Question 1

The specific identification inventory cost determination method is desirable when a company sells a large number of low-unit cost items.

Accepted Answer

A) True 
 B)False

Question 2

When the value of inventory is higher than its cost, the inventory is written down to its net realizable value at the end of the period.

Accepted Answer

A) True 
 B)False

Question 3

The selection of an appropriate inventory cost formula for an individual company is made by

Accepted Answer

A)  the external auditors. 
B)  the CICA for private companies. 
C)  the International Financial Reporting Standards for public companies. 
D)  management. 
A)  the external auditors. 
B)  the CICA for private companies. 
C)  the International Financial Reporting Standards for public companies. 
D)  management.

Question 4

The Jeter Company uses the perpetual inventory system and the average cost formula to value inventories. On August 1, there were 5,000 units valued at $15,000 in the beginning inventory. On August 10, 10,000 units were purchased for $6 per unit. On August 15, 8,000 units were sold for $12 per unit. The amount charged to cost of goods on August 15 was

Accepted Answer

A)  $35,000. 
B)  $40,000. 
C)  $48,000. 
D)  $36,000. 
A)  $35,000. 
B)  $40,000. 
C)  $48,000. 
D)  $36,000.

Question 5

One of the considerations of choosing a cost determination method is to use the same method for all inventories having a similar nature and usage in the company.

Accepted Answer

A) True 
 B)False

Question 6

If the goods are produced for specific projects, then specific identification cost determination method must be used.

Accepted Answer

A) True 
 B)False

Question 7

Under the periodic system of inventory, opening inventory will always be higher using average cost of inventory than FIFO.

Accepted Answer

A) True 
 B)False

Question 8

Net realizable value is the selling price less any costs required to make the goods ready for sale.

Accepted Answer

A) True 
 B)False

Question 9

Margolians Dept Store estimates inventory by using the retail inventory method. The following information was developed:   The estimated cost of the ending inventory is

Accepted Answer

A)  $250,000. 
B)  $140,000. 
C)  $ 95,000. 
D)  $100,000. 
A)  $250,000. 
B)  $140,000. 
C)  $ 95,000. 
D)  $100,000.

Question 10

Only companies who use a periodic method of inventory need to have an annual physical inventory count.

Accepted Answer

A) True 
 B)False

Question 11

When prices are constant, which of the following inventory cost formulas will lead to the lowest cost of goods sold figure?

Accepted Answer

A)  FIFO 
B)  Specific Identification 
C)  Average 
D)  When prices are constant, all cost determination methods will yield the same cost of goods sold figure. 
A)  FIFO 
B)  Specific Identification 
C)  Average 
D)  When prices are constant, all cost determination methods will yield the same cost of goods sold figure.

Question 12

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 sell goods which are not interchangeable. 
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 sell goods which are not interchangeable.

Question 13

Of the following companies, which one would not likely employ the specific identification method for inventory costing?

Accepted Answer

A)  Art Gallery 
B)  Farm implements dealership 
C)  Antique shop 
D)  Drug store 
A)  Art Gallery 
B)  Farm implements dealership 
C)  Antique shop 
D)  Drug store

Question 14

Inventory estimates are normally associated with the periodic method of accounting for inventory.

Accepted Answer

A) True 
 B)False

Question 15

A company has goods available for sale during a period at cost and at retail of $90,000 and $150,000, respectively. If sales during the period amounted to $120,000, an estimate of the ending inventory at cost at the end of the period under the retail method is

Accepted Answer

A)  $48,000. 
B)  $72,000. 
C)  $18,000. 
D)  $30,000. 
A)  $48,000. 
B)  $72,000. 
C)  $18,000. 
D)  $30,000.

Question 16

Featherstone Dollar Stores uses the periodic inventory, and completes a physical count of inventory annually and adjusts inventory to actual at each year end. For quarterly (interim) financial statements, they use the gross profit method to estimate inventory. The average of the actual gross profit margin for the most recent two years is used to estimate the quarter-end inventory. The average gross profit margin for the years ending December 31, 2012 and 2013 was 26%.
For Quarter 1, 2014, the following sales and purchases data is available:   Instructions
Prepare Featherstone's multi-step income statement for the three months ended March 31, 2014, and calculate the estimated inventory at March 31, 2014.

Accepted Answer

The answer of Featherstone Dollar Stores uses the periodic inventory,...

Question 17

At the end of April, Greenland Company reports the following for the month:   Instructions 
a. Assuming Greenland uses a periodic inventory system, calculate the cost of ending inventory and the cost of goods sold under (1) FIFO, (2) average.
b. Which cost assumption results in the highest ending inventory? Why?
c. Which cost assumption results in the highest cost of goods sold?
d. Which cost assumption results in the highest cash flow? Why?

Accepted Answer

a. Cost of goods available for sale:
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Question 18

Goods which have been removed from the warehouse and sent to a customer on approval do not need to be included in a seller's inventory.

Accepted Answer

A) True 
 B)False

Question 19

The inventory turnover ratio measurers the number of times inventory is

Accepted Answer

A)  purchased. 
B)  returned. 
C)  sold. 
D)  written off. 
A)  purchased. 
B)  returned. 
C)  sold. 
D)  written off.

Question 20

The FIFO inventory cost determination method will result in a higher cash flow to a company than average.

Accepted Answer

A) True 
 B)False

The specific identification inventory cost determination method is desirable when a company sells a large number of low-unit cost items.

When the value of inventory is higher than its cost, the inventory is written down to its net realizable value at the end of the period.

The selection of an appropriate inventory cost formula for an individual company is made by

One of the considerations of choosing a cost determination method is to use the same method for all inventories having a similar nature and usage in the company.

If the goods are produced for specific projects, then specific identification cost determination method must be used.

Under the periodic system of inventory, opening inventory will always be higher using average cost of inventory than FIFO.

Net realizable value is the selling price less any costs required to make the goods ready for sale.

Margolians Dept Store estimates inventory by using the retail inventory method. The following information was developed: The estimated cost of the ending inventory is

Only companies who use a periodic method of inventory need to have an annual physical inventory count.

When prices are constant, which of the following inventory cost formulas will lead to the lowest cost of goods sold figure?

The specific identification method of costing inventories is used when the

Of the following companies, which one would not likely employ the specific identification method for inventory costing?

Inventory estimates are normally associated with the periodic method of accounting for inventory.

A company has goods available for sale during a period at cost and at retail of $90,000 and $150,000, respectively. If sales during the period amounted to $120,000, an estimate of the ending inventory at cost at the end of the period under the retail method is

Goods which have been removed from the warehouse and sent to a customer on approval do not need to be included in a seller's inventory.

The inventory turnover ratio measurers the number of times inventory is

The FIFO inventory cost determination method will result in a higher cash flow to a company than average.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Internal Control and Cash

Long-Lived Assets

Current Liabilities

Accounting Principles

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Investments

Filters

Exam 6: Inventory Costing

The specific identification inventory cost determination method is desirable when a company sells a large number of low-unit cost items.

When the value of inventory is higher than its cost, the inventory is written down to its net realizable value at the end of the period.

The selection of an appropriate inventory cost formula for an individual company is made by

One of the considerations of choosing a cost determination method is to use the same method for all inventories having a similar nature and usage in the company.

If the goods are produced for specific projects, then specific identification cost determination method must be used.

Under the periodic system of inventory, opening inventory will always be higher using average cost of inventory than FIFO.

Net realizable value is the selling price less any costs required to make the goods ready for sale.

Margolians Dept Store estimates inventory by using the retail inventory method. The following information was developed: The estimated cost of the ending inventory is

Only companies who use a periodic method of inventory need to have an annual physical inventory count.

When prices are constant, which of the following inventory cost formulas will lead to the lowest cost of goods sold figure?

The specific identification method of costing inventories is used when the

Of the following companies, which one would not likely employ the specific identification method for inventory costing?

Inventory estimates are normally associated with the periodic method of accounting for inventory.

A company has goods available for sale during a period at cost and at retail of $90,000 and $150,000, respectively. If sales during the period amounted to $120,000, an estimate of the ending inventory at cost at the end of the period under the retail method is

Goods which have been removed from the warehouse and sent to a customer on approval do not need to be included in a seller's inventory.

The inventory turnover ratio measurers the number of times inventory is

The FIFO inventory cost determination method will result in a higher cash flow to a company than average.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Internal Control and Cash

Long-Lived Assets

Current Liabilities

Accounting Principles

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Investments

Filters