Question 1

What is the effect of an error in the ending inventory balance on the income statement?

Accepted Answer

An inventory error causes misstatements

Question 2

A company can change its inventory costing method without mentioning this change in its financial statements since it is a decision made by internal management.

Accepted Answer

A) True 
 B)False

Question 3

A company had 270 units of inventory at a cost of $154 each on March 1.On March 5,the company purchased 470 units of inventory for $174 each.On March 10,the company purchased 170 units for $214 each.On March 20,540 units were sold.Given this information,determine the cost of the 540 units sold using the weighted average periodic inventory method.(Do not round your intermediate calculations; round the final answer to nearest dollar amount.)

Accepted Answer

A) $64,949. 
B) $70,380 
C) $72,380. 
D) $94,791. 
E) $96,791. 
A) $64,949. 
B) $70,380 
C) $72,380. 
D) $94,791. 
E) $96,791.

Question 4

The four methods of inventory valuation are SIFO,FIFO,LIFO,and average cost.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

@#IMG-DLM&_TB6947_00_TB6947_00

Question 6

The reliability of the gross profit method depends on a good estimate of the gross profit ratio.

Accepted Answer

A) True 
 B)False

Question 7

Neither GAAP nor IFRS allow inventory to be adjusted upward beyond the original cost.

Accepted Answer

A) True 
 B)False

Question 8

Bert and John Jacobs founded a T-shirt company,Life is good.How did they prioritize inventory management as their company grew?

Accepted Answer

Inventory management is important to any

Question 9

One of the most important decisions in accounting for inventory is determining the unit costs assigned to each inventory item.

Accepted Answer

A) True 
 B)False

Question 10

Regardless of what inventory method or system is used,cost of goods available for sale must be allocated between ___________________ and ___________________.

Accepted Answer

cost of go

Question 11

Not many companies take a physical count of inventory each year as they rely primarily on inventory records alone to determine the inventory value.

Accepted Answer

A) True 
 B)False

Question 12

The dollar value assigned to goods purchased will differ under the different inventory valuation methods of specific identification,FIFO,LIFO,and weighted average.

Accepted Answer

A) True 
 B)False

Question 13

The City Store reported the following amounts on their financial statements for 2012,2013,and 2014:
   It was discovered early in 2015 that the ending inventory on December 31,2012,was overstated by $6,000 and the ending inventory on December 31,2013,was understated by $2,500.The ending inventory on December 31,2014,was correct.Ignoring income taxes,determine the correct amounts of cost of goods sold,net income,total current assets,and equity for each of the years 2012,2013,and 2014.

Accepted Answer

@#IMG-DLM&_TB6947_00_TB6947_00

Question 14

What costs are assigned to merchandise inventory?

Accepted Answer

The costs of merchandise inven

Question 15

If the _______________ is responsible for paying the freight,ownership of merchandise inventory passes when goods are loaded on the transport vehicle.

Accepted Answer

The answer of If the _______________ is responsible for paying...

Question 16

Given the following information,determine the cost of ending inventory at December 31 using the weighted average perpetual inventory method.Assume this is the first month of the company's operations. 
December 2: 5 units were purchased at $7 per unit.
December 9: 10 units were purchased at $9.40 per unit.
December 12: 2 units were sold.

Accepted Answer

A) $17.20 
B) $111.80 
C) $129.00 
D) $94.00 
E) $8.60 
A) $17.20 
B) $111.80 
C) $129.00 
D) $94.00 
E) $8.60

Question 17

LIFO assumes that inventory costs flow in the order they were incurred.

Accepted Answer

A) True 
 B)False

Question 18

A corporation has provided the following information about one of its products:
   During the year,470 units were sold.What is ending inventory using the weighted average periodic inventory method? (Round the weighted average cost per unit to two decimal points; round the ending inventory to the nearest whole dollar.)

Accepted Answer

Number of units purchased = 235+ 435 +13

Question 19

The inventory valuation method that identifies the invoice cost of each item in ending inventory to determine the cost assigned to that inventory is the:

Accepted Answer

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

Question 20

The choice of an inventory valuation method can have a major impact on gross profit and cost of sales.

Accepted Answer

A) True 
 B)False

What is the effect of an error in the ending inventory balance on the income statement?

A company can change its inventory costing method without mentioning this change in its financial statements since it is a decision made by internal management.

The four methods of inventory valuation are SIFO,FIFO,LIFO,and average cost.

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

The reliability of the gross profit method depends on a good estimate of the gross profit ratio.

Neither GAAP nor IFRS allow inventory to be adjusted upward beyond the original cost.

Bert and John Jacobs founded a T-shirt company,Life is good.How did they prioritize inventory management as their company grew?

One of the most important decisions in accounting for inventory is determining the unit costs assigned to each inventory item.

Regardless of what inventory method or system is used,cost of goods available for sale must be allocated between _ and _.

Not many companies take a physical count of inventory each year as they rely primarily on inventory records alone to determine the inventory value.

The dollar value assigned to goods purchased will differ under the different inventory valuation methods of specific identification,FIFO,LIFO,and weighted average.

What costs are assigned to merchandise inventory?

If the _______________ is responsible for paying the freight,ownership of merchandise inventory passes when goods are loaded on the transport vehicle.

LIFO assumes that inventory costs flow in the order they were incurred.

The inventory valuation method that identifies the invoice cost of each item in ending inventory to determine the cost assigned to that inventory is the:

The choice of an inventory valuation method can have a major impact on gross profit and cost of sales.

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

What is the effect of an error in the ending inventory balance on the income statement?

A company can change its inventory costing method without mentioning this change in its financial statements since it is a decision made by internal management.

The four methods of inventory valuation are SIFO,FIFO,LIFO,and average cost.

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

The reliability of the gross profit method depends on a good estimate of the gross profit ratio.

Neither GAAP nor IFRS allow inventory to be adjusted upward beyond the original cost.

Bert and John Jacobs founded a T-shirt company,Life is good.How did they prioritize inventory management as their company grew?

One of the most important decisions in accounting for inventory is determining the unit costs assigned to each inventory item.

Regardless of what inventory method or system is used,cost of goods available for sale must be allocated between ___________________ and ___________________.

Not many companies take a physical count of inventory each year as they rely primarily on inventory records alone to determine the inventory value.

The dollar value assigned to goods purchased will differ under the different inventory valuation methods of specific identification,FIFO,LIFO,and weighted average.

What costs are assigned to merchandise inventory?

If the _______________ is responsible for paying the freight,ownership of merchandise inventory passes when goods are loaded on the transport vehicle.

LIFO assumes that inventory costs flow in the order they were incurred.

The inventory valuation method that identifies the invoice cost of each item in ending inventory to determine the cost assigned to that inventory is the:

The choice of an inventory valuation method can have a major impact on gross profit and cost of sales.

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

Regardless of what inventory method or system is used,cost of goods available for sale must be allocated between _ and _.