Question 1

Lionworks Enterprises had the following inventory data:
 
Assuming FIFO,what is the cost of goods sold for the July 14 sale?

Accepted Answer

A) $455 
B) $440 
C) $456 
D) $464 
A) $455 
B) $440 
C) $456 
D) $464

Question 2

If the ending inventory is overstated in Year 1,then the Cost of Goods Sold will be overstated in Year 2.

Accepted Answer

A) True 
 B)False

Question 3

Cost of goods sold equals:

Accepted Answer

A) ending inventory plus net purchases minus beginning inventory. 
B) beginning inventory minus net purchases plus ending inventory. 
C) beginning inventory plus net sales minus ending inventory. 
D) beginning inventory plus net purchases minus ending inventory. 
A) ending inventory plus net purchases minus beginning inventory. 
B) beginning inventory minus net purchases plus ending inventory. 
C) beginning inventory plus net sales minus ending inventory. 
D) beginning inventory plus net purchases minus ending inventory.

Question 4

Merchandise inventory represents the goods that a merchandiser has available to sell to its customers.

Accepted Answer

A) True 
 B)False

Question 5

Counting inventory that is in transit on December 31 that was shipped from the supplier FOB shipping point would not cause any error in the final inventory valuation.

Accepted Answer

A) True 
 B)False

Question 6

Under the LIFO method,the flow of costs through the accounting records will:

Accepted Answer

A) be nearly the opposite of the physical flow of goods through the business. 
B) closely match the physical flow of goods through the business. 
C) exactly match the physical flow of goods through the business. 
D) have no relationship to the physical flow of goods through the business. 
A) be nearly the opposite of the physical flow of goods through the business. 
B) closely match the physical flow of goods through the business. 
C) exactly match the physical flow of goods through the business. 
D) have no relationship to the physical flow of goods through the business.

Question 7

An inventory layer is synonymous with a separate:

Accepted Answer

A) sale of merchandise. 
B) purchase of merchandise. 
C) return of merchandise. 
D) customer return of merchandise. 
A) sale of merchandise. 
B) purchase of merchandise. 
C) return of merchandise. 
D) customer return of merchandise.

Question 8

The last step in using the gross profit method to estimate ending inventory is to:

Accepted Answer

A) estimate the beginning inventory. 
B) estimate the cost of goods sold. 
C) calculate the cost of goods available for sale. 
D) estimate the ending inventory. 
A) estimate the beginning inventory. 
B) estimate the cost of goods sold. 
C) calculate the cost of goods available for sale. 
D) estimate the ending inventory.

Question 9

Under the LIFO method,the physical flow of goods through the business will:

Accepted Answer

A) have no relationship to the flow of costs through the accounting records. 
B) closely match the flow of costs through the accounting records. 
C) exactly match the flow of costs through the accounting records. 
D) be nearly the opposite of the flow of costs through the accounting records. 
A) have no relationship to the flow of costs through the accounting records. 
B) closely match the flow of costs through the accounting records. 
C) exactly match the flow of costs through the accounting records. 
D) be nearly the opposite of the flow of costs through the accounting records.

Question 10

An error in the reported inventory will cause errors in all of the following EXCEPT the:

Accepted Answer

A) Balance Sheet. 
B) Statement of Retained Earnings. 
C) following year's financial statements. 
D) cash account. 
A) Balance Sheet. 
B) Statement of Retained Earnings. 
C) following year's financial statements. 
D) cash account.

Question 11

Customer demand for an item CANNOT:

Accepted Answer

A) increase the inventory turnover. 
B) decrease the inventory turnover. 
C) affect the amount of merchandise the company purchases. 
D) change the formula used to calculate inventory turnover. 
A) increase the inventory turnover. 
B) decrease the inventory turnover. 
C) affect the amount of merchandise the company purchases. 
D) change the formula used to calculate inventory turnover.

Question 12

Changing from LIFO to FIFO over two accounting periods could be viewed as a violation of which accounting concept or principle?

Accepted Answer

A) Conservatism 
B) Consistency 
C) Materiality 
D) Entity 
A) Conservatism 
B) Consistency 
C) Materiality 
D) Entity

Question 13

Which inventory costing method results in the oldest costs in ending inventory?

Accepted Answer

A) Average cost 
B) Last-In,First-Out 
C) First-In,First-Out 
D) Average-In,First-Out 
A) Average cost 
B) Last-In,First-Out 
C) First-In,First-Out 
D) Average-In,First-Out

Question 14

Consistency is mandated by:

Accepted Answer

A) the IRS. 
B) the SEC. 
C) GAAP. 
D) the federal government. 
A) the IRS. 
B) the SEC. 
C) GAAP. 
D) the federal government.

Question 15

If ending inventory in Period 1 is understated,Cost of Goods Sold in Period 2 is:

Accepted Answer

A) overstated. 
B) understated. 
C) not affected. 
D) the same as in Period 1. 
A) overstated. 
B) understated. 
C) not affected. 
D) the same as in Period 1.

Question 16

The ________ estimates inventory by using the format for cost of goods sold.

Accepted Answer

A) FIFO method 
B) LIFO method 
C) gross profit method 
D) average cost method 
A) FIFO method 
B) LIFO method 
C) gross profit method 
D) average cost method

Question 17

The journal entries to record the purchases of inventory on account are different based on the costing method chosen.

Accepted Answer

A) True 
 B)False

Question 18

To save time when performing physical inventory counts,outside companies are rarely used because they are not familiar with the inventory.

Accepted Answer

A) True 
 B)False

Question 19

If a misstatement of inventory occurs,the net income for ________ periods will be misstated.

Accepted Answer

A) 0 
B) 1 
C) 2 
D) 3 
A) 0 
B) 1 
C) 2 
D) 3

Question 20

The most popular inventory costing method is:

Accepted Answer

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

Lionworks Enterprises had the following inventory data: Assuming FIFO,what is the cost of goods sold for the July 14 sale?

If the ending inventory is overstated in Year 1,then the Cost of Goods Sold will be overstated in Year 2.

Cost of goods sold equals:

Merchandise inventory represents the goods that a merchandiser has available to sell to its customers.

Counting inventory that is in transit on December 31 that was shipped from the supplier FOB shipping point would not cause any error in the final inventory valuation.

Under the LIFO method,the flow of costs through the accounting records will:

An inventory layer is synonymous with a separate:

The last step in using the gross profit method to estimate ending inventory is to:

Under the LIFO method,the physical flow of goods through the business will:

An error in the reported inventory will cause errors in all of the following EXCEPT the:

Customer demand for an item CANNOT:

Changing from LIFO to FIFO over two accounting periods could be viewed as a violation of which accounting concept or principle?

Which inventory costing method results in the oldest costs in ending inventory?

Consistency is mandated by:

If ending inventory in Period 1 is understated,Cost of Goods Sold in Period 2 is:

The ________ estimates inventory by using the format for cost of goods sold.

The journal entries to record the purchases of inventory on account are different based on the costing method chosen.

To save time when performing physical inventory counts,outside companies are rarely used because they are not familiar with the inventory.

If a misstatement of inventory occurs,the net income for ________ periods will be misstated.

The most popular inventory costing method is:

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

The Challenges of Accounting: Standards, internal Control, audits, fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Financial Statement Analysis

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Exam 5: Inventory

Lionworks Enterprises had the following inventory data: Assuming FIFO,what is the cost of goods sold for the July 14 sale?

If the ending inventory is overstated in Year 1,then the Cost of Goods Sold will be overstated in Year 2.

Cost of goods sold equals:

Merchandise inventory represents the goods that a merchandiser has available to sell to its customers.

Counting inventory that is in transit on December 31 that was shipped from the supplier FOB shipping point would not cause any error in the final inventory valuation.

Under the LIFO method,the flow of costs through the accounting records will:

An inventory layer is synonymous with a separate:

The last step in using the gross profit method to estimate ending inventory is to:

Under the LIFO method,the physical flow of goods through the business will:

An error in the reported inventory will cause errors in all of the following EXCEPT the:

Customer demand for an item CANNOT:

Changing from LIFO to FIFO over two accounting periods could be viewed as a violation of which accounting concept or principle?

Which inventory costing method results in the oldest costs in ending inventory?

Consistency is mandated by:

If ending inventory in Period 1 is understated,Cost of Goods Sold in Period 2 is:

The ________ estimates inventory by using the format for cost of goods sold.

The journal entries to record the purchases of inventory on account are different based on the costing method chosen.

To save time when performing physical inventory counts,outside companies are rarely used because they are not familiar with the inventory.

If a misstatement of inventory occurs,the net income for ________ periods will be misstated.

The most popular inventory costing method is:

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

The Challenges of Accounting: Standards, internal Control, audits, fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Financial Statement Analysis

Filters