Question 1

Which of the following values is considered the market value when valuing inventory at lower-of-cost-or-market?

Accepted Answer

A) Sales price less the company's normal mark-up percentage 
B) Current replacement cost 
C) Cost plus the company's normal mark-up percentage 
D) Historic cost 
A) Sales price less the company's normal mark-up percentage 
B) Current replacement cost 
C) Cost plus the company's normal mark-up percentage 
D) Historic cost

Question 2

In a period of rising costs, the last-in, first-out (LIFO)method results in lower cost of goods sold and higher net income than the first-in, first-out (FIFO)method.

Accepted Answer

A) True 
 B)False

Question 3

Under the weighted-average method, the cost per unit is determined by:

Accepted Answer

A) dividing the cost of goods available for sale by the number of units available. 
B) dividing the cost of goods available for sale by the number of units in beginning inventory. 
C) multiplying the number of units purchased with the weighted-average cost. 
D) multiplying the cost of goods available for sale by the ending weighted-average price of previous accounting period. 
A) dividing the cost of goods available for sale by the number of units available. 
B) dividing the cost of goods available for sale by the number of units in beginning inventory. 
C) multiplying the number of units purchased with the weighted-average cost. 
D) multiplying the cost of goods available for sale by the ending weighted-average price of previous accounting period.

Question 4

A company purchased 100 units for $20 each on January 31. It purchased 100 units for $30 on February 28. It sold a total of 150 units for $45 each from March 1 through December 31. If the company uses the last-in, first-out inventory costing method, calculate the amount of ending inventory on December 31. (Assume that the company uses a perpetual inventory system.)

Accepted Answer

A) $1,500 
B) $1,250 
C) $1,000 
D) $2,250 
A) $1,500 
B) $1,250 
C) $1,000 
D) $2,250

Question 5

Which of the following inventory costing methods is based on the actual cost of each particular unit of inventory?

Accepted Answer

A) Specific identification 
B) Weighted-average 
C) Last-in, first-out 
D) First-in, first-out 
A) Specific identification 
B) Weighted-average 
C) Last-in, first-out 
D) First-in, first-out

Question 6

An overstatement of ending merchandise inventory in the current period results in an understatement of cost of goods sold in the current period.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is the correct formula to calculate weighted-average unit cost?

Accepted Answer

A) Weighted-average unit cost = Cost of goods available for sale + Number of units available 
B) Weighted-average unit cost = Cost of goods available for sale × Number of units available 
C) Weighted-average unit cost = Cost of goods available for sale - Number of units available 
D) Weighted-average unit cost = Cost of goods available for sale ÷ Number of units available 
A) Weighted-average unit cost = Cost of goods available for sale + Number of units available 
B) Weighted-average unit cost = Cost of goods available for sale × Number of units available 
C) Weighted-average unit cost = Cost of goods available for sale - Number of units available 
D) Weighted-average unit cost = Cost of goods available for sale ÷ Number of units available

Question 8

The disclosure concept states that a company should report enough information for outsiders to make knowledgeable decisions about the company.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is true of a good merchandise inventory control system?

Accepted Answer

A) It minimizes the authorization of purchase of merchandise. 
B) It ensures that a physical count of inventory is not required. 
C) It often prevents the company from a stockout. 
D) It minimizes the authorization of sale of merchandise. 
A) It minimizes the authorization of purchase of merchandise. 
B) It ensures that a physical count of inventory is not required. 
C) It often prevents the company from a stockout. 
D) It minimizes the authorization of sale of merchandise.

Question 10

The tracking of inventory shrinkage due to theft, damage, or errors is done with the help of ________ of inventory.

Accepted Answer

A) authorization 
B) sale 
C) physical count 
D) delivery 
A) authorization 
B) sale 
C) physical count 
D) delivery

Question 11

The ending inventory of a company was $450,000 as per the perpetual inventory records. The current replacement cost for the ending inventory is $410,000. Prepare the journal entry to adjust inventory.

Accepted Answer

@#IMG-DLM& Note:
Amount writte

Question 12

A company should not change the inventory costing method each period in order to maximize net income. This is an example of the disclosure principle.

Accepted Answer

A) True 
 B)False

Question 13

Ronald Company had the following balances and transactions during 2014.   What is the amount of the company's Merchandise Inventory, as disclosed in the December 31, 2014 balance sheet as per the periodic weighted-average costing method?

Accepted Answer

A) $186 
B) $140 
C) $398 
D) $651 
A) $186 
B) $140 
C) $398 
D) $651

Question 14

In a period of rising costs, the first-in, first-out (FIFO)method results in lower cost of goods sold and higher gross profit than the last-in, first-out (LIFO)method.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following requires that financial statements should report the least favorable figures?

Accepted Answer

A) conservatism 
B) materiality concept 
C) disclosure principle 
D) consistency principle 
A) conservatism 
B) materiality concept 
C) disclosure principle 
D) consistency principle

Which of the following values is considered the market value when valuing inventory at lower-of-cost-or-market?

In a period of rising costs, the last-in, first-out (LIFO)method results in lower cost of goods sold and higher net income than the first-in, first-out (FIFO)method.

Under the weighted-average method, the cost per unit is determined by:

Which of the following inventory costing methods is based on the actual cost of each particular unit of inventory?

An overstatement of ending merchandise inventory in the current period results in an understatement of cost of goods sold in the current period.

Which of the following is the correct formula to calculate weighted-average unit cost?

The disclosure concept states that a company should report enough information for outsiders to make knowledgeable decisions about the company.

Which of the following statements is true of a good merchandise inventory control system?

The tracking of inventory shrinkage due to theft, damage, or errors is done with the help of ________ of inventory.

The ending inventory of a company was $450,000 as per the perpetual inventory records. The current replacement cost for the ending inventory is $410,000. Prepare the journal entry to adjust inventory.

A company should not change the inventory costing method each period in order to maximize net income. This is an example of the disclosure principle.

Ronald Company had the following balances and transactions during 2014. What is the amount of the company's Merchandise Inventory, as disclosed in the December 31, 2014 balance sheet as per the periodic weighted-average costing method?

In a period of rising costs, the first-in, first-out (FIFO)method results in lower cost of goods sold and higher gross profit than the last-in, first-out (LIFO)method.

Which of the following requires that financial statements should report the least favorable figures?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters

Exam 6: Merchandise Inventory

Which of the following values is considered the market value when valuing inventory at lower-of-cost-or-market?

In a period of rising costs, the last-in, first-out (LIFO)method results in lower cost of goods sold and higher net income than the first-in, first-out (FIFO)method.

Under the weighted-average method, the cost per unit is determined by:

Which of the following inventory costing methods is based on the actual cost of each particular unit of inventory?

An overstatement of ending merchandise inventory in the current period results in an understatement of cost of goods sold in the current period.

Which of the following is the correct formula to calculate weighted-average unit cost?

The disclosure concept states that a company should report enough information for outsiders to make knowledgeable decisions about the company.

Which of the following statements is true of a good merchandise inventory control system?

The tracking of inventory shrinkage due to theft, damage, or errors is done with the help of ________ of inventory.

The ending inventory of a company was $450,000 as per the perpetual inventory records. The current replacement cost for the ending inventory is $410,000. Prepare the journal entry to adjust inventory.

A company should not change the inventory costing method each period in order to maximize net income. This is an example of the disclosure principle.

Ronald Company had the following balances and transactions during 2014. What is the amount of the company's Merchandise Inventory, as disclosed in the December 31, 2014 balance sheet as per the periodic weighted-average costing method?

In a period of rising costs, the first-in, first-out (FIFO)method results in lower cost of goods sold and higher gross profit than the last-in, first-out (LIFO)method.

Which of the following requires that financial statements should report the least favorable figures?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters