retailer operating in an industry that experiences inflation (rising prices).Ace wants to maintain a high current ratio.Which inventory costing method should Ace consider using?

In periods of inflation, phantom or paper profits may be reported as a result of using the

Hogan Industries had the following inventory transactions occur during 2022: The company sold 306 units at $63 each and has a tax rate of 30%.Assuming that a periodic inventory system is used, what is the company's gross profit using FIFO? (rounded to whole dollars)

A company purchased inventory as follows: 200 units at $6.00 300 units at $6.60 The average unit cost for inventory is

Barnett Company had the following records: What is Barnett's inventory turnover for 2022? (rounded)

Dole Industries had the following inventory transactions occur during 2022: The company sold 255 units at $126 each and has a tax rate of 30%.Assuming that a periodic inventory system is used, what is the company's gross profit using LIFO? (rounded to whole dollars)

Inventory methods such as FIFO and LIFO deal more with the flow of costs than with the flow of goods.

The LIFO reserve is the difference between ending inventory using LIFO and ending inventory if FIFO were used instead.

Which inventory costing method should a gasoline retailer use?

Under the periodic inventory system, both the sales amount and the cost of goods sold amount are recorded when each item of merchandise is sold.

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 specific identification method of costing inventories is used when the

Automobile Audio has the following inventory data: A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand.Ending inventory under FIFO is

Technology has made the periodic inventory system more popular and easier to apply.

Which statement concerning lower-of-cost-or-net-realizable-value (LCNRV) is incorrect?

Ace Company is a retailer operating in an industry that experiences inflation (rising prices).Ace wants the most realistic cost of goods sold.Which inventory costing method should Ace consider using?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

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Exam 6: Reporting and Analyzing Inventory

Which of the following is not a common cost flow assumption used in costing inventory?

Ace Company is a retailer operating in an industry that experiences inflation (rising prices).Ace wants to maintain a high current ratio.Which inventory costing method should Ace consider using?

In periods of inflation, phantom or paper profits may be reported as a result of using the

Hogan Industries had the following inventory transactions occur during 2022: The company sold 306 units at $63 each and has a tax rate of 30%.Assuming that a periodic inventory system is used, what is the company's gross profit using FIFO? (rounded to whole dollars)

A company purchased inventory as follows: 200 units at $6.00 300 units at $6.60 The average unit cost for inventory is

Barnett Company had the following records: What is Barnett's inventory turnover for 2022? (rounded)

Dole Industries had the following inventory transactions occur during 2022: The company sold 255 units at $126 each and has a tax rate of 30%.Assuming that a periodic inventory system is used, what is the company's gross profit using LIFO? (rounded to whole dollars)

Inventory methods such as FIFO and LIFO deal more with the flow of costs than with the flow of goods.

The LIFO reserve is the difference between ending inventory using LIFO and ending inventory if FIFO were used instead.

Which inventory costing method should a gasoline retailer use?

Under the periodic inventory system, both the sales amount and the cost of goods sold amount are recorded when each item of merchandise is sold.

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 specific identification method of costing inventories is used when the

Automobile Audio has the following inventory data: A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand.Ending inventory under FIFO is

Technology has made the periodic inventory system more popular and easier to apply.

Which statement concerning lower-of-cost-or-net-realizable-value (LCNRV) is incorrect?

Ace Company is a retailer operating in an industry that experiences inflation (rising prices).Ace wants the most realistic cost of goods sold.Which inventory costing method should Ace consider using?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

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