Exam 5: Reporting and Analyzing Inventories

Given the following information,determine the cost of goods sold at December 31 using the weighted average 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.

(Multiple Choice)

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Question 61

A company reported the following data related to its ending inventory: Calculate the lower of cost or-market on both the: (a) Inventory as a whole. (b) Inventory applied separately to each product.

(Essay)

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Question 62

An advantage of LIFO is that it assigns the most recent costs to cost of goods sold and does a better job of matching current costs with revenues on the income statement.

(True/False)

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Question 63

Given the following information,determine the cost of goods sold for December 31 using the FIFO 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.

(Multiple Choice)

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Question 64

On September 30 a company needed to estimate its ending inventory to prepare its third quarter financial statements.The following information is available: Beginning inventory,July 1: $4,000 Net sales: $40,000 Net purchases: $41,000 The company's gross margin ratio is 15%.Using the gross profit method,the cost of goods sold would be:

(Multiple Choice)

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Question 65

The FIFO inventory method assumes that costs for the most recently purchased items are the first to be charged to the cost of goods sold.

(True/False)

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Question 66

Some companies use the _ constraint or the __ constraint to avoid assigning incidental costs of acquiring merchandise to inventory.

(Short Answer)

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Question 67

A company's ability to pay its short-term obligations depends on many factors including how quickly it is able to sell its merchandise inventory.

(True/False)

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Question 68

If the _______________ is responsible for paying the freight,ownership of merchandise inventory passes when the goods arrive at their destination.

(Short Answer)

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Question 69

The lower of cost or market rule for inventory valuation must be applied to each individual unit separately and not to major categories of inventory or to the entire inventory.

(True/False)

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Question 70

The assignment of costs to cost of goods sold and to inventory using specific identification is the same for both the perpetual and periodic systems.

(True/False)

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Question 71

The matching principle is used by some companies to avoid allocating incidental inventory costs to cost of goods sold.

(True/False)

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Question 72

The ______________________ method of assigning costs to inventory and cost of goods sold assumes that the most recent purchases are sold first.

(Short Answer)

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Question 73

An inventory error is sometimes said to be self-correcting because it causes an offsetting error in the next period.

(True/False)

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Question 74

Use the following information to estimate the third quarter ending inventory under the gross profit method.This company's gross profit ratio is 20%. Third quarter beginning inventory: $54,000 Net sales for third quarter: $85,000 Net purchases for third quarter: $21,000

(Multiple Choice)

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Question 75

Days' sales in inventory is calculated as:

(Multiple Choice)

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Question 76

Damaged and obsolete goods:

(Multiple Choice)

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Question 77

Identify the inventory valuation method that is being described for each situation below.In all cases,assume a period of rising prices.Use the following to identify the inventory valuation method:

The method that will cause the company to have the lowest cost of goods sold.

LIFO(Last in, first out)

The method that will assign a value to inventory that approximates its current cost.

FIFO(First in, first out)

The method that will tend to smooth out erratic changes in costs.

WA(Weighted average)

Correct Answer:

Verified

The method that will cause the company to have the lowest cost of goods sold.

The method that will assign a value to inventory that approximates its current cost.

The method that will tend to smooth out erratic changes in costs.

The method that will cause the company to have the lowest income taxes.

(Matching)

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Question 78

Days' sales in inventory:

(Multiple Choice)

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Question 79

Explain the effects of inventory valuation methods on the cost of ending inventory,income,and income taxes.

(Essay)

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Question 80

Showing 61 - 80 of 211

A company reported the following data related to its ending inventory: Calculate the lower of cost or-market on both the: (a) Inventory as a whole. (b) Inventory applied separately to each product.

An advantage of LIFO is that it assigns the most recent costs to cost of goods sold and does a better job of matching current costs with revenues on the income statement.

The FIFO inventory method assumes that costs for the most recently purchased items are the first to be charged to the cost of goods sold.

Some companies use the _ constraint or the __ constraint to avoid assigning incidental costs of acquiring merchandise to inventory.

A company's ability to pay its short-term obligations depends on many factors including how quickly it is able to sell its merchandise inventory.

If the _______________ is responsible for paying the freight,ownership of merchandise inventory passes when the goods arrive at their destination.

The lower of cost or market rule for inventory valuation must be applied to each individual unit separately and not to major categories of inventory or to the entire inventory.

The assignment of costs to cost of goods sold and to inventory using specific identification is the same for both the perpetual and periodic systems.

The matching principle is used by some companies to avoid allocating incidental inventory costs to cost of goods sold.

The ______________________ method of assigning costs to inventory and cost of goods sold assumes that the most recent purchases are sold first.

An inventory error is sometimes said to be self-correcting because it causes an offsetting error in the next period.

Use the following information to estimate the third quarter ending inventory under the gross profit method.This company's gross profit ratio is 20%. Third quarter beginning inventory: $54,000 Net sales for third quarter: $85,000 Net purchases for third quarter: $21,000

Days' sales in inventory is calculated as:

Damaged and obsolete goods:

Days' sales in inventory:

Explain the effects of inventory valuation methods on the cost of ending inventory,income,and income taxes.

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

A company reported the following data related to its ending inventory: Calculate the lower of cost or-market on both the: (a) Inventory as a whole. (b) Inventory applied separately to each product.

An advantage of LIFO is that it assigns the most recent costs to cost of goods sold and does a better job of matching current costs with revenues on the income statement.

The FIFO inventory method assumes that costs for the most recently purchased items are the first to be charged to the cost of goods sold.

Some companies use the _________________ constraint or the __________________ constraint to avoid assigning incidental costs of acquiring merchandise to inventory.

A company's ability to pay its short-term obligations depends on many factors including how quickly it is able to sell its merchandise inventory.

If the _______________ is responsible for paying the freight,ownership of merchandise inventory passes when the goods arrive at their destination.

The lower of cost or market rule for inventory valuation must be applied to each individual unit separately and not to major categories of inventory or to the entire inventory.

The assignment of costs to cost of goods sold and to inventory using specific identification is the same for both the perpetual and periodic systems.

The matching principle is used by some companies to avoid allocating incidental inventory costs to cost of goods sold.

The ______________________ method of assigning costs to inventory and cost of goods sold assumes that the most recent purchases are sold first.

An inventory error is sometimes said to be self-correcting because it causes an offsetting error in the next period.

Use the following information to estimate the third quarter ending inventory under the gross profit method.This company's gross profit ratio is 20%. Third quarter beginning inventory: $54,000 Net sales for third quarter: $85,000 Net purchases for third quarter: $21,000

Days' sales in inventory is calculated as:

Damaged and obsolete goods:

Days' sales in inventory:

Explain the effects of inventory valuation methods on the cost of ending inventory,income,and income taxes.

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

Some companies use the _ constraint or the __ constraint to avoid assigning incidental costs of acquiring merchandise to inventory.