Question 1

Under the LCNRV basis, net realizable value is defined as current replacement cost.

Accepted Answer

A) True 
 B)False

Question 2

For companies that use a perpetual inventory system, all of the following are purposes for taking a physical inventory except to:

Accepted Answer

A) check the accuracy of the records. 
B) determine the amount of wasted raw materials. 
C) determine losses due to employee theft. 
D) determine ownership of the goods. 
A) check the accuracy of the records. 
B) determine the amount of wasted raw materials. 
C) determine losses due to employee theft. 
D) determine ownership of the goods.

Question 3

When applying the lower-of-cost-or-net-realizable-value rule to inventory valuation, net realizable value refers to

Accepted Answer

A) estimated selling price less cost to complete and sell. 
B) original cost. 
C) current replacement cost. 
D) original cost, less physical deterioration. 
A) estimated selling price less cost to complete and sell. 
B) original cost. 
C) current replacement cost. 
D) original cost, less physical deterioration.

Question 4

At December 31, 2022, Howell Company's inventory records indicated a balance of $878,000.Upon further investigation it was determined that this amount included the following: 
-$168,000 in inventory purchases made by Howell shipped from the seller 12/27/22 terms FOB destination, but not due to be received until January 2
-$111,000 in goods sold by Howell with terms FOB destination on December 27.The goods are not expected to reach their destination until January 6.
-$9,000 of goods received on consignment from Westwood Company
What is Howell's correct ending inventory balance at December 31, 2022?

Accepted Answer

A) $710,000 
B) $869,000 
C) $590,000 
D) $701,000 
A) $710,000 
B) $869,000 
C) $590,000 
D) $701,000

Question 5

The following information was available for Camara Company at December 31, 2022: beginning inventory $80,000; ending inventory $120,000; cost of goods sold $630,000; and sales $900,000.Camara's days in inventory in 2022 was

Accepted Answer

A) 40.6 days. 
B) 46.2 days. 
C) 57.9 days. 
D) 68.9 days. 
A) 40.6 days. 
B) 46.2 days. 
C) 57.9 days. 
D) 68.9 days.

Question 6

An overstatement of the beginning inventory results in

Accepted Answer

A) no effect on the period's net income. 
B) an overstatement of net income. 
C) an understatement of net income. 
D) a need to adjust purchases. 
A) no effect on the period's net income. 
B) an overstatement of net income. 
C) an understatement of net income. 
D) a need to adjust purchases.

Question 7

Many companies use just-in-time inventory methods.Which of the following is not an advantage of this method?

Accepted Answer

A) It limits the risk of having obsolete items in inventory. 
B) Companies may not have quantities to meet customer demand. 
C) It lowers inventory levels and costs. 
D) Companies can respond to individual customer requests. 
A) It limits the risk of having obsolete items in inventory. 
B) Companies may not have quantities to meet customer demand. 
C) It lowers inventory levels and costs. 
D) Companies can respond to individual customer requests.

Question 8

Noise Makers Inc.has the following inventory data:   A physical count of merchandise inventory on July 30 reveals that there are 48 units on hand.Using the average cost method, the value of ending inventory is

Accepted Answer

A) $930. 
B) $960. 
C) $976. 
D) $990. 
A) $930. 
B) $960. 
C) $976. 
D) $990.

Question 9

A company uses the periodic inventory method and the beginning inventory is overstated by $4,000 because the ending inventory in the previous period was overstated by $4,000; the ending inventory for this period is correct.The amounts reflected in the current end of the period balance sheet are

Accepted Answer

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

Question 10

Use the following information regarding Black Company and Red Company to answer the question "Which amount is equal to Black Company's "days in inventory" for 2022 (to the closest decimal place)?"

Accepted Answer

A) 43.5 days 
B) 52.1 days 
C) 48.7 days 
D) 42.0 days 
A) 43.5 days 
B) 52.1 days 
C) 48.7 days 
D) 42.0 days

Question 11

Which of the following items will increase inventoriable costs for the buyer of goods?

Accepted Answer

A) Purchase returns and allowances granted by the seller 
B) Purchase discounts taken by the purchaser 
C) Freight charges paid by the seller 
D) Freight charges paid by the purchaser 
A) Purchase returns and allowances granted by the seller 
B) Purchase discounts taken by the purchaser 
C) Freight charges paid by the seller 
D) Freight charges paid by the purchaser

Question 12

Given equal circumstances, which inventory method would probably be the most time-consuming?

Accepted Answer

A) FIFO 
B) LIFO 
C) Average-cost 
D) Specific identification. 
A) FIFO 
B) LIFO 
C) Average-cost 
D) Specific identification.

Question 13

Bonkers Bananas has the following inventory data:   A physical count of merchandise inventory on July 30 reveals that there are 50 units on hand.Using the LIFO inventory method, the amount allocated to ending inventory for July is

Accepted Answer

A) $1,100. 
B) $1,010. 
C) $1,070. 
D) $1,000. 
A) $1,100. 
B) $1,010. 
C) $1,070. 
D) $1,000.

Question 14

When the average-cost method is applied in a perpetual inventory system, the sale of goods will change the unit cost that remains in inventory.

Accepted Answer

A) True 
 B)False

Question 15

Use the following information for Boxter, Inc., Clifford Company, Danforth Industries, and Evans Services to answer the question "Using the LIFO adjustment, which company shows the greatest improvement in its current ratio from 2021 to 2022?"

Accepted Answer

A) Boxter 
B) Clifford 
C) Danforth 
D) Evans 
A) Boxter 
B) Clifford 
C) Danforth 
D) Evans

Question 16

A company just began business and made the following four inventory purchases in June:   A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand.Using the average-cost method, the amount allocated to the ending inventory on June 30 is

Accepted Answer

A) $1,361. 
B) $1,416. 
C) $1,320. 
D) $1,344. 
A) $1,361. 
B) $1,416. 
C) $1,320. 
D) $1,344.

Question 17

The accountant at Patton Company has determined that income before income taxes amounted to $11,000 using the FIFO costing assumption.If the income tax rate is 30% and the amount of income taxes paid would be $900 greater if the LIFO assumption were used, what would be the amount of income before taxes under the LIFO assumption?

Accepted Answer

A) $11,900 
B) $14,000 
C) $8,000 
D) $10,100 
A) $11,900 
B) $14,000 
C) $8,000 
D) $10,100

Question 18

In periods of falling prices, FIFO will result in a larger net income than the LIFO method.

Accepted Answer

A) True 
 B)False

Question 19

Selection of an inventory costing method by management does not usually depend on

Accepted Answer

A) the fiscal year end. 
B) income statement effects. 
C) balance sheet effects. 
D) tax effects. 
A) the fiscal year end. 
B) income statement effects. 
C) balance sheet effects. 
D) tax effects.

Question 20

Olympus Climbers Company has the following inventory data:   A physical count of merchandise inventory on July 30 reveals that there are 48 units on hand.Using the FIFO inventory method, the amount allocated to cost of goods sold for July is

Accepted Answer

A) $930. 
B) $990. 
C) $2,010. 
D) $2,070. 
A) $930. 
B) $990. 
C) $2,010. 
D) $2,070.

Under the LCNRV basis, net realizable value is defined as current replacement cost.

For companies that use a perpetual inventory system, all of the following are purposes for taking a physical inventory except to:

When applying the lower-of-cost-or-net-realizable-value rule to inventory valuation, net realizable value refers to

The following information was available for Camara Company at December 31, 2022: beginning inventory $80,000; ending inventory $120,000; cost of goods sold $630,000; and sales $900,000.Camara's days in inventory in 2022 was

An overstatement of the beginning inventory results in

Many companies use just-in-time inventory methods.Which of the following is not an advantage of this method?

Noise Makers Inc.has the following inventory data: A physical count of merchandise inventory on July 30 reveals that there are 48 units on hand.Using the average cost method, the value of ending inventory is

A company uses the periodic inventory method and the beginning inventory is overstated by $4,000 because the ending inventory in the previous period was overstated by $4,000; the ending inventory for this period is correct.The amounts reflected in the current end of the period balance sheet are

Use the following information regarding Black Company and Red Company to answer the question "Which amount is equal to Black Company's "days in inventory" for 2022 (to the closest decimal place)?"

Which of the following items will increase inventoriable costs for the buyer of goods?

Given equal circumstances, which inventory method would probably be the most time-consuming?

Bonkers Bananas has the following inventory data: A physical count of merchandise inventory on July 30 reveals that there are 50 units on hand.Using the LIFO inventory method, the amount allocated to ending inventory for July is

When the average-cost method is applied in a perpetual inventory system, the sale of goods will change the unit cost that remains in inventory.

Use the following information for Boxter, Inc., Clifford Company, Danforth Industries, and Evans Services to answer the question "Using the LIFO adjustment, which company shows the greatest improvement in its current ratio from 2021 to 2022?"

A company just began business and made the following four inventory purchases in June: A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand.Using the average-cost method, the amount allocated to the ending inventory on June 30 is

In periods of falling prices, FIFO will result in a larger net income than the LIFO method.

Selection of an inventory costing method by management does not usually depend on

Olympus Climbers Company has the following inventory data: A physical count of merchandise inventory on July 30 reveals that there are 48 units on hand.Using the FIFO inventory method, the amount allocated to cost of goods sold for July is

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

Under the LCNRV basis, net realizable value is defined as current replacement cost.

For companies that use a perpetual inventory system, all of the following are purposes for taking a physical inventory except to:

When applying the lower-of-cost-or-net-realizable-value rule to inventory valuation, net realizable value refers to

The following information was available for Camara Company at December 31, 2022: beginning inventory $80,000; ending inventory $120,000; cost of goods sold $630,000; and sales $900,000.Camara's days in inventory in 2022 was

An overstatement of the beginning inventory results in

Many companies use just-in-time inventory methods.Which of the following is not an advantage of this method?

Noise Makers Inc.has the following inventory data: A physical count of merchandise inventory on July 30 reveals that there are 48 units on hand.Using the average cost method, the value of ending inventory is

A company uses the periodic inventory method and the beginning inventory is overstated by $4,000 because the ending inventory in the previous period was overstated by $4,000; the ending inventory for this period is correct.The amounts reflected in the current end of the period balance sheet are

Use the following information regarding Black Company and Red Company to answer the question "Which amount is equal to Black Company's "days in inventory" for 2022 (to the closest decimal place)?"

Which of the following items will increase inventoriable costs for the buyer of goods?

Given equal circumstances, which inventory method would probably be the most time-consuming?

Bonkers Bananas has the following inventory data: A physical count of merchandise inventory on July 30 reveals that there are 50 units on hand.Using the LIFO inventory method, the amount allocated to ending inventory for July is

When the average-cost method is applied in a perpetual inventory system, the sale of goods will change the unit cost that remains in inventory.

Use the following information for Boxter, Inc., Clifford Company, Danforth Industries, and Evans Services to answer the question "Using the LIFO adjustment, which company shows the greatest improvement in its current ratio from 2021 to 2022?"

A company just began business and made the following four inventory purchases in June: A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand.Using the average-cost method, the amount allocated to the ending inventory on June 30 is

In periods of falling prices, FIFO will result in a larger net income than the LIFO method.

Selection of an inventory costing method by management does not usually depend on

Olympus Climbers Company has the following inventory data: A physical count of merchandise inventory on July 30 reveals that there are 48 units on hand.Using the FIFO inventory method, the amount allocated to cost of goods sold for July is

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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