Exam 6: Merchandise Inventory

Which of the following amounts could differ if a company,using the LIFO inventory costing method,shifts from a periodic inventory system to a perpetual inventory system?

A company reports in its financial statements that it uses the FIFO method of inventory costing.This is an example of the disclosure principle.

Which of the following inventory valuation methods minimizes income tax expense during a period of rising inventory costs?

Misty,Inc.had 24,000 units of ending inventory that were recorded at the cost of $8.00 per unit using the FIFO method.The current replacement cost is $4.50 per unit.Which of the following amounts would be reported as Ending Merchandise Inventory on the balance sheet using the lower-of-cost-or-market rule?

The ending Merchandise Inventory for the current accounting period is understated by $2,700.What effect will this error have on Cost of Goods Sold and Net Income for the current accounting period?

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

Which of the following inventory costing methods uses the cost of the oldest purchases to calculate the cost of goods sold?

The total cost spent on inventory that was available to be sold during a period is called the cost of goods sold.

Rodriguez,Inc.had the following balances and transactions during 2017,from January 1 to December 31: What would be reported for Ending Merchandise Inventory on the balance sheet at December 31,2017 if the perpetual inventory system and the weighted-average inventory costing method are used? (Round unit costs to two decimal places and total costs to nearest dollar. )

Ending inventory equals the cost of goods available for sale less beginning inventory.

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

A company changes its inventory costing method each period in order to maximize net income.This is a violation of the consistency principle.

A company that uses the perpetual inventory system purchased 500 pallets of industrial soap for $10,000 and paid $750 for the freight-in.The company sold the whole lot to a supermarket chain for $14,000 on account.The company uses the specific-identification method of inventory costing.Which of the following entries correctly records the cost of goods sold?

A company that uses the periodic inventory system provided the following information: 1.Beginning inventory $5,000 2.Purchases $130,000 3.Purchase discounts $2,000 4.Purchase returns and allowances $600 At the end of the period,the company does an inventory count and finds $16,000 worth of inventory on hand.What is the amount of cost of goods sold?

Universal,Inc.purchased 500 units of inventory at $25 per unit by payment of cash.Provide the journal entry to record the purchase of inventory.(Assume a perpetual inventory system. )

Which of the following is the correct formula to calculate days' sales in inventory?

The periodic inventory records of Zucker Sales indicate the following for the month of April: As of April 30,Zucker Sales counts 8 units of merchandise inventory on hand. Compute ending merchandise inventory and cost of goods sold for Zucker using the LIFO inventory method.

Metro Computer,Inc.had the following balances and transactions during 2017: What would the company's ending merchandise inventory amount be on December 31,2017 if the perpetual inventory system and the last-in,first-out inventory costing method are used?

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 materiality concept.

Which of the following is an application of conservatism?