Question 1

The _________________ method is commonly used to estimate the value of inventory that has been destroyed,lost or stolen.

Accepted Answer

gross profit

Question 2

In the retail inventory method of inventory valuation,the retail amount of inventory refers to the dollar amount measured by looking at the selling prices of inventory items.

Accepted Answer

A) True 
 B)False  True

Question 3

During a period of steadily rising costs,the inventory valuation method that yields the lowest reported net income is:

Accepted Answer

A) Specific identification method 
B) Average cost method 
C) Weighted average method 
D) FIFO method 
E) LIFO method 
A) Specific identification method 
B) Average cost method 
C) Weighted average method 
D) FIFO method 
E) LIFO method E

Question 4

An overstatement of ending inventory will cause an overstatement of assets and an understatement of equity on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 5

On December 31,a company needed to estimate its ending inventory to prepare its fourth quarter financial statements.The following information is currently available: Inventory as of October 1: $12,500
Net sales for fourth quarter: $40,000
Net purchases for fourth quarter: $27,500
The company typically achieves a gross profit ratio of 15%.Ending Inventory under the gross profit method would be:

Accepted Answer

A) $4,000 
B) $6,000 
C) $10,000 
D) $16,000 
E) $34,000 
A) $4,000 
B) $6,000 
C) $10,000 
D) $16,000 
E) $34,000

Question 6

The cost of an inventory item includes the _____________,plus ______________ costs necessary to put it in a place and condition for sale.

Accepted Answer

invoice price minus

Question 7

A company has inventory of 10 units at a cost of $10 each on June 1.On June 3,they purchased 20 units at $12 each.12 units are sold on June 5.Using the FIFO perpetual inventory method,what is the cost of the 12 units that were sold?

Accepted Answer

A) $120 
B) $124 
C) $128 
D) $130 
E) $140 
A) $120 
B) $124 
C) $128 
D) $130 
E) $140

Question 8

A company sells a climbing kit and uses the periodic inventory system to account for its merchandise.The beginning balance of the inventory and its transactions during January were as follows:   If the ending inventory is reported at $357,what inventory method was used?

Accepted Answer

A) LIFO 
B) FIFO 
C) Weighted average 
D) Specific identification 
E) Retail inventory method 
A) LIFO 
B) FIFO 
C) Weighted average 
D) Specific identification 
E) Retail inventory method

Question 9

The inventory valuation method that tends to smooth out erratic changes in costs is:

Accepted Answer

A) FIFO 
B) Weighted average 
C) LIFO 
D) Specific identification 
E) WIFO 
A) FIFO 
B) Weighted average 
C) LIFO 
D) Specific identification 
E) WIFO

Question 10

If damaged goods can be sold at a reduced price,they are included in inventory at their ________________________.

Accepted Answer

net realiz

Question 11

A company had 14 units of inventory at a cost of $18 each on November 1.On November 2,the company purchased 19 units at $19 each.On November 6,the company purchased 15 units at $20 each.On November 8,the company sold 36 units for $63 each.Given this information,determine the cost of the 36 units sold using the LIFO periodic inventory method.

Accepted Answer

A) $673. 
B) $697 
C) $720. 
D) $772 
E) $949. 
A) $673. 
B) $697 
C) $720. 
D) $772 
E) $949.

Question 12

A company had inventory on November 1 of 5 units at a cost of $20 each.On November 2,they purchased 10 units at $22 each.On November 6,they purchased 6 units at $25 each.On November 8,8 units were sold for $55 each.Using the LIFO perpetual inventory method,what was the value of the inventory on November 8 after the sale?

Accepted Answer

A) $304 
B) $296 
C) $288 
D) $280 
E) $276 
A) $304 
B) $296 
C) $288 
D) $280 
E) $276

Question 13

Interim statements:

Accepted Answer

A) Are required by Congress. 
B) Are necessary to achieve full disclosure about a business's operations. 
C) Are usually monthly or quarterly statements prepared in between the traditional,annual statement dates. 
D) Require the use of the perpetual method for inventories. 
E) Cannot be prepared if the company follows the conservatism principle. 
A) Are required by Congress. 
B) Are necessary to achieve full disclosure about a business's operations. 
C) Are usually monthly or quarterly statements prepared in between the traditional,annual statement dates. 
D) Require the use of the perpetual method for inventories. 
E) Cannot be prepared if the company follows the conservatism principle.

Question 14

A company's cost of goods sold was $15,500 and its average merchandise inventory was $4,500.Its inventory turnover equals 3.4.

Accepted Answer

A) True 
 B)False

Question 15

A company uses the retail inventory method and has the following information available concerning its most recent accounting period:
   (a) What is the cost-to-retail ratio using the retail method?
(b) What is the estimated cost of the ending inventory?

Accepted Answer

(a) @#IMG-DLM&_TB6947_00_TB694

Question 16

Explain why the lower of cost or market rule is used to value inventory.

Accepted Answer

The concept of conservatism requires tha

Question 17

A company made the following purchases during the year:
   On December 31,there were 28 units in ending inventory.These 28 units consisted of 1 from the January 10 purchase,2 from the March 15 purchase,5 from the April 25 purchase,15 from the July 30 purchase,and 5 from the October 10 purchase.Using specific identification,calculate the cost of the ending inventory.

Accepted Answer

The answer of A company made the following purchases during...

Question 18

GAAP and IFRS differ on the rules regarding LIFO as GAAP allows LIFO to assign costs to inventory and IFRS does not.

Accepted Answer

A) True 
 B)False

Question 19

A company's store was destroyed by a fire on February 10 of this year.The only information for the current period that could be salvaged included the following:
Beginning inventory,January 1: $34,000
Purchases to date: $118,000
Sales to date: $140,000
Historically,the company's gross profit ratio has been 30%.Estimate the value of the destroyed inventory using the gross profit method.

Accepted Answer

@#IMG-DLM&_TB6947_00

Question 20

The understatement of the beginning inventory balance causes:

Accepted Answer

A) Cost of goods sold to be understated and net income to be understated. 
B) Cost of goods sold to be understated and net income to be overstated. 
C) Cost of goods sold to be overstated and net income to be overstated. 
D) Cost of goods sold to be overstated and net income to be understated. 
E) Cost of goods sold to be overstated and net income to be correct. 
A) Cost of goods sold to be understated and net income to be understated. 
B) Cost of goods sold to be understated and net income to be overstated. 
C) Cost of goods sold to be overstated and net income to be overstated. 
D) Cost of goods sold to be overstated and net income to be understated. 
E) Cost of goods sold to be overstated and net income to be correct.

The _________________ method is commonly used to estimate the value of inventory that has been destroyed,lost or stolen.

In the retail inventory method of inventory valuation,the retail amount of inventory refers to the dollar amount measured by looking at the selling prices of inventory items.

During a period of steadily rising costs,the inventory valuation method that yields the lowest reported net income is:

An overstatement of ending inventory will cause an overstatement of assets and an understatement of equity on the balance sheet.

The cost of an inventory item includes the _,plus __ costs necessary to put it in a place and condition for sale.

A company has inventory of 10 units at a cost of $10 each on June 1.On June 3,they purchased 20 units at $12 each.12 units are sold on June 5.Using the FIFO perpetual inventory method,what is the cost of the 12 units that were sold?

A company sells a climbing kit and uses the periodic inventory system to account for its merchandise.The beginning balance of the inventory and its transactions during January were as follows: If the ending inventory is reported at $357,what inventory method was used?

The inventory valuation method that tends to smooth out erratic changes in costs is:

If damaged goods can be sold at a reduced price,they are included in inventory at their ________________________.

Interim statements:

A company's cost of goods sold was $15,500 and its average merchandise inventory was $4,500.Its inventory turnover equals 3.4.

A company uses the retail inventory method and has the following information available concerning its most recent accounting period: (a) What is the cost-to-retail ratio using the retail method? (b) What is the estimated cost of the ending inventory?

Explain why the lower of cost or market rule is used to value inventory.

GAAP and IFRS differ on the rules regarding LIFO as GAAP allows LIFO to assign costs to inventory and IFRS does not.

The understatement of the beginning inventory balance causes:

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Accounting for Partnerships

Accounting With Special Journals

Filters

Exam 5: Reporting and Analyzing Inventories

The _________________ method is commonly used to estimate the value of inventory that has been destroyed,lost or stolen.

In the retail inventory method of inventory valuation,the retail amount of inventory refers to the dollar amount measured by looking at the selling prices of inventory items.

During a period of steadily rising costs,the inventory valuation method that yields the lowest reported net income is:

An overstatement of ending inventory will cause an overstatement of assets and an understatement of equity on the balance sheet.

The cost of an inventory item includes the _____________,plus ______________ costs necessary to put it in a place and condition for sale.

A company has inventory of 10 units at a cost of $10 each on June 1.On June 3,they purchased 20 units at $12 each.12 units are sold on June 5.Using the FIFO perpetual inventory method,what is the cost of the 12 units that were sold?

A company sells a climbing kit and uses the periodic inventory system to account for its merchandise.The beginning balance of the inventory and its transactions during January were as follows: If the ending inventory is reported at $357,what inventory method was used?

The inventory valuation method that tends to smooth out erratic changes in costs is:

If damaged goods can be sold at a reduced price,they are included in inventory at their ________________________.

Interim statements:

A company's cost of goods sold was $15,500 and its average merchandise inventory was $4,500.Its inventory turnover equals 3.4.

A company uses the retail inventory method and has the following information available concerning its most recent accounting period: (a) What is the cost-to-retail ratio using the retail method? (b) What is the estimated cost of the ending inventory?

Explain why the lower of cost or market rule is used to value inventory.

GAAP and IFRS differ on the rules regarding LIFO as GAAP allows LIFO to assign costs to inventory and IFRS does not.

The understatement of the beginning inventory balance causes:

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Accounting for Partnerships

Accounting With Special Journals

Filters

The cost of an inventory item includes the _,plus __ costs necessary to put it in a place and condition for sale.