Question 1

LIFO inventory value is often less than the inventory's replacement cost because LIFO inventory is valued using the oldest purchase cost.

Accepted Answer

A) True 
 B)False

Question 2

Goods in transit are included in a purchaser's inventory:

Accepted Answer

A) At any time during transit. 
B) When the purchaser is responsible for paying freight charges. 
C) When the supplier is responsible for freight charges. 
D) If the goods are shipped FOB destination. 
E) After the halfway point between the buyer and seller. 
A) At any time during transit. 
B) When the purchaser is responsible for paying freight charges. 
C) When the supplier is responsible for freight charges. 
D) If the goods are shipped FOB destination. 
E) After the halfway point between the buyer and seller.

Question 3

A company has inventory of 15 units at a cost of $12 each on August 1.On August 5,they purchased 10 units at $13 per unit.On August 12,they purchased 20 units at $14 per unit.On August 15,they sold 30 units.Using the FIFO perpetual inventory method,what is the value of the inventory on August 15 after the sale?

Accepted Answer

A) $140 
B) $160 
C) $210 
D) $380 
E) $590 
A) $140 
B) $160 
C) $210 
D) $380 
E) $590

Question 4

Monthly or quarterly statements are called interim statements because they are prepared between the traditional annual statement dates.

Accepted Answer

A) True 
 B)False

Question 5

A company had the following purchases during the current year:   On December 31,there were 26 units remaining in ending inventory.These 26 units consisted of 2 from January,4 from February,6 from May,4 from September and 10 from November.Using the specific identification method,what is the cost of the ending inventory?

Accepted Answer

A) $3,500 
B) $3,800 
C) $3,960 
D) $3,280 
E) $3,640 
A) $3,500 
B) $3,800 
C) $3,960 
D) $3,280 
E) $3,640

Question 6

A company's warehouse was destroyed by a tornado on March 15.The following information was salvaged from the ruins: 
Inventory,beginning: $28,000
Purchases for the period: $17,000
Sales for the period: $55,000
Sales returns for the period: $700
The company's average gross profit ratio is 35%.What is the estimated cost of the lost inventory?

Accepted Answer

A) $9,705 
B) $25,995 
C) $29,250 
D) $44,000 
E) $45,000 
A) $9,705 
B) $25,995 
C) $29,250 
D) $44,000 
E) $45,000

Question 7

A company made the following merchandise purchases and sales during the month of
May:
   There was no beginning inventory.If the company uses the weighted average perpetual inventory method,what would be the cost of its ending inventory?

Accepted Answer

@#IMG-DLM&_TB6947_00

Question 8

The retail inventory method estimates the cost of ending inventory by applying the gross profit ratio to net sales.

Accepted Answer

A) True 
 B)False

Question 9

Merchandise inventory includes:

Accepted Answer

A) All goods owned by a company and held for sale. 
B) All goods in transit. 
C) All goods on consignment. 
D) Only damaged goods. 
E) Only items that are on the shelf. 
A) All goods owned by a company and held for sale. 
B) All goods in transit. 
C) All goods on consignment. 
D) Only damaged goods. 
E) Only items that are on the shelf.

Question 10

Given the following information,determine the cost of goods sold at December 31 using the LIFO periodic inventory method: 
December 2: 5 units were purchased at $7 per unit.
December 9: 10 units were purchased at $9.40 per unit.
December 11: 12 units were sold at $35 per unit.
December 15: 20 units were purchased at $10.15 per unit.
December 22: 18 units were sold at $35 per unit.

Accepted Answer

A) $284.70 
B) $332.10 
C) $281.25 
D) $290.70 
E) $297.00 
A) $284.70 
B) $332.10 
C) $281.25 
D) $290.70 
E) $297.00

Question 11

The Inventory account is a controlling account for the inventory subsidiary ledger that contains a separate record for each individual product.

Accepted Answer

A) True 
 B)False

Question 12

The ______________________ method of assigning costs to inventory and cost of goods sold is usually only practical for companies with expensive,custom-made inventory.

Accepted Answer

specific i

Question 13

In applying the lower of cost or market method to inventory valuation,market is defined as the current selling price.

Accepted Answer

A) True 
 B)False

Question 14

The conservatism constraint:

Accepted Answer

A) Requires that when more than one equally likely estimate of amounts is expected to be received or paid in the future,then the less optimistic amount should be used. 
B) Requires that a company use the same accounting methods period after period. 
C) Requires that revenues and expenses be reported in the period in which they are earned or incurred. 
D) Requires that all items of a material nature be included in financial statements. 
E) Requires that all inventory items be reported at full cost. 
A) Requires that when more than one equally likely estimate of amounts is expected to be received or paid in the future,then the less optimistic amount should be used. 
B) Requires that a company use the same accounting methods period after period. 
C) Requires that revenues and expenses be reported in the period in which they are earned or incurred. 
D) Requires that all items of a material nature be included in financial statements. 
E) Requires that all inventory items be reported at full cost.

Question 15

A company had inventory of 5 units at a cost of $20 each on November 1.On November 2,they purchased 10 units at $22 each.On November 6,they purchased 6 units at $25 each.On November 8,they sold 18 units for $54 each.Using the LIFO perpetual inventory method,what was the cost of the 18 units sold?

Accepted Answer

A) $395 
B) $410 
C) $450 
D) $510 
E) $520 
A) $395 
B) $410 
C) $450 
D) $510 
E) $520

Question 16

A merchandiser that uses a periodic inventory system made the following cash purchases and sales during the year.There was no beginning inventory.
   The company has a calendar year-end and uses the weighted average inventory valuation method.Prepare the general journal entry to record the December 1 sale and the year-end adjusting entry relating to inventory.(Round the weighted average cost per unit to two decimal points; round the ending inventory to the nearest whole dollar.)

Accepted Answer

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Calculati

Question 17

The inventory valuation method that results in the lowest taxable income in a period of inflation is:

Accepted Answer

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

Question 18

A company made the following merchandise purchases and sales during the month of May:
   There was no beginning inventory.If the company uses the weighted average periodic method,what would be the cost of the ending inventory?

Accepted Answer

@#IMG-DLM&_TB6947_00_TB6947_00_TB6947_00

Question 19

Goods on consignment are goods shipped by their owner,called the consignee,to another party called the consignor.

Accepted Answer

A) True 
 B)False

Question 20

A corporation uses a FIFO perpetual inventory system. August 2,25 units were purchased at $12 per unit.
August 5,10 units were purchased at $13 per unit.
August 15,12 units were sold at $25 per unit.
August 18,15 units were purchased at $14 per unit.
What was the amount of the ending inventory for the month of August?

Accepted Answer

A) $496.00 
B) $486.00 
C) $492.57 
D) $300.00 
E) $510.00 
A) $496.00 
B) $486.00 
C) $492.57 
D) $300.00 
E) $510.00

LIFO inventory value is often less than the inventory's replacement cost because LIFO inventory is valued using the oldest purchase cost.

Goods in transit are included in a purchaser's inventory:

Monthly or quarterly statements are called interim statements because they are prepared between the traditional annual statement dates.

A company made the following merchandise purchases and sales during the month of May: There was no beginning inventory.If the company uses the weighted average perpetual inventory method,what would be the cost of its ending inventory?

The retail inventory method estimates the cost of ending inventory by applying the gross profit ratio to net sales.

Merchandise inventory includes:

The Inventory account is a controlling account for the inventory subsidiary ledger that contains a separate record for each individual product.

The ______________________ method of assigning costs to inventory and cost of goods sold is usually only practical for companies with expensive,custom-made inventory.

In applying the lower of cost or market method to inventory valuation,market is defined as the current selling price.

The conservatism constraint:

A company had inventory of 5 units at a cost of $20 each on November 1.On November 2,they purchased 10 units at $22 each.On November 6,they purchased 6 units at $25 each.On November 8,they sold 18 units for $54 each.Using the LIFO perpetual inventory method,what was the cost of the 18 units sold?

The inventory valuation method that results in the lowest taxable income in a period of inflation is:

A company made the following merchandise purchases and sales during the month of May: There was no beginning inventory.If the company uses the weighted average periodic method,what would be the cost of the ending inventory?

Goods on consignment are goods shipped by their owner,called the consignee,to another party called the consignor.

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

LIFO inventory value is often less than the inventory's replacement cost because LIFO inventory is valued using the oldest purchase cost.

Goods in transit are included in a purchaser's inventory:

Monthly or quarterly statements are called interim statements because they are prepared between the traditional annual statement dates.

A company made the following merchandise purchases and sales during the month of May: There was no beginning inventory.If the company uses the weighted average perpetual inventory method,what would be the cost of its ending inventory?

The retail inventory method estimates the cost of ending inventory by applying the gross profit ratio to net sales.

Merchandise inventory includes:

The Inventory account is a controlling account for the inventory subsidiary ledger that contains a separate record for each individual product.

The ______________________ method of assigning costs to inventory and cost of goods sold is usually only practical for companies with expensive,custom-made inventory.

In applying the lower of cost or market method to inventory valuation,market is defined as the current selling price.

The conservatism constraint:

A company had inventory of 5 units at a cost of $20 each on November 1.On November 2,they purchased 10 units at $22 each.On November 6,they purchased 6 units at $25 each.On November 8,they sold 18 units for $54 each.Using the LIFO perpetual inventory method,what was the cost of the 18 units sold?

The inventory valuation method that results in the lowest taxable income in a period of inflation is:

A company made the following merchandise purchases and sales during the month of May: There was no beginning inventory.If the company uses the weighted average periodic method,what would be the cost of the ending inventory?

Goods on consignment are goods shipped by their owner,called the consignee,to another party called the consignor.

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