Question 1

The choice of an inventory costing method has no significant impact on the financial statements.

Accepted Answer

A) True 
 B)False

Question 2

List three different security measures taken to safeguard inventory.

Accepted Answer

Answers will vary and may include
- stor

Question 3

Beginning inventory, purchases, and sales data for tennis rackets are as follows:   Complete the inventory cost card assuming the business maintains a perpetual inventory system and determine the cost of goods sold and ending inventory using LIFO.

Accepted Answer

The answer of Beginning inventory, purchases, and sales data for...

Question 4

Which of the following companies would be more likely to use the specific identification inventory costing method?

Accepted Answer

A) Gordon's Jewelers 
B) Lowe's 
C) Best Buy 
D) Walmart 
A) Gordon's Jewelers 
B) Lowe's 
C) Best Buy 
D) Walmart

Question 5

If the revenues are correctly reported and the gross profit of a company is understated, what is the effect on stockholders' equity?

Accepted Answer

A) understated 
B) overstated 
C) correctly stated 
D) none of these 
A) understated 
B) overstated 
C) correctly stated 
D) none of these

Question 6

Complete the following table using the perpetual FIFO method of inventory flow.

Accepted Answer

The answer of Complete the following table using the perpetual...

Question 7

Use the information below to answer the following questions.The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1.  
-Assuming that the company uses the perpetual inventory system, determine the cost of goods sold for the sale of May 20 using the FIFO inventory cost method.

Accepted Answer

A) $120 
B) $180 
C) $136 
D) $144 
A) $120 
B) $180 
C) $136 
D) $144

Question 8

The following data were taken from Castle, Inc.​
Cost of goods sold
$894,000
Inventory, end of year
78,000
Inventory, beginning of the year
92,000
Determine the inventory turnover ratio and the number of days' sales in inventory for Castle Inc. Round to two decimal places.

Accepted Answer

Inventory turnover = Cost of goods sold/

Question 9

A perpetual inventory system is an effective means of control over inventory.

Accepted Answer

A) True 
 B)False

Question 10

Direct disposal costs do not include special advertising or sales commissions.

Accepted Answer

A) True 
 B)False

Question 11

It's not unusual for large companies to use different inventory costing methods for different segments of its inventory.

Accepted Answer

A) True 
 B)False

Question 12

Addison, Inc. uses a perpetual inventory system. Below is information about one inventory item for the month of September. Use this information to answer the questions that follow.  
-Under the _____ inventory method, accounting records maintain a continuously updated inventory value.

Accepted Answer

A) retail 
B) periodic 
C) physical 
D) perpetual 
A) retail 
B) periodic 
C) physical 
D) perpetual

Question 13

Stevens Company started the year with an inventory cost of $145,000. During the month of January, Stevens purchased inventory that cost $53,000. January sales totaled $140,000. Estimated gross profit is 35%. The estimated ending inventory as of January 31 is

Accepted Answer

A) $58,000 
B) $91,000 
C) $107,000 
D) $69,300 
A) $58,000 
B) $91,000 
C) $107,000 
D) $69,300

Question 14

Brutus Corporation, a newly formed corporation, has the following transactions during May, its first month of operations.  
-Using the table provided, calculate total sales, cost of goods sold, gross profit, and ending inventory using each of the average cost periodic inventory method. Round the average to the nearest cent.

Accepted Answer

A) Total sales: $56,975.00 Cost of goods sold: $36,431.25
Gross profit: $20,543.75
Ending inventory: $19,981.2 
B) Total sales: $56,975.00 Cost of goods sold: $36,587.50
Gross profit: $20,387.50
Ending inventory: $19,825.00 
C) Total sales: $56,975.00 Cost of goods sold: $37,312.50
Gross profit: $19,662.50
Ending inventory: $19,573.25 
D) Total sales: $56,975.00 Cost of goods sold: $37,401.75
Gross profit: $19,573.25
Ending inventory: $19,010.75 
A) Total sales: $56,975.00 Cost of goods sold: $36,431.25
Gross profit: $20,543.75
Ending inventory: $19,981.2 
B) Total sales: $56,975.00 Cost of goods sold: $36,587.50
Gross profit: $20,387.50
Ending inventory: $19,825.00 
C) Total sales: $56,975.00 Cost of goods sold: $37,312.50
Gross profit: $19,662.50
Ending inventory: $19,573.25 
D) Total sales: $56,975.00 Cost of goods sold: $37,401.75
Gross profit: $19,573.25
Ending inventory: $19,010.75

Question 15

Use the information below to answer the following questions.The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1.  
-Assuming that the company uses the perpetual inventory system, determine the May 31 inventory balance using the LIFO inventory cost method.

Accepted Answer

A) $324 
B) $372 
C) $320 
D) $364 
A) $324 
B) $372 
C) $320 
D) $364

Question 16

Average inventory is computed by adding the inventory at the beginning of the period to the inventory at the end of the period and dividing by two.

Accepted Answer

A) True 
 B)False

Question 17

The following lots of a Commodity P were available for sale during the year. Use this information to answer the questions that follow.   The firm uses the periodic system, and there are 20 units of the commodity on hand at the end of the year.​
-Under a periodic inventory system

Accepted Answer

A) accounting records continuously disclose the amount of inventory 
B) a separate account for each type of merchandise is maintained in a subsidiary ledger 
C) a physical inventory is taken at the end of the period 
D) inventory is debited when goods are returned to vendors 
A) accounting records continuously disclose the amount of inventory 
B) a separate account for each type of merchandise is maintained in a subsidiary ledger 
C) a physical inventory is taken at the end of the period 
D) inventory is debited when goods are returned to vendors

Question 18

Addison, Inc. uses a perpetual inventory system. Below is information about one inventory item for the month of September.  
-Use the information in the table to answer this question. Using a perpetual system, what is the cost of the goods sold for November if the company uses the weighted average cost method?

Accepted Answer

A) $610 
B) $585 
C) $590 
D) $575 
A) $610 
B) $585 
C) $590 
D) $575

Question 19

Of the three widely used inventory costing methods (FIFO, LIFO, and average cost), the LIFO method of costing inventory assumes costs are charged based on the most recent purchases first.

Accepted Answer

A) True 
 B)False

Question 20

Too much inventory on hand

Accepted Answer

A) ties up funds that could be used to improve operations 
B) increases the cost to safeguard the assets 
C) increases the losses due to price declines 
D) all of these 
A) ties up funds that could be used to improve operations 
B) increases the cost to safeguard the assets 
C) increases the losses due to price declines 
D) all of these

Exam 6: Inventories

The choice of an inventory costing method has no significant impact on the financial statements.

List three different security measures taken to safeguard inventory.

Beginning inventory, purchases, and sales data for tennis rackets are as follows: Complete the inventory cost card assuming the business maintains a perpetual inventory system and determine the cost of goods sold and ending inventory using LIFO.

Which of the following companies would be more likely to use the specific identification inventory costing method?

If the revenues are correctly reported and the gross profit of a company is understated, what is the effect on stockholders' equity?

Complete the following table using the perpetual FIFO method of inventory flow.

The following data were taken from Castle, Inc.​ Cost of goods sold $894,000 Inventory, end of year 78,000 Inventory, beginning of the year 92,000 Determine the inventory turnover ratio and the number of days' sales in inventory for Castle Inc. Round to two decimal places.

A perpetual inventory system is an effective means of control over inventory.

Direct disposal costs do not include special advertising or sales commissions.

It's not unusual for large companies to use different inventory costing methods for different segments of its inventory.

Addison, Inc. uses a perpetual inventory system. Below is information about one inventory item for the month of September. Use this information to answer the questions that follow. -Under the _____ inventory method, accounting records maintain a continuously updated inventory value.

Stevens Company started the year with an inventory cost of $145,000. During the month of January, Stevens purchased inventory that cost $53,000. January sales totaled $140,000. Estimated gross profit is 35%. The estimated ending inventory as of January 31 is

Average inventory is computed by adding the inventory at the beginning of the period to the inventory at the end of the period and dividing by two.

The following lots of a Commodity P were available for sale during the year. Use this information to answer the questions that follow. The firm uses the periodic system, and there are 20 units of the commodity on hand at the end of the year.​ -Under a periodic inventory system

Of the three widely used inventory costing methods (FIFO, LIFO, and average cost), the LIFO method of costing inventory assumes costs are charged based on the most recent purchases first.

Too much inventory on hand

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

The Accounting Cycle

Accounting for Retail Businesses

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current, Installment Notes, and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, Stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity-Based Costing

Support Department and Joint Cost Allocation

Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

The Balanced Scorecard and Corporate Social Responsibility

Investments

Filters

The following data were taken from Castle, Inc. Cost of goods sold $894,000 Inventory, end of year 78,000 Inventory, beginning of the year 92,000 Determine the inventory turnover ratio and the number of days' sales in inventory for Castle Inc. Round to two decimal places.

The following lots of a Commodity P were available for sale during the year. Use this information to answer the questions that follow. The firm uses the periodic system, and there are 20 units of the commodity on hand at the end of the year. -Under a periodic inventory system