Question 1

The most conservative method of applying the lower of cost or net realizable value rule is to use the lower of total cost or total net realizable value by groups.

Accepted Answer

A) True 
 B)False

Question 2

The use of the LIFO method of inventory valuation

Accepted Answer

A) assigns the cost of the most recent purchases to the ending inventory. 
B) results in the same valuation as the specific identification method in a time of rising prices. 
C) results in the lowest reported net income in a time of rising prices. 
D) results in the highest reported net income in a time of rising prices. 
A) assigns the cost of the most recent purchases to the ending inventory. 
B) results in the same valuation as the specific identification method in a time of rising prices. 
C) results in the lowest reported net income in a time of rising prices. 
D) results in the highest reported net income in a time of rising prices.

Question 3

In periods of rising prices, use of the---------- method of inventory valuation results in the lowest inventory cost on the balance sheet.

Accepted Answer

The answer of In periods of rising prices, use of...

Question 4

An assumption necessary to use the Gross Profit method is that the

Accepted Answer

A) Gross Profit amount is constant from period to period. 
B) inventory level remains constant. 
C) Gross Profit percentage increases at the rate of inflation. 
D) rate of Gross Profit is constant from period to period. 
A) Gross Profit amount is constant from period to period. 
B) inventory level remains constant. 
C) Gross Profit percentage increases at the rate of inflation. 
D) rate of Gross Profit is constant from period to period.

Question 5

If a firm uses the FIFO method of inventory valuation for tax purposes, it must use the FIFO method for financial accounting.

Accepted Answer

A) True 
 B)False

Question 6

The gross profit method of determining ending inventory cost

Accepted Answer

A) requires that a firm keep inventory and purchases data at retail value as well as at cost. 
B) provides accurate information about the number of units in inventory. 
C) can be used without taking a physical count of merchandise. 
D) requires that the inventory be classified into groups of items of about the same rate of markon. 
A) requires that a firm keep inventory and purchases data at retail value as well as at cost. 
B) provides accurate information about the number of units in inventory. 
C) can be used without taking a physical count of merchandise. 
D) requires that the inventory be classified into groups of items of about the same rate of markon.

Question 7

The--------- method of inventory valuation is a procedure developed for charging the current costs of goods against current sales prices.

Accepted Answer

The answer of The--------- method of inventory valuation is a...

Question 8

A company reported the following information regarding its inventory: Beginning inventory: cost of $63,000; retail of $140,000
Net purchases: cost $42,000; retail $84,000 Sales at retail: $160,000
The year-end inventory showed $64,000 worth of merchandise available at retail prices. What is the cost of the ending inventory?

Accepted Answer

A) $40,000. 
B) $32,000. 
C) $30,000. 
D) $28,800. 
A) $40,000. 
B) $32,000. 
C) $30,000. 
D) $28,800.

Question 9

A matching of the most recent costs to revenue results from the use of

Accepted Answer

A) the FIFO method. 
B) the LIFO method. 
C) the average cost method. 
D) the lower of cost or net realizable value method. 
A) the FIFO method. 
B) the LIFO method. 
C) the average cost method. 
D) the lower of cost or net realizable value method.

Question 10

For internal control, unit counts used to compute the inventory should be verified by thorough spot checks.

Accepted Answer

A) True 
 B)False

Question 11

The inventory valuation method which tends to smooth out periodic fluctuations in cost is:

Accepted Answer

A) the LIFO method 
B) the weighted average method 
C) the FIFO method 
D) the specific identification method 
A) the LIFO method 
B) the weighted average method 
C) the FIFO method 
D) the specific identification method

Question 12

Distinguish between periodic inventory, perpetual inventory, and physical inventory.

Accepted Answer

Periodic inventory is based on the actua

Question 13

The cost of the earliest merchandise purchased is assigned to ending inventory when a company uses

Accepted Answer

A) the FIFO method. 
B) the LIFO method. 
C) the average cost method. 
D) the lower of cost or net realizable value method. 
A) the FIFO method. 
B) the LIFO method. 
C) the average cost method. 
D) the lower of cost or net realizable value method.

Question 14

Many retail stores take a periodic inventory at retail values, using the sales price marked on the merchandise.

Accepted Answer

A) True 
 B)False

Question 15

In the---------- method of inventory valuation, inventory cost is determined by multiplying the number of units in inventory by a unit cost, which is calculated by dividing the cost of goods available for sale by the units of merchandise available for sale.

Accepted Answer

The answer of In the---------- method of inventory valuation, inventory...

Question 16

Which of the following inventory costing procedures requires a physical count of merchandise a minimum of once a year at year end?

Accepted Answer

A) the Last-in-first-out method 
B) the average cost method 
C) the First-in-first-out method 
D) a physical count at a minimum of once a year is required for all inventory costing procedures 
A) the Last-in-first-out method 
B) the average cost method 
C) the First-in-first-out method 
D) a physical count at a minimum of once a year is required for all inventory costing procedures

Question 17

Duncan Industries' inventory of coats (Model XL)during 2019 is given below. The company uses a periodic inventory system.
  
What is the cost of the ending inventory and the cost of goods sold?
1. Assume Duncan Industries utilizes the FIFO method
2. Assume Duncan Industries utilizes the LIFO method
3. Assume Duncan Industries utilizes the average cost method

Accepted Answer

1. (FIFO) EI: $280.00 = 4 x $70; COGS:$8

Question 18

Information about the Maxwell Company's inventory of one item during 2019 is given below.
  
Assuming that Maxwell uses a periodic system, compute the cost of the ending inventory and cost o goods sold under each of the following methods. (Round answers to two decimal places.)
1. Average cost method
2. First in, first out (FIFO)method
3. Last in, first out (LIFO)method

Accepted Answer

1. End. Inv., $1,721.50 (55 x $31.30); C

Question 19

The June 1 inventory of the Kaufman Company had a cost of $8,000 and a retail value of $20,000. During June, merchandise was purchased for $36,000 and marked to sell for $60,000. June sales totaled $45,000. Use the retail method to compute the answers to the following questions.
1. What is the retail value of the ending inventory as of June 30?
2. What is the approximate cost of the ending inventory?
3. What is the cost of goods sold during June?

Accepted Answer

1. $35,000; 2. $19,2

Question 20

In periods of rising prices, the inventory valuation procedure that results in the highest net income is

Accepted Answer

A) the FIFO method. 
B) the LIFO method. 
C) the average cost method. 
D) the lower of cost or net realizable value method. 
A) the FIFO method. 
B) the LIFO method. 
C) the average cost method. 
D) the lower of cost or net realizable value method.

Exam 17: Merchandise Inventory

The most conservative method of applying the lower of cost or net realizable value rule is to use the lower of total cost or total net realizable value by groups.

The use of the LIFO method of inventory valuation

In periods of rising prices, use of the---------- method of inventory valuation results in the lowest inventory cost on the balance sheet.

An assumption necessary to use the Gross Profit method is that the

If a firm uses the FIFO method of inventory valuation for tax purposes, it must use the FIFO method for financial accounting.

The gross profit method of determining ending inventory cost

The--------- method of inventory valuation is a procedure developed for charging the current costs of goods against current sales prices.

A matching of the most recent costs to revenue results from the use of

For internal control, unit counts used to compute the inventory should be verified by thorough spot checks.

The inventory valuation method which tends to smooth out periodic fluctuations in cost is:

Distinguish between periodic inventory, perpetual inventory, and physical inventory.

The cost of the earliest merchandise purchased is assigned to ending inventory when a company uses

Many retail stores take a periodic inventory at retail values, using the sales price marked on the merchandise.

In the---------- method of inventory valuation, inventory cost is determined by multiplying the number of units in inventory by a unit cost, which is calculated by dividing the cost of goods available for sale by the units of merchandise available for sale.

Which of the following inventory costing procedures requires a physical count of merchandise a minimum of once a year at year end?

In periods of rising prices, the inventory valuation procedure that results in the highest net income is

Accounting: The Language of Business

Analyzing Business Transactions

Analyzing Business Transactions Using T Accounts

The General Journal and the General Ledger

Adjustments and the Worksheet

Closing Entries and Teh Postclosing Trial Balance

Accounting for Sales and Accounts Receivable

Accounting for Purchases and Accounts Payable

Cash Receipts, Cash Payments, and Banking Procedures

Payroll Computations, Records, and Payment

Payroll Taxes, Deposits, and Reports

Accruals, Deferrals, and the Worksheet

Financial Statements and Closing Procedures

Accounting Principles and Reporting Standards

Accounts Receivable and Uncollectible Accounts

Notes Payable and Notes Receivable

Property, Plant, and Equipment

Accounting for Partnerships

Corporations: Formation and Capital Stock Transactions

Corporate Earnings and Capital Transactions

Long-Term Bonds

Financial Statement Analysis

The Statement of Cash Flows

Departmentalized Profit and Cost Centers

Accounting for Manufacturing Activities

Job Order Cost Accounting

Process Cost Accounting

Controlling Manufacturing Costs: Standard Costs

Cost-Revenue Analysis for Decision Making

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