Question 1

Variable costs are those that do not change in proportion to the level of production and include raw materials,direct labor,and the salaries of factory supervisors.

Accepted Answer

A) True 
 B)False

Question 2

The size of the divergence between FIFO cost of goods sold and replacement cost of goods sold depends on

Accepted Answer

A) the severity of input cost changes. 
B) the rapidity of physical inventory turnover. 
C) both the severity of input cost changes and the rapidity of physical inventory turnover. 
D) a multitude of factors including the severity of input cost changes and the rapidity of physical inventory turnover. 
A) the severity of input cost changes. 
B) the rapidity of physical inventory turnover. 
C) both the severity of input cost changes and the rapidity of physical inventory turnover. 
D) a multitude of factors including the severity of input cost changes and the rapidity of physical inventory turnover.

Question 3

The input cost changes that occur after the purchase of inventory items in a current cost accounting system are recognized as

Accepted Answer

A) realized gains and losses. 
B) unrealized holding gains and losses. 
C) extraordinary gains and losses. 
D) costs of goods solD. 
A) realized gains and losses. 
B) unrealized holding gains and losses. 
C) extraordinary gains and losses. 
D) costs of goods solD.

Question 4

The SEC rule (Regulation S-X)requires firms to disclose "the excess of replacement cost or current cost over stated LIFO value ..." rather than the difference between inventory book value at LIFO and inventory book value at FIFO.

Accepted Answer

A) True 
 B)False

Question 5

Goods held on consignment are included in the inventory valuation of

Accepted Answer

A) the consignor. 
B) the consignee. 
C) both the consignor and the consignee. 
D) neither the consignor nor the consignee. 
A) the consignor. 
B) the consignee. 
C) both the consignor and the consignee. 
D) neither the consignor nor the consignee.

Question 6

Goods available for sale is determined by

Accepted Answer

A) adding the cost of any beginning inventory and the cost of purchases during the period. 
B) subtracting the cost of any ending inventory from the cost of any beginning inventory. 
C) subtracting the cost of any beginning inventory from the cost of any ending inventory. 
D) subtracting the cost of any beginning inventory from the cost of purchases during the perioD. 
A) adding the cost of any beginning inventory and the cost of purchases during the period. 
B) subtracting the cost of any ending inventory from the cost of any beginning inventory. 
C) subtracting the cost of any beginning inventory from the cost of any ending inventory. 
D) subtracting the cost of any beginning inventory from the cost of purchases during the perioD.

Question 7

Companies frequently disclose the effects of absorption costing on reported net income.

Accepted Answer

A) True 
 B)False

Question 8

Dollar-value LIFO avoids much of the detailed record keeping required under standard LIFO.

Accepted Answer

A) True 
 B)False

Question 9

Cost of goods available for sale is always the same regardless of the inventory cost flow assumption in use.

Accepted Answer

A) True 
 B)False

Question 10

A periodic system of inventory

Accepted Answer

A) reduces record keeping. 
B) increases record keeping. 
C) increases the cost of maintaining inventory. 
D) eliminates the need for a physical count. 
A) reduces record keeping. 
B) increases record keeping. 
C) increases the cost of maintaining inventory. 
D) eliminates the need for a physical count.

Question 11

The lower of cost or market method is based on the assumption that input costs and selling prices generally move together.

Accepted Answer

A) True 
 B)False

Question 12

Under a periodic inventory system,cost of goods sold automatically includes the cost of inventory "shrinkage."

Accepted Answer

A) True 
 B)False

Question 13

When a LIFO firm liquidates old LIFO layers,the net income number under LIFO can be seriously distorted because the older costs in the LIFO layers that are liquidated are matched against sales dollars that are stated at higher current prices.

Accepted Answer

A) True 
 B)False

Question 14

Some analysts argue that by merging current cost profits and realized holding gains,LIFO gives misleading signals about the sustainable operating profits of the company.

Accepted Answer

A) True 
 B)False

Question 15

Financial analysts recognize that the deficiency of the FIFO cost flow assumption is the failure to

Accepted Answer

A) match current costs with current revenues. 
B) match current costs with oldest revenues. 
C) match oldest costs with current revenues. 
D) match oldest costs with oldest revenues. 
A) match current costs with current revenues. 
B) match current costs with oldest revenues. 
C) match oldest costs with current revenues. 
D) match oldest costs with oldest revenues.

Question 16

Inventory shipped on consignment is owned by the consignee.

Accepted Answer

A) True 
 B)False

Question 17

Analysts try to remove holding gains from reported FIFO income because

Accepted Answer

A) the FEI's code of professional ethics requires that they do so if possible. 
B) holding gains understate management's true performance. 
C) they are potentially unsustainable. 
D) None of these is appropriate reasons for removing holding gains from reported FIFO income. 
A) the FEI's code of professional ethics requires that they do so if possible. 
B) holding gains understate management's true performance. 
C) they are potentially unsustainable. 
D) None of these is appropriate reasons for removing holding gains from reported FIFO income.

Question 18

The Mick Company reported a LIFO cost of goods sold for the year of $100,000.The LIFO reserve decreased by $30,000 for the year.An estimate of the cost of goods sold under FIFO is

Accepted Answer

A) $70,000. 
B) $130,000. 
C) $160,000. 
D) $200,000. 
A) $70,000. 
B) $130,000. 
C) $160,000. 
D) $200,000.

Question 19

The World Company's financial statements for 2014 and 2015 contain the following errors:
$\begin{array} { l l l } &2015&2014\
\text { Ending Inventory } & \$ 6,000 \text { overstated } & \$ 16,000 \text { overstated } \
\text { Insurance Expense } & \$ 4,000 \text { understated } & \$ 12,000 \text { overstated }
\end{array}$
-If no correcting entries were made at the end of 2014,by how much will retained earnings be overstated or understated at the end of 2015? Ignore tax consequences.

Accepted Answer

A) $2,000 understated 
B) $2,000 overstated 
C) $10,000 understated 
D) $10,000 overstated 
A) $2,000 understated 
B) $2,000 overstated 
C) $10,000 understated 
D) $10,000 overstated

Question 20

Under a periodic inventory system,purchases are debited to a purchases account.

Accepted Answer

A) True 
 B)False

Variable costs are those that do not change in proportion to the level of production and include raw materials,direct labor,and the salaries of factory supervisors.

The size of the divergence between FIFO cost of goods sold and replacement cost of goods sold depends on

The input cost changes that occur after the purchase of inventory items in a current cost accounting system are recognized as

The SEC rule (Regulation S-X)requires firms to disclose "the excess of replacement cost or current cost over stated LIFO value ..." rather than the difference between inventory book value at LIFO and inventory book value at FIFO.

Goods held on consignment are included in the inventory valuation of

Goods available for sale is determined by

Companies frequently disclose the effects of absorption costing on reported net income.

Dollar-value LIFO avoids much of the detailed record keeping required under standard LIFO.

Cost of goods available for sale is always the same regardless of the inventory cost flow assumption in use.

A periodic system of inventory

The lower of cost or market method is based on the assumption that input costs and selling prices generally move together.

Under a periodic inventory system,cost of goods sold automatically includes the cost of inventory "shrinkage."

When a LIFO firm liquidates old LIFO layers,the net income number under LIFO can be seriously distorted because the older costs in the LIFO layers that are liquidated are matched against sales dollars that are stated at higher current prices.

Some analysts argue that by merging current cost profits and realized holding gains,LIFO gives misleading signals about the sustainable operating profits of the company.

Financial analysts recognize that the deficiency of the FIFO cost flow assumption is the failure to

Inventory shipped on consignment is owned by the consignee.

Analysts try to remove holding gains from reported FIFO income because

The Mick Company reported a LIFO cost of goods sold for the year of $100,000.The LIFO reserve decreased by $30,000 for the year.An estimate of the cost of goods sold under FIFO is

Under a periodic inventory system,purchases are debited to a purchases account.

The Economic and Institutional Setting for Financial Reporting

Accrual Accounting and Income Determination

Additional Topics in Income Determination

Structure of the Balance Sheet and Statement of Cash Flows

Essentials of Financial Statement Analysis

The Role of Financial Information in Valuation and Credit Risk Assessment

The Role of Financial Information in Contracting

Receivables

Long-Lived Assets

Financial Instruments As Liabilities

Financial Reporting for Leases

Income Tax Reporting

Pensions and Postretirement Benefits

Financial Reporting for Owners Equity

Intercorporate Equity Investments

Statement of Cash Flows

Filters

Exam 9: Inventories

Variable costs are those that do not change in proportion to the level of production and include raw materials,direct labor,and the salaries of factory supervisors.

The size of the divergence between FIFO cost of goods sold and replacement cost of goods sold depends on

The input cost changes that occur after the purchase of inventory items in a current cost accounting system are recognized as

The SEC rule (Regulation S-X)requires firms to disclose "the excess of replacement cost or current cost over stated LIFO value ..." rather than the difference between inventory book value at LIFO and inventory book value at FIFO.

Goods held on consignment are included in the inventory valuation of

Goods available for sale is determined by

Companies frequently disclose the effects of absorption costing on reported net income.

Dollar-value LIFO avoids much of the detailed record keeping required under standard LIFO.

Cost of goods available for sale is always the same regardless of the inventory cost flow assumption in use.

A periodic system of inventory

The lower of cost or market method is based on the assumption that input costs and selling prices generally move together.

Under a periodic inventory system,cost of goods sold automatically includes the cost of inventory "shrinkage."

When a LIFO firm liquidates old LIFO layers,the net income number under LIFO can be seriously distorted because the older costs in the LIFO layers that are liquidated are matched against sales dollars that are stated at higher current prices.

Some analysts argue that by merging current cost profits and realized holding gains,LIFO gives misleading signals about the sustainable operating profits of the company.

Financial analysts recognize that the deficiency of the FIFO cost flow assumption is the failure to

Inventory shipped on consignment is owned by the consignee.

Analysts try to remove holding gains from reported FIFO income because

The Mick Company reported a LIFO cost of goods sold for the year of $100,000.The LIFO reserve decreased by $30,000 for the year.An estimate of the cost of goods sold under FIFO is

Under a periodic inventory system,purchases are debited to a purchases account.

The Economic and Institutional Setting for Financial Reporting

Accrual Accounting and Income Determination

Additional Topics in Income Determination

Structure of the Balance Sheet and Statement of Cash Flows

Essentials of Financial Statement Analysis

The Role of Financial Information in Valuation and Credit Risk Assessment

The Role of Financial Information in Contracting

Receivables

Long-Lived Assets

Financial Instruments As Liabilities

Financial Reporting for Leases

Income Tax Reporting

Pensions and Postretirement Benefits

Financial Reporting for Owners Equity

Intercorporate Equity Investments

Statement of Cash Flows

Filters