Question 1

Goods in transit shipped FOB destination belong to the seller.

Accepted Answer

A) True 
 B)False  True

Question 2

In the notes to the financial statements, the following information should not be included:

Accepted Answer

A)  the major inventory classifications 
B)  the cost determination method (FIFO, specific identification , or average) 
C)  the fact that inventory is valued at the lower of cost or net realizable value 
D)  the amount inventory is written up above its original cost 
A)  the major inventory classifications 
B)  the cost determination method (FIFO, specific identification , or average) 
C)  the fact that inventory is valued at the lower of cost or net realizable value 
D)  the amount inventory is written up above its original cost D

Question 3

In a period of rising prices,

Accepted Answer

A)  Cost of Goods sold is higher using average, compared with FIFO. 
B)  Compared with average, FIFO results in lower gross profit. 
C)  Compared with average, FIFO has lower ending inventory. 
D)  Compared with FIFO, average has higher owner's equity. 
A)  Cost of Goods sold is higher using average, compared with FIFO. 
B)  Compared with average, FIFO results in lower gross profit. 
C)  Compared with average, FIFO has lower ending inventory. 
D)  Compared with FIFO, average has higher owner's equity. A

Question 4

The specific identification method does not track the actual physical flow of the goods in a perpetual system

Accepted Answer

A) True 
 B)False

Question 5

An error in ending inventory of the current period will have a reverse effect on the profit of the next period.

Accepted Answer

A) True 
 B)False

Question 6

In a period of rising prices, FIFO results in a lower profit and lower ending inventory than average

Accepted Answer

A) True 
 B)False

Question 7

Acme has the following information about its inventory. 
   
Using a perpetual inventory system, calculate the costs to be assigned to the ending inventory and to goods sold under:
a. Average 
b. FIFO.

Accepted Answer

The answer of Acme has the following information about its...

Question 8

What is the formula to determine weighted average unit cost?

Accepted Answer

Cost of goods available for

Question 9

Given the following information for Delta Company, calculate the Inventory turnover ratio:

Accepted Answer

The answer of Given the following information for Delta Company,...

Question 10

Which of the following statements is not true?

Accepted Answer

A)  Specific identification exactly matches costs and revenues. 
B)  Average tends to smooth out price changes. 
C)  FIFO assigns an amount to inventory that is the lower of cost or net realizable value. 
D)  FIFO assigns the oldest costs incurred to cost of goods sold. 
A)  Specific identification exactly matches costs and revenues. 
B)  Average tends to smooth out price changes. 
C)  FIFO assigns an amount to inventory that is the lower of cost or net realizable value. 
D)  FIFO assigns the oldest costs incurred to cost of goods sold.

Question 11

If the ending inventory is overstated:

Accepted Answer

A)  profit will be understated. 
B)  profit will be overstated. 
C)  profit will be correct. 
D)  gross profit will be understated. 
A)  profit will be understated. 
B)  profit will be overstated. 
C)  profit will be correct. 
D)  gross profit will be understated.

Question 12

Paddy Company, which uses a perpetual inventory system, miscounted its ending inventory in Year 1, causing it to be understated. The error was not detected. Using the symbols U, O, and NE to represent understated, overstated, and no effect, indicate the impact of the error on each of the following items.

Accepted Answer

The answer of Paddy Company, which uses a perpetual inventory...

Question 13

In a perpetual system, the calculation for weighted average unit cost is Cost of Goods Sold divided by the total units available for sale

Accepted Answer

A) True 
 B)False

Question 14

Inventory is written down to net realizable value if the net realizable value is lower than its cost

Accepted Answer

A) True 
 B)False

Question 15

Taking a physical inventory involves actually counting, weighing, or measuring each kind of inventory on hand

Accepted Answer

A) True 
 B)False

Question 16

Under FIFO, the assignment of cost to merchandise sold is in the same order in which the merchandise was purchased.

Accepted Answer

A) True 
 B)False

Question 17

The specific identification method is used for high-volume, low-cost items.

Accepted Answer

A) True 
 B)False

Question 18

Goods on consignment are owned by the holder of the goods (consignee).

Accepted Answer

A) True 
 B)False

Question 19

There are three inventory cost determination methods. Name them.

Accepted Answer

Specific

Question 20

A company just starting business made the following four inventory purchases in August:
   
On August 24, there were a total of 900 units sold. Using the FIFO inventory cost formula for a periodic inventory system, what is the amount allocated to cost of goods sold for August?

Accepted Answer

August 1….300 units cost $1,56

Goods in transit shipped FOB destination belong to the seller.

In the notes to the financial statements, the following information should not be included:

In a period of rising prices,

The specific identification method does not track the actual physical flow of the goods in a perpetual system

An error in ending inventory of the current period will have a reverse effect on the profit of the next period.

In a period of rising prices, FIFO results in a lower profit and lower ending inventory than average

Acme has the following information about its inventory. Using a perpetual inventory system, calculate the costs to be assigned to the ending inventory and to goods sold under: a. Average b. FIFO.

What is the formula to determine weighted average unit cost?

Given the following information for Delta Company, calculate the Inventory turnover ratio:

Which of the following statements is not true?

If the ending inventory is overstated:

In a perpetual system, the calculation for weighted average unit cost is Cost of Goods Sold divided by the total units available for sale

Inventory is written down to net realizable value if the net realizable value is lower than its cost

Taking a physical inventory involves actually counting, weighing, or measuring each kind of inventory on hand

Under FIFO, the assignment of cost to merchandise sold is in the same order in which the merchandise was purchased.

The specific identification method is used for high-volume, low-cost items.

Goods on consignment are owned by the holder of the goods (consignee).

There are three inventory cost determination methods. Name them.

A company just starting business made the following four inventory purchases in August: On August 24, there were a total of 900 units sold. Using the FIFO inventory cost formula for a periodic inventory system, what is the amount allocated to cost of goods sold for August?

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Internal Control and Cash

Accounting for Receivables

Long-Lived Assets

Current Liabilities

Financial Reporting Concepts

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and IFRS

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

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Exam 6: Inventory Costing

Goods in transit shipped FOB destination belong to the seller.

In the notes to the financial statements, the following information should not be included:

In a period of rising prices,

The specific identification method does not track the actual physical flow of the goods in a perpetual system

An error in ending inventory of the current period will have a reverse effect on the profit of the next period.

In a period of rising prices, FIFO results in a lower profit and lower ending inventory than average

Acme has the following information about its inventory. Using a perpetual inventory system, calculate the costs to be assigned to the ending inventory and to goods sold under: a. Average b. FIFO.

What is the formula to determine weighted average unit cost?

Given the following information for Delta Company, calculate the Inventory turnover ratio:

Which of the following statements is not true?

If the ending inventory is overstated:

In a perpetual system, the calculation for weighted average unit cost is Cost of Goods Sold divided by the total units available for sale

Inventory is written down to net realizable value if the net realizable value is lower than its cost

Taking a physical inventory involves actually counting, weighing, or measuring each kind of inventory on hand

Under FIFO, the assignment of cost to merchandise sold is in the same order in which the merchandise was purchased.

The specific identification method is used for high-volume, low-cost items.

Goods on consignment are owned by the holder of the goods (consignee).

There are three inventory cost determination methods. Name them.

A company just starting business made the following four inventory purchases in August: On August 24, there were a total of 900 units sold. Using the FIFO inventory cost formula for a periodic inventory system, what is the amount allocated to cost of goods sold for August?

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Internal Control and Cash

Accounting for Receivables

Long-Lived Assets

Current Liabilities

Financial Reporting Concepts

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and IFRS

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Filters