Exam 6: Merchandise Inventory

Complete the following table,which compares the effects of LIFO,FIFO,and weighted-average inventory costing methods on the financial statements in periods of rising inventory costs.The answer should be lowest,highest,or middle.

A high rate of inventory turnover indicates difficulty in selling inventory.

A company that uses the perpetual inventory system purchased 500 pallets of industrial soap for $8,000 and paid $900 for the freight-in.The company sold the whole lot to a supermarket chain for $13,000 on account.Which of the following entries correctly records the sale?

The consistency principle states that businesses should report the same amount of ending merchandise inventory from period to period.

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

An overstatement of ending merchandise inventory in the current period results in an overstatement of cost of goods sold in the current period.

A high rate of inventory turnover indicates ease in selling inventory.

When inventory costs are declining,which of the following inventory costing method will result in the lowest ending merchandise inventory?

An overstatement of ending merchandise inventory in the current period results in an overstatement of net income in the current period.

Evans,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 LIFO inventory costing method?

When using the FIFO inventory costing method,ending merchandise inventory will be the highest,as compared to LIFO and weighted-average inventory costing methods,when costs are decreasing.

Which of the following states that a company must perform strictly proper accounting only for items that are significant to the business's financial statements?

When a company uses the last-in,first-out (LIFO)method,the cost of goods sold correlates to the most recently purchased goods,and the ending inventory correlates to the oldest goods in stock.

Clark Sales sold 450 units of product to a customer on account.The company uses the perpetual inventory system.The selling price was $28 per unit,and the cost,according to the company's inventory records,was $12 per unit.Provide the journal entries to record the sale.

Weller,Inc.provided the following particulars for 2017: Calculate the average number of days that inventory was held by Weller,Inc.during 2017.(Assume 365 days in a year.Round your intermediate calculations and final answer to two decimal places. )

Given the same purchase and sales data,and assuming the cost of inventory is rising,the costing methods for inventory will result in different amounts for net income.

The Merchandise Inventory account is debited to write down the inventory as per the lower-of-cost-or-market rule.

Ending inventory for the current accounting period is overstated by $2,700.What effect will this error have on Cost of Goods Sold and Net Income for the current accounting period?

Malcom,Inc.had the following balances and transactions during 2017: What would be reported as Cost of Goods Sold on the income statement for the year ending December 31,2017 if the perpetual inventory system and the first-in,first-out inventory costing method are used?

A lower days' sales in inventory for Moonshine,Inc. ,when compared to other companies,indicates that it is ________.