Question 1

When inventory costs are declining,which of the following inventory costing methods will result in the highest cost of goods sold?

Accepted Answer

A) first-in,first-out 
B) last-in,first-out 
C) weighted-average 
D) specific identification 
A) first-in,first-out 
B) last-in,first-out 
C) weighted-average 
D) specific identification

Question 2

A company purchased 400 units for $20 each on January 31.It purchased 520 units for $26 each on February 28.It sold a total of 560 units for $40 each from March 1 through December 31.What is the amount of ending inventory on December 31 if the company uses the first-in,first-out (FIFO)inventory costing method? (Assume that the company uses a perpetual inventory system. )

Accepted Answer

A) $9,360 
B) $4,960 
C) $7,200 
D) $2,240 
A) $9,360 
B) $4,960 
C) $7,200 
D) $2,240

Question 3

Ronald,Inc.had the following balances and transactions during 2017:
 
What is the amount of the company's Merchandise Inventory,as disclosed in the December 31,2017 balance sheet,using the periodic weighted-average inventory costing method? (Round the unit costs to two decimal places and total costs to the nearest dollar. )

Accepted Answer

A) $102 
B) $87 
C) $406 
D) $792 
A) $102 
B) $87 
C) $406 
D) $792

Question 4

Weighted average cost per unit is determined by dividing the cost of goods available for sale by the number of units available.

Accepted Answer

A) True 
 B)False

Question 5

Under the periodic inventory system,which of the following amounts will always stay the same regardless of the inventory valuation method used?

Accepted Answer

A) ending merchandise inventory 
B) cost of goods sold 
C) gross profit 
D) purchases 
A) ending merchandise inventory 
B) cost of goods sold 
C) gross profit 
D) purchases

Question 6

Which of the following statements is true of a good merchandise inventory control system?

Accepted Answer

A) It eliminates the need for authorization of merchandise purchases. 
B) It ensures that a physical count of inventory is not required. 
C) It often prevents the company from a stockout. 
D) It eliminates the need to examine inventory purchases for damage. 
A) It eliminates the need for authorization of merchandise purchases. 
B) It ensures that a physical count of inventory is not required. 
C) It often prevents the company from a stockout. 
D) It eliminates the need to examine inventory purchases for damage.

Question 7

Lewis,Inc.had the following balances and transactions during 2016:
 
What would be reported as Cost of Goods Sold on the income statement for the year ending December 31,2016 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. )

Accepted Answer

A) $15,390 
B) $27,360 
C) $15,330 
D) $11,970 
A) $15,390 
B) $27,360 
C) $15,330 
D) $11,970

Question 8

Which of the following amounts would be reported as Merchandise Inventory on the balance sheet of a company if the cost of an item is $120 and the current replacement cost is $100?

Accepted Answer

A) $220 
B) The average of $100 and $120 
C) $120 
D) $100 
A) $220 
B) The average of $100 and $120 
C) $120 
D) $100

Question 9

Richardson Auto Supplies reported the following income statement for the year ended December 31,2017.
   
Compute inventory turnover rate for the year.(Round to two decimal places. )
Compute days' sales in inventory for the year.(Round to two decimal places. )

Accepted Answer

Inventory turnover is 6.94 tim

Question 10

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

Accepted Answer

A) conservatism 
B) materiality concept 
C) disclosure principle 
D) consistency principle 
A) conservatism 
B) materiality concept 
C) disclosure principle 
D) consistency principle

Question 11

The ending merchandise inventory for the current year is overstated by $25,000.What effect will this error have on the following year's net income?

Accepted Answer

A) The net income will be overstated by $50,000. 
B) The net income will be overstated by $25,000. 
C) The net income will be understated by $25,000. 
D) The net income will be understated by $50,000. 
A) The net income will be overstated by $50,000. 
B) The net income will be overstated by $25,000. 
C) The net income will be understated by $25,000. 
D) The net income will be understated by $50,000.

Question 12

Which of the following inventory costing methods results in the highest value of ending inventory during a period of rising inventory costs?

Accepted Answer

A) specific identification 
B) weighted-average 
C) last-in,first-out 
D) first-in,first-out 
A) specific identification 
B) weighted-average 
C) last-in,first-out 
D) first-in,first-out

Question 13

Which of the following principles states that a business's financial statements must report enough information for outsiders to make knowledgeable decisions about the company?

Accepted Answer

A) conservatism 
B) materiality concept 
C) disclosure principle 
D) consistency principle 
A) conservatism 
B) materiality concept 
C) disclosure principle 
D) consistency principle

Question 14

McClain Designs Furniture began June with merchandise inventory of 45 sofas that cost a total of $31,500.During the month,McClain Designs purchased and sold merchandise on account as follows:
   
Prepare a perpetual inventory record,using the weighted-average inventory costing method,and determine the company's cost of goods sold,ending merchandise inventory,and gross profit.(Round weighted-average cost per unit to the nearest cent and all other amounts to the nearest dollar. )

Accepted Answer

The answer of McClain Designs Furniture began June with merchandise...

Question 15

Martell,Inc.purchased inventory on account for $6,500.Provide the journal entry to record the purchase of inventory on account.(Assume a perpetual inventory system. )

Accepted Answer

The answer of Martell,Inc.purchased inventory on account for $6,500.Provide the...

Question 16

The specific identification method of inventory costing is recommended when a business deals in unique and high-priced inventory items.

Accepted Answer

A) True 
 B)False

Question 17

Samson,Inc.had the following balances and transactions during 2017:
 
What is the amount of the company's Merchandise Inventory,as disclosed in the December 31,2017 balance sheet as per the periodic FIFO inventory costing method?

Accepted Answer

A) $552 
B) $588 
C) $920 
D) $882 
A) $552 
B) $588 
C) $920 
D) $882

Question 18

"The amounts obtained for cost of goods sold and ending merchandise inventory are always the same for FIFO perpetual and FIFO periodic." Is this statement true? Why or why not?

Accepted Answer

This is a true statement.This occurs bec

Question 19

Anderson Plumbing Fixtures reported the following income statement for the year ended December 31,2017.
   
Compute inventory turnover rate for the year.(Round to two decimal places. )
Compute days' sales in inventory for the year.(Round to two decimal places. )

Accepted Answer

Inventory turnover is 3.69 tim

Question 20

First Street,Inc.has 7 units in ending merchandise inventory on December 31.The units were purchased in November for $200 each.The price lists from suppliers indicate the current replacement cost of the item to be $196 each.Which of the following statements is true of the effects of the adjustments to ending merchandise inventory on the cost of goods sold?

Accepted Answer

A) The cost of goods sold would increase by $4. 
B) The cost of goods sold would not be affected. 
C) The cost of goods sold would decrease by $28. 
D) The cost of goods sold would increase by $28. 
A) The cost of goods sold would increase by $4. 
B) The cost of goods sold would not be affected. 
C) The cost of goods sold would decrease by $28. 
D) The cost of goods sold would increase by $28.

Exam 6: Merchandise Inventory

When inventory costs are declining,which of the following inventory costing methods will result in the highest cost of goods sold?

Weighted average cost per unit is determined by dividing the cost of goods available for sale by the number of units available.

Under the periodic inventory system,which of the following amounts will always stay the same regardless of the inventory valuation method used?

Which of the following statements is true of a good merchandise inventory control system?

Which of the following amounts would be reported as Merchandise Inventory on the balance sheet of a company if the cost of an item is $120 and the current replacement cost is $100?

Richardson Auto Supplies reported the following income statement for the year ended December 31,2017. Compute inventory turnover rate for the year.(Round to two decimal places. ) Compute days' sales in inventory for the year.(Round to two decimal places. )

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

The ending merchandise inventory for the current year is overstated by $25,000.What effect will this error have on the following year's net income?

Which of the following inventory costing methods results in the highest value of ending inventory during a period of rising inventory costs?

Which of the following principles states that a business's financial statements must report enough information for outsiders to make knowledgeable decisions about the company?

Martell,Inc.purchased inventory on account for $6,500.Provide the journal entry to record the purchase of inventory on account.(Assume a perpetual inventory system. )

The specific identification method of inventory costing is recommended when a business deals in unique and high-priced inventory items.

Samson,Inc.had the following balances and transactions during 2017: What is the amount of the company's Merchandise Inventory,as disclosed in the December 31,2017 balance sheet as per the periodic FIFO inventory costing method?

"The amounts obtained for cost of goods sold and ending merchandise inventory are always the same for FIFO perpetual and FIFO periodic." Is this statement true? Why or why not?

Anderson Plumbing Fixtures reported the following income statement for the year ended December 31,2017. Compute inventory turnover rate for the year.(Round to two decimal places. ) Compute days' sales in inventory for the year.(Round to two decimal places. )

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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