Question 1

An understatement of the beginning inventory balance causes cost of goods sold to be:

Accepted Answer

A) understated and net income to be understated. 
B) understated and net income to be overstated. 
C) overstated and net income to be understated. 
D) overstated and net income to be correct. 
A) understated and net income to be understated. 
B) understated and net income to be overstated. 
C) overstated and net income to be understated. 
D) overstated and net income to be correct.

Question 2

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

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 3

The number of days to sell is calculated as:

Accepted Answer

A) 365 divided by ending inventory. 
B) Cost of goods sold divided by ending inventory. 
C) 365 divided by Inventory turnover ratio. 
D) Cost of goods sold divided by Average inventory. 
A) 365 divided by ending inventory. 
B) Cost of goods sold divided by ending inventory. 
C) 365 divided by Inventory turnover ratio. 
D) Cost of goods sold divided by Average inventory.

Question 4

The most commonly used inventory costing method in the U.S.is:

Accepted Answer

A) FIFO. 
B) specific identification. 
C) LIFO. 
D) weighted average. 
A) FIFO. 
B) specific identification. 
C) LIFO. 
D) weighted average.

Question 5

In a period of rising prices,the inventory costing method that assigns a value to inventory that approximates current cost is:

Accepted Answer

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

Question 6

Which financial statements will be properly stated if the Year 1 ending inventory balance is understated?

Accepted Answer

A) Year 1 balance sheet. 
B) Year 2 balance sheet. 
C) Year 1 income statement. 
D) Year 2 income statement. 
A) Year 1 balance sheet. 
B) Year 2 balance sheet. 
C) Year 1 income statement. 
D) Year 2 income statement.

Question 7

Goods placed in inventory are initially recorded at market value.

Accepted Answer

A) True 
 B)False

Question 8

Eaton Electronics uses a periodic inventory system.On March 31,Eaton has two plasma TVs on hand at a cost of $1,500 each (serial numbers 11534892 and 11534894).In April,the company purchases four more identical TVs from Toshiba for $1,450 each (serial numbers 11542631 through 11542634).In May,the company purchases five more identical TVs for $1,600 each (serial numbers 11550964 through 11550968).In June,Eaton sells two of these TVs (serial numbers 11534894 and 11542631).There were no additional purchases or sales during the remainder of the year. Eaton Electronics uses the weighted average method.What is the company's weighted average cost per unit? (Round the per unit cost to the nearest dollar. )

Accepted Answer

A) $1,500 
B) $1,517 
C) $1,527 
D) $1,600 
A) $1,500 
B) $1,517 
C) $1,527 
D) $1,600

Question 9

Eaton Electronics uses a periodic inventory system.On March 31,Eaton has two plasma TVs on hand at a cost of $1,500 each (serial numbers 11534892 and 11534894).In April,the company purchases four more identical TVs from Toshiba for $1,450 each (serial numbers 11542631 through 11542634).In May,the company purchases five more identical TVs for $1,600 each (serial numbers 11550964 through 11550968).In June,Eaton sells two of these TVs (serial numbers 11534894 and 11542631).There were no additional purchases or sales during the remainder of the year. Eaton Electronics uses the LIFO method.What is the cost of its ending inventory?

Accepted Answer

A) $13,850 
B) $13,800 
C) $13,760 
D) $13,600 
A) $13,850 
B) $13,800 
C) $13,760 
D) $13,600

Question 10

The LIFO Conformity Rule requires that LIFO be used:

Accepted Answer

A) for financial reporting if it is used on the company's income tax return. 
B) for both IFRS and GAAP. 
C) every accounting period even when prices are rising. 
D) by all companies in the same industry. 
A) for financial reporting if it is used on the company's income tax return. 
B) for both IFRS and GAAP. 
C) every accounting period even when prices are rising. 
D) by all companies in the same industry.

Question 11

Sweetwater Co.updates its inventory perpetually.The company reported a beginning inventory of $3,000.During the year,the company recorded inventory purchases of $9,000 and cost of goods sold of $10,000.What was the amount of its ending inventory?

Accepted Answer

A) $2,000 
B) $5,000 
C) $5,200 
D) $5,400 
A) $2,000 
B) $5,000 
C) $5,200 
D) $5,400

Question 12

Most companies report their lower of cost or market write-down expense as a ________ expense even if the goods haven't been sold,because it's a necessary cost of carrying and (eventually)selling the goods.

Accepted Answer

A) Cost of Goods Sold 
B) Discount 
C) Marketing 
D) Lower of Cost or Market 
A) Cost of Goods Sold 
B) Discount 
C) Marketing 
D) Lower of Cost or Market

Question 13

Generally,which inventory costing method approximates most closely the current cost for each of the following? $\begin{array}{|c|c|c|}
\hline & \text { Ending Inventory } & \text { Cost of Goods Sold } \
\hline \text { A) } & \text { FIFO } & \text { LIFO } \
\hline \text { B) } & \text { LFO } & \text { LFO } \
\hline \text { C) } & \text { FIFO } & \text { FIFO } \
\hline \text { D) } & \text { LFO } & \text { FIFO } \
\hline
\end{array}$

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 14

Yucca Co.updates its inventory periodically.The company's beginning inventory was $4,860 and purchases were $10,080 during the year.The company's ending inventory count was $9,000.What was the amount of its cost of goods sold?

Accepted Answer

A) $5,940 
B) $14,940 
C) $23,940 
D) $3,780 
A) $5,940 
B) $14,940 
C) $23,940 
D) $3,780

Question 15

Zippy Shoe Co.uses a periodic inventory system.Zippy purchased 800 pairs of shoes at $70 each in June,2,000 pairs in August at $72 each,and 1,200 pairs in December at $75 each.Zippy sold 3,800 pairs of shoes during the year.
Required:
Calculate the company's ending inventory and cost of goods sold using the each of following inventory costing methods.
a.FIFO
b.LIFO
c.Weighted Average

Accepted Answer

The answer of Zippy Shoe Co.uses a periodic inventory system.Zippy...

Question 16

Sleepy Monk offers roasted coffee beans for sale on consignment from Sea Level Roasters.Which company should report the inventory of unsold coffee beans on its balance sheet?

Accepted Answer

A) Sea Level Roasters 
B) Sleepy Monk 
C) Both companies 
D) Neither company 
A) Sea Level Roasters 
B) Sleepy Monk 
C) Both companies 
D) Neither company

Question 17

A company uses a perpetual inventory system.On May 1,beginning inventory consists of 10 items at a cost of $10 each.On May 3,10 items are purchased at $12 each.On May 8,12 items are sold.On May 15,10 items are purchased at $14 each.Using the weighted average cost,cost of goods sold for the month ended May 31 is:

Accepted Answer

A) $230.40. 
B) $132.00. 
C) $228.00. 
D) $144.00. 
A) $230.40. 
B) $132.00. 
C) $228.00. 
D) $144.00.

Question 18

Which of the following would be in the finished goods inventory of a company making ice cream?

Accepted Answer

A) Milk and cream used to make the ice cream. 
B) Ice cream that has been made but is freezing to the level required for shipping. 
C) Frozen ice cream that is waiting to be shipped to retailers. 
D) Ice cream in process awaiting the addition of nuts. 
A) Milk and cream used to make the ice cream. 
B) Ice cream that has been made but is freezing to the level required for shipping. 
C) Frozen ice cream that is waiting to be shipped to retailers. 
D) Ice cream in process awaiting the addition of nuts.

Question 19

A company uses a periodic inventory system.The company had beginning inventory of 3 units that cost $5 each.During the month,17 units were purchased for $6 each.The company sold 15 units during the month and had 5 remaining in ending inventory.If the company uses FIFO instead of LIFO to calculate cost of goods sold,then cost of goods sold will be:

Accepted Answer

A) higher using FIFO,leading to higher gross profit and higher income taxes. 
B) lower using FIFO,leading to higher gross profit and higher income taxes. 
C) lower using FIFO,leading to lower gross profit and lower income taxes. 
D) higher using FIFO,leading to lower gross profit and lower income taxes. 
A) higher using FIFO,leading to higher gross profit and higher income taxes. 
B) lower using FIFO,leading to higher gross profit and higher income taxes. 
C) lower using FIFO,leading to lower gross profit and lower income taxes. 
D) higher using FIFO,leading to lower gross profit and lower income taxes.

Question 20

When the periodic inventory system is in use,the choice of an inventory costing method usually has no impact on gross profit or cost of goods sold.

Accepted Answer

A) True 
 B)False

An understatement of the beginning inventory balance causes cost of goods sold to be:

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

The number of days to sell is calculated as:

The most commonly used inventory costing method in the U.S.is:

In a period of rising prices,the inventory costing method that assigns a value to inventory that approximates current cost is:

Which financial statements will be properly stated if the Year 1 ending inventory balance is understated?

Goods placed in inventory are initially recorded at market value.

The LIFO Conformity Rule requires that LIFO be used:

Sweetwater Co.updates its inventory perpetually.The company reported a beginning inventory of $3,000.During the year,the company recorded inventory purchases of $9,000 and cost of goods sold of $10,000.What was the amount of its ending inventory?

Most companies report their lower of cost or market write-down expense as a ________ expense even if the goods haven't been sold,because it's a necessary cost of carrying and (eventually)selling the goods.

Generally,which inventory costing method approximates most closely the current cost for each of the following? Ending Inventory Cost of Goods Sold A) FIFO LIFO B) LFO LFO C) FIFO FIFO D) LFO FIFO

Yucca Co.updates its inventory periodically.The company's beginning inventory was $4,860 and purchases were $10,080 during the year.The company's ending inventory count was $9,000.What was the amount of its cost of goods sold?

Sleepy Monk offers roasted coffee beans for sale on consignment from Sea Level Roasters.Which company should report the inventory of unsold coffee beans on its balance sheet?

Which of the following would be in the finished goods inventory of a company making ice cream?

When the periodic inventory system is in use,the choice of an inventory costing method usually has no impact on gross profit or cost of goods sold.

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

An understatement of the beginning inventory balance causes cost of goods sold to be:

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

The number of days to sell is calculated as:

The most commonly used inventory costing method in the U.S.is:

In a period of rising prices,the inventory costing method that assigns a value to inventory that approximates current cost is:

Which financial statements will be properly stated if the Year 1 ending inventory balance is understated?

Goods placed in inventory are initially recorded at market value.

The LIFO Conformity Rule requires that LIFO be used:

Sweetwater Co.updates its inventory perpetually.The company reported a beginning inventory of $3,000.During the year,the company recorded inventory purchases of $9,000 and cost of goods sold of $10,000.What was the amount of its ending inventory?

Most companies report their lower of cost or market write-down expense as a ________ expense even if the goods haven't been sold,because it's a necessary cost of carrying and (eventually)selling the goods.

Generally,which inventory costing method approximates most closely the current cost for each of the following? Ending Inventory Cost of Goods Sold A) FIFO LIFO B) LFO LFO C) FIFO FIFO D) LFO FIFO

Yucca Co.updates its inventory periodically.The company's beginning inventory was $4,860 and purchases were $10,080 during the year.The company's ending inventory count was $9,000.What was the amount of its cost of goods sold?

Sleepy Monk offers roasted coffee beans for sale on consignment from Sea Level Roasters.Which company should report the inventory of unsold coffee beans on its balance sheet?

Which of the following would be in the finished goods inventory of a company making ice cream?

When the periodic inventory system is in use,the choice of an inventory costing method usually has no impact on gross profit or cost of goods sold.

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