Question 1

If inventory is updated perpetually,which of the equations is correct?

Accepted Answer

A) Cost of goods sold = Beginning inventory − Purchases − Ending inventory 
B) Cost of goods sold = Beginning inventory + Purchases + Ending inventory 
C) Ending inventory = Beginning inventory + Purchases − Cost of goods sold 
D) Ending inventory = Beginning inventory + Purchases + Cost of goods sold 
A) Cost of goods sold = Beginning inventory − Purchases − Ending inventory 
B) Cost of goods sold = Beginning inventory + Purchases + Ending inventory 
C) Ending inventory = Beginning inventory + Purchases − Cost of goods sold 
D) Ending inventory = Beginning inventory + Purchases + Cost of goods sold

Question 2

When a company sells goods,it removes their cost from the Inventory account and reports the cost on the income statement as Cost of Goods Sold.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is not a primary goal of inventory management?

Accepted Answer

A) Obtaining the lowest cost of inventory. 
B) Ensuring sufficient quantities of inventory are available to meet customers' needs. 
C) Ensuring inventory quality meets customers' expectations and company standards. 
D) Minimizing the costs of acquiring and carrying inventory. 
A) Obtaining the lowest cost of inventory. 
B) Ensuring sufficient quantities of inventory are available to meet customers' needs. 
C) Ensuring inventory quality meets customers' expectations and company standards. 
D) Minimizing the costs of acquiring and carrying inventory.

Question 4

Which company will have the lower number of days to sell?

Accepted Answer

A) Company A whose cost of goods sold equals $8,000 and whose average inventory is $500. 
B) Company B whose cost of goods sold equals $4,000 and whose average inventory is $200. 
C) Company C whose cost of goods sold equals $2,000 and whose average inventory is $200. 
D) There is not enough information to answer this question. 
A) Company A whose cost of goods sold equals $8,000 and whose average inventory is $500. 
B) Company B whose cost of goods sold equals $4,000 and whose average inventory is $200. 
C) Company C whose cost of goods sold equals $2,000 and whose average inventory is $200. 
D) There is not enough information to answer this question.

Question 5

Match the term to the appropriate definition.There are more definitions than terms.
-Ending Inventory Equation

Accepted Answer

A) Inventory costing method that identifies the cost of the specific item that was sold. 
B) Inventory costing method that assumes that the costs of the first goods purchased are the costs of the first goods sold. 
C) The difference between net sales and cost of goods sold. 
D) The inventory that starts the manufacturing process. 
E) Inventory items being transported.
F)Consists of products acquired in a finished condition,ready for sale without further processing.
G)A valuation rule that requires Inventory to be written down when its market value falls below its cost.
H)The expense that follows directly after Net Sales on a multiple step income statement.
I)Beginning Inventory + Purchases - Cost of Goods Sold
J)Goods a company is holding on behalf of the goods' owner.
K)Inventory costing method that assumes that the costs of the last goods purchased are the costs of the first goods sold.
L)Requires that if LIFO is used on the income tax return,it also must be used in financial statement reporting.
M)Beginning Inventory + Purchases - Ending Inventory
N)Goods that are in the process of being manufactured.
O)Inventory costing method that uses the weighted average unit cost of the goods available for sale for both cost of goods sold and ending inventory.
P)Goods that are held for sale in the normal course of business or are used to produce other goods for sale.
Q)How many times (on average)that inventory has been bought or sold.
R)Inventory that was in process and now is completed and ready for sale.
S)A measure of the average number of days from the time inventory is bought to the time it is sold. 
A) Inventory costing method that identifies the cost of the specific item that was sold. 
B) Inventory costing method that assumes that the costs of the first goods purchased are the costs of the first goods sold. 
C) The difference between net sales and cost of goods sold. 
D) The inventory that starts the manufacturing process. 
E) Inventory items being transported.
F)Consists of products acquired in a finished condition,ready for sale without further processing.
G)A valuation rule that requires Inventory to be written down when its market value falls below its cost.
H)The expense that follows directly after Net Sales on a multiple step income statement.
I)Beginning Inventory + Purchases - Cost of Goods Sold
J)Goods a company is holding on behalf of the goods' owner.
K)Inventory costing method that assumes that the costs of the last goods purchased are the costs of the first goods sold.
L)Requires that if LIFO is used on the income tax return,it also must be used in financial statement reporting.
M)Beginning Inventory + Purchases - Ending Inventory
N)Goods that are in the process of being manufactured.
O)Inventory costing method that uses the weighted average unit cost of the goods available for sale for both cost of goods sold and ending inventory.
P)Goods that are held for sale in the normal course of business or are used to produce other goods for sale.
Q)How many times (on average)that inventory has been bought or sold.
R)Inventory that was in process and now is completed and ready for sale.
S)A measure of the average number of days from the time inventory is bought to the time it is sold.

Question 6

Schoop,Inc.has 100 units in inventory,purchased at $8 per unit.These units have a current market value of $7.The entry to write-down the inventory will include a:

Accepted Answer

A) credit to Cost of Goods Sold for $100. 
B) debit to Cost of Goods Sold for $700. 
C) credit to Inventory for $100. 
D) debit to Inventory for $700. 
A) credit to Cost of Goods Sold for $100. 
B) debit to Cost of Goods Sold for $700. 
C) credit to Inventory for $100. 
D) debit to Inventory for $700.

Question 7

Which of the following is merchandise inventory?

Accepted Answer

A) Goods held for sale in the normal course of business 
B) Office supplies that a company plans to use in the next few months 
C) Equipment used to manufacture products which will be sold later 
D) Raw materials and work in process 
A) Goods held for sale in the normal course of business 
B) Office supplies that a company plans to use in the next few months 
C) Equipment used to manufacture products which will be sold later 
D) Raw materials and work in process

Question 8

LIFO and weighted average results will be the same using either a perpetual or periodic system.

Accepted Answer

A) True 
 B)False

Question 9

Inventory is reported on the balance sheet as a current asset.

Accepted Answer

A) True 
 B)False

Question 10

King Costume uses a periodic inventory system.The company started the month with 8 masks in its beginning inventory that cost $10 each.During the month,King Costume purchased 40 additional masks for $12 each.At the end of the month,King counted its inventory and found that 5 masks remained unsold.Using the LIFO method,its cost of goods sold for the month is:

Accepted Answer

A) $510. 
B) $516. 
C) $50. 
D) $500. 
A) $510. 
B) $516. 
C) $50. 
D) $500.

Question 11

Goods placed in inventory are initially recorded at:

Accepted Answer

A) market value. 
B) the amount paid to acquire the asset. 
C) the amount paid to prepare the asset for sale to customers. 
D) the amount paid to acquire the asset and prepare it for sale. 
A) market value. 
B) the amount paid to acquire the asset. 
C) the amount paid to prepare the asset for sale to customers. 
D) the amount paid to acquire the asset and prepare it for sale.

Question 12

Coachlight Inc.has a periodic inventory system.The company purchased 200 units of inventory at $9 per unit and 300 units at $10 per unit.What is the weighted average unit cost for these purchases of inventory?

Accepted Answer

A) $9.00. 
B) $9.50. 
C) $9.60. 
D) $10.00. 
A) $9.00. 
B) $9.50. 
C) $9.60. 
D) $10.00.

Question 13

Which of the following kinds of inventory would be the best suited for the specific identification method?

Accepted Answer

A) Ice cream 
B) Business jets 
C) Biking helmets 
D) Potato chips 
A) Ice cream 
B) Business jets 
C) Biking helmets 
D) Potato chips

Question 14

Which of the following statements is correct?

Accepted Answer

A) Specific identification is the most practical,but least accurate,measure of cost and net income. 
B) When unit costs are increasing,the weighted average cost method yields a cost of goods sold between that of FIFO and LIFO. 
C) FIFO will lead to the highest net income if unit costs are falling. 
D) LIFO will always yield a smaller net income than FIFO. 
A) Specific identification is the most practical,but least accurate,measure of cost and net income. 
B) When unit costs are increasing,the weighted average cost method yields a cost of goods sold between that of FIFO and LIFO. 
C) FIFO will lead to the highest net income if unit costs are falling. 
D) LIFO will always yield a smaller net income than FIFO.

Question 15

Beryl Co.uses a periodic inventory system and has the following information in regard to its inventory:   There are 1,000 units in ending inventory.What is the amount of the ending inventory using the LIFO method?

Accepted Answer

A) $6,000 
B) $14,400 
C) $15,600 
D) $17,800 
A) $6,000 
B) $14,400 
C) $15,600 
D) $17,800

Question 16

In a period of rising prices,the inventory costing method that will cause the company to have the lowest income tax expense is:

Accepted Answer

A) LIFO. 
B) FIFO. 
C) Weighted average. 
D) Specific identification. 
A) LIFO. 
B) FIFO. 
C) Weighted average. 
D) Specific identification.

Question 17

Amiable Inc.uses a perpetual inventory system.The following transactions took place during the month of August: $\begin{array}{|l|l|}
\hline \text { August } 2 & 25 \text { units were purchased at } \$ 12 \text { per unit } \
\hline \text { August } 5 & 10 \text { units were purchased at } \$ 13 \text { per unit } \
\hline \text { August } 15 & 12 \text { units were sold at } \$ 25 \text { per unit } \
\hline \text { August } 18 & 15 \text { units were purchased at } \$ 14 \text { per unit } \
\hline
\end{array}$ If Amiable uses the LIFO method,what is the ending inventory at August 31?

Accepted Answer

A) $496.00 
B) $486.00 
C) $492.57 
D) $300.00 
E) $510.00 
A) $496.00 
B) $486.00 
C) $492.57 
D) $300.00 
E) $510.00

Question 18

An understatement of the ending inventory balance will cause:

Accepted Answer

A) Cost of goods sold to be overstated and net income to be understated. 
B) Cost of goods sold to be overstated and net income to be overstated. 
C) Cost of goods sold to be understated and net income to be overstated. 
D) Cost of goods sold to be overstated and net income to be correct. 
A) Cost of goods sold to be overstated and net income to be understated. 
B) Cost of goods sold to be overstated and net income to be overstated. 
C) Cost of goods sold to be understated and net income to be overstated. 
D) Cost of goods sold to be overstated and net income to be correct.

If inventory is updated perpetually,which of the equations is correct?

When a company sells goods,it removes their cost from the Inventory account and reports the cost on the income statement as Cost of Goods Sold.

Which of the following is not a primary goal of inventory management?

Which company will have the lower number of days to sell?

Match the term to the appropriate definition.There are more definitions than terms. -Ending Inventory Equation

Schoop,Inc.has 100 units in inventory,purchased at $8 per unit.These units have a current market value of $7.The entry to write-down the inventory will include a:

Which of the following is merchandise inventory?

LIFO and weighted average results will be the same using either a perpetual or periodic system.

Inventory is reported on the balance sheet as a current asset.

Goods placed in inventory are initially recorded at:

Coachlight Inc.has a periodic inventory system.The company purchased 200 units of inventory at $9 per unit and 300 units at $10 per unit.What is the weighted average unit cost for these purchases of inventory?

Which of the following kinds of inventory would be the best suited for the specific identification method?

Which of the following statements is correct?

Beryl Co.uses a periodic inventory system and has the following information in regard to its inventory: There are 1,000 units in ending inventory.What is the amount of the ending inventory using the LIFO method?

In a period of rising prices,the inventory costing method that will cause the company to have the lowest income tax expense is:

An understatement of the ending inventory balance will cause:

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments,Financial Statements,and Financial Results

Fraud,Internal Control,and Cash

Merchandising Operations and the Multistep Income Statement

Receivables,Bad Debt Expense,and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Stockholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 7: Inventory and Cost of Goods Sold

If inventory is updated perpetually,which of the equations is correct?

When a company sells goods,it removes their cost from the Inventory account and reports the cost on the income statement as Cost of Goods Sold.

Which of the following is not a primary goal of inventory management?

Which company will have the lower number of days to sell?

Match the term to the appropriate definition.There are more definitions than terms. -Ending Inventory Equation

Schoop,Inc.has 100 units in inventory,purchased at $8 per unit.These units have a current market value of $7.The entry to write-down the inventory will include a:

Which of the following is merchandise inventory?

LIFO and weighted average results will be the same using either a perpetual or periodic system.

Inventory is reported on the balance sheet as a current asset.

Goods placed in inventory are initially recorded at:

Coachlight Inc.has a periodic inventory system.The company purchased 200 units of inventory at $9 per unit and 300 units at $10 per unit.What is the weighted average unit cost for these purchases of inventory?

Which of the following kinds of inventory would be the best suited for the specific identification method?

Which of the following statements is correct?

Beryl Co.uses a periodic inventory system and has the following information in regard to its inventory: There are 1,000 units in ending inventory.What is the amount of the ending inventory using the LIFO method?

In a period of rising prices,the inventory costing method that will cause the company to have the lowest income tax expense is:

An understatement of the ending inventory balance will cause:

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments,Financial Statements,and Financial Results

Fraud,Internal Control,and Cash

Merchandising Operations and the Multistep Income Statement

Receivables,Bad Debt Expense,and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Stockholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters