Question 1

During an inflationary period, which inventory costing alternative usually results in a firm paying the lowest income taxes?

Accepted Answer

A)  FIFO 
B)  LIFO 
C)  Average cost 
D)  Specific identification 
A)  FIFO 
B)  LIFO 
C)  Average cost 
D)  Specific identification

Question 2

Jahn Company had the following balances in its general ledger at December 31, 2012:
  
For the year 2012, Jahn Company's electronic sales registers showed a total cost of goods sold of $480,000. Assuming that a physical count of inventory on December 31, 2012, revealed inventory on hand costing $185,000, complete the following:

Accepted Answer

For the year 2012, Jahn Company's electr

Question 3

Which inventory cost flow assumption matches current costs against current revenues?

Accepted Answer

A)  Average cost 
B)  FIFO 
C)  Specific identification 
D)  LIFO 
A)  Average cost 
B)  FIFO 
C)  Specific identification 
D)  LIFO

Question 4

Which of the following is NOT an inventory in a manufacturing company?

Accepted Answer

A)  Raw materials 
B)  Finished goods 
C)  Work-in-process 
D)  Merchandise 
A)  Raw materials 
B)  Finished goods 
C)  Work-in-process 
D)  Merchandise

Question 5

Which inventory cost flow assumption is most often used by businesses that sell a limited number of high-priced items?

Accepted Answer

A)  Average cost 
B)  FIFO 
C)  Specific identification 
D)  LIFO 
A)  Average cost 
B)  FIFO 
C)  Specific identification 
D)  LIFO

Question 6

The following information is available for the Segura Company for the three months ended June 30: $\begin{array}{ll}
\text { Inventory, April 1 } & \$ 1,200,000 \
\text { Purchases } & 4,500,000 \
\text { Freight In } & 300,000 \
\text { Sales } & 6,400,000
\end{array}$ The gross margin was 25 percent of sales. What is the estimated inventory balance at June 30?

Accepted Answer

A)  $880,000 
B)  $933,000 
C)  $1,200,000 
D)  $1,500,000 
A)  $880,000 
B)  $933,000 
C)  $1,200,000 
D)  $1,500,000

Question 7

Which of the following will occur when inventory costs are decreasing?

Accepted Answer

A)  LIFO will result in lower net income and lower ending inventory than will FIFO 
B)  FIFO will result in lower net income and lower ending inventory than will LIFO 
C)  LIFO will result in a lower net income but a higher ending inventory than will FIFO 
D)  FIFO will result in a lower net income but a higher ending inventory than will LIFO 
A)  LIFO will result in lower net income and lower ending inventory than will FIFO 
B)  FIFO will result in lower net income and lower ending inventory than will LIFO 
C)  LIFO will result in a lower net income but a higher ending inventory than will FIFO 
D)  FIFO will result in a lower net income but a higher ending inventory than will LIFO

Question 8

Martin Inc. is a wholesaler of office supplies. The activity for supply number 47519 during October is shown below:
  
-Refer to Exhibit 7-6. If Martin Inc. uses a periodic average cost inventory system, the ending inventory of supply number 47519 at October 31 is reported as (round the average cost to the nearest cent)

Accepted Answer

A)  $152,232 
B)  $150,160 
C)  $150,080 
D)  $146,400 
A)  $152,232 
B)  $150,160 
C)  $150,080 
D)  $146,400

Question 9

If a firm's beginning inventory is $70,000, goods purchased during the period cost $260,000, and the cost of goods sold is $300,000, what is the ending inventory?

Accepted Answer

A)  $30,000 
B)  $50,000 
C)  $40,000 
D)  $90,000 
A)  $30,000 
B)  $50,000 
C)  $40,000 
D)  $90,000

Question 10

Compute the missing numbers in the following income statements:

Accepted Answer

The answer of Compute the missing numbers in the following...

Question 11

Iliescu Sporting Goods had the following inventory records for one line of skis for the month of January:
 
- Refer to Exhibit 7-7. Assuming the perpetual FIFO inventory method is used, what is the cost of Iliescu's ending inventory?

Accepted Answer

A)  $3,000 
B)  $3,446 
C)  $3,276 
D)  $3,546 
A)  $3,000 
B)  $3,446 
C)  $3,276 
D)  $3,546

Question 12

The following information was taken from the records of Kane Company: $\begin{array}{lc}
\text { Beginning inventory } & \$ 135,000 \
\text { Encling inventory } & 150,000 \
\text { Net crecdit sales } & 1,440,000 \
\text { Cost of goods sold } & 810,000 \
\text { Net income } & 112,500
\end{array}$ Given this information, Kane's inventory turnover is

Accepted Answer

A)  5.68 
B)  5.40 
C)  10.11 
D)  1.33 
A)  5.68 
B)  5.40 
C)  10.11 
D)  1.33

Question 13

The following information is available for Velva Company for its most recent year:   The gross margin is 40 percent of net sales. What is the cost of goods available for sale?

Accepted Answer

A)  $3,360,000 
B)  $3,840,000 
C)  $4,800,000 
D)  $4,880,000 
A)  $3,360,000 
B)  $3,840,000 
C)  $4,800,000 
D)  $4,880,000

Question 14

The perpetual method of accounting for inventory

Accepted Answer

A)  Requires that a physical count of inventory be taken before the cost of goods sold can be determined with any reasonable degree of accuracy 
B)  Is likely to be less expensive to maintain than a periodic inventory method 
C)  Is not as helpful as a periodic method in providing management with timely reports about inventory quantities and costs 
D)  Allows management to better estimate inventory losses from pilferage than does a periodic inventory method 
A)  Requires that a physical count of inventory be taken before the cost of goods sold can be determined with any reasonable degree of accuracy 
B)  Is likely to be less expensive to maintain than a periodic inventory method 
C)  Is not as helpful as a periodic method in providing management with timely reports about inventory quantities and costs 
D)  Allows management to better estimate inventory losses from pilferage than does a periodic inventory method

Question 15

The following information is available for Harvey Corporation for the month of June:   Given this information, the average (periodic) ending inventory balance is approximately

Accepted Answer

A)  $9,056 
B)  $4,205 
C)  $3,968 
D)  $4,320 
A)  $9,056 
B)  $4,205 
C)  $3,968 
D)  $4,320

Question 16

Prepare journal entries to record the following four transactions for Labatt Company using the periodic inventory method. (Omit explanations for the entries.)

Accepted Answer

The answer of Prepare journal entries to record the following...

Question 17

Which inventory cost flow assumption will provide the same amounts for ending inventory and cost of goods sold under both the periodic and perpetual inventory systems?

Accepted Answer

A)  FIFO 
B)  LIFO 
C)  Average cost 
D)  NIFO 
A)  FIFO 
B)  LIFO 
C)  Average cost 
D)  NIFO

Question 18

The following data are available for Toltec Company:
  
Based on these data, answer the following three independent questions:

Accepted Answer

Based on these data,

Question 19

The following information is available for the Williston Company for the month ended September 30:
 $\begin{array}{lc}
\text { Inventory, September 1 } & \$ 600,000 \
\text { Purchases } & 2,250,000 \
\text { Freight In } & 150,000 \
\text { Sales } & 3,200,000
\end{array}$ The gross margin was 40 percent of sales. What is Williston's estimated inventory balance at September 30?

Accepted Answer

The answer of The following information is available for the...

Question 20

The two ratios that help a company measure how effectively it is managing its inventory are

Accepted Answer

A)  Inventory turnover and number of days' sales in inventory 
B)  Inventory turnover and number of days' purchases in accounts payable 
C)  Number of days' sales in inventory and number of days' purchases in accounts payable 
D)  Accounts receivable turnover and number of days' sales in inventory 
A)  Inventory turnover and number of days' sales in inventory 
B)  Inventory turnover and number of days' purchases in accounts payable 
C)  Number of days' sales in inventory and number of days' purchases in accounts payable 
D)  Accounts receivable turnover and number of days' sales in inventory

Exam 7: Inventory and the Cost of Sales

During an inflationary period, which inventory costing alternative usually results in a firm paying the lowest income taxes?

Which inventory cost flow assumption matches current costs against current revenues?

Which of the following is NOT an inventory in a manufacturing company?

Which inventory cost flow assumption is most often used by businesses that sell a limited number of high-priced items?

The following information is available for the Segura Company for the three months ended June 30: Inventory, April 1 \ 1,200,000 Purchases 4,500,000 Freight In 300,000 Sales 6,400,000 The gross margin was 25 percent of sales. What is the estimated inventory balance at June 30?

Which of the following will occur when inventory costs are decreasing?

If a firm's beginning inventory is $70,000, goods purchased during the period cost $260,000, and the cost of goods sold is $300,000, what is the ending inventory?

Compute the missing numbers in the following income statements:

Iliescu Sporting Goods had the following inventory records for one line of skis for the month of January: - Refer to Exhibit 7-7. Assuming the perpetual FIFO inventory method is used, what is the cost of Iliescu's ending inventory?

The following information was taken from the records of Kane Company: Beginning inventory \ 135,000 Encling inventory 150,000 Net crecdit sales 1,440,000 Cost of goods sold 810,000 Net income 112,500 Given this information, Kane's inventory turnover is

The following information is available for Velva Company for its most recent year: The gross margin is 40 percent of net sales. What is the cost of goods available for sale?

The perpetual method of accounting for inventory

The following information is available for Harvey Corporation for the month of June: Given this information, the average (periodic) ending inventory balance is approximately

Prepare journal entries to record the following four transactions for Labatt Company using the periodic inventory method. (Omit explanations for the entries.)

Which inventory cost flow assumption will provide the same amounts for ending inventory and cost of goods sold under both the periodic and perpetual inventory systems?

The following data are available for Toltec Company: Based on these data, answer the following three independent questions:

The following information is available for the Williston Company for the month ended September 30: Inventory, September 1 \ 600,000 Purchases 2,250,000 Freight In 150,000 Sales 3,200,000 The gross margin was 40 percent of sales. What is Williston's estimated inventory balance at September 30?

The two ratios that help a company measure how effectively it is managing its inventory are

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Completing the Operating Cycle

Investments: Property, Plant, and Equipment and Intangible Assets

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Management Accounting and Cost Concepts

Cost Flows and Business Organizations

Activity-Based Costing

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

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