Exam 6: Merchandise Inventory

When using the LIFO inventory costing method and the periodic inventory method,the ending inventory comes from the newest costs of the period.

The Cost of Goods Sold account is credited to write down the inventory as required by the lower-of-cost-or-market rule.

The amounts obtained for cost of goods sold and ending merchandise inventory are not the same for FIFO perpetual and FIFO periodic.

A company is uncertain whether a complex transaction should result in an asset being recorded at $100,000 or at $150,000.Under the conservatism principle,it should choose to show it at $100,000.

For all four inventory costing methods,cost of goods sold is always equal to the sum of beginning inventory plus net purchases.

Jameson Company had the following balances and transactions during 2019: Beginning Merchandise Inventory as of January 1, 2019 320 units at \ 74 March 10 Sold 80 units Purchased 150 units at June 10 \ 77 October 30 Sold 150 units What would be reported for Cost of Goods Sold on the income statement for the year ending December 31,2019 if the perpetual inventory system and the last-in,first-out inventory costing method are used?

Using the LIFO method of inventory valuation will always produce the same results for cost of goods sold and ending inventory whether a company uses perpetual or periodic inventory costing methods.

Under International Financial Reporting Standards (IFRS),companies may only use the specific identification,FIFO,and weighted-average methods to cost inventory.

In computing the lower-of-cost-or-market,market value generally means the selling price.

A company decides to ignore a very small error in its inventory balance.This is an example of the application of the ________.

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

List and briefly discuss three measures that can be taken to maintain good controls over merchandise inventory.

The ending merchandise inventory for the current accounting period is overstated by $3,500.What will be the effect of this error?

A company discovers that its cost of goods sold is understated by an insignificant amount.It does not need to correct the error because of the conservatism principle.

Baldwin Company had the following balances and transactions during 2019: Beginning Merchandise Inventory as of January 1,2019 125 units at \ 82 March 10 Sold 80 units June 10 Purchased 250 units at \ 86 October 30 Sold 205 units What would be reported as Cost of Goods Sold on the income statement for the year ending December 31,2019 if the perpetual inventory system and the first-in,first-out inventory costing method are used?

What does inventory turnover measure? What does a high rate of inventory turnover indicate?

Cougar Company had the following balances and transactions during 2019: Beginning Merchandise Inventory 120 units at \ 80 March 10 Sold 60 units Purchased 240 units at June 10 \ 82 October 30 Sold 110 units What would be reported as Cost of Goods Sold on the income statement for the year ending December 31,2019 if the perpetual inventory system and the weighted-average inventory costing method are used? (Round the unit costs to two decimal places and total costs to the nearest dollar.)

Companies determine the number of units on hand from perpetual inventory records backed up by a physical count.

Complete the following table,which compares the effects of LIFO,FIFO and weighted-average inventory costing methods on the financial statements in periods of declining inventory costs.The answer should be lowest,highest,or middle. Financial Statement Element: LIFO FIFO Weighted- Average Cost of Goods Sold Net Income Ending Merchandise Inventory

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