Question 1

The Internal Revenue Service allows companies to use LIFO for income tax purposes even if they use FIFO for financial reporting.

Accepted Answer

A) True 
 B)False

Question 2

When using FIFO for inventories,market value generally refers to ________ under U.S.GAAP and ________ under IFRS.

Accepted Answer

A) current replacement cost;historical cost 
B) historical cost;net realizable value 
C) historical cost;current replacement cost 
D) net realizable value;net realizable value 
A) current replacement cost;historical cost 
B) historical cost;net realizable value 
C) historical cost;current replacement cost 
D) net realizable value;net realizable value

Question 3

The following data was extracted from the records of Today Company:   What is the gross profit using the LIFO method?

Accepted Answer

A) $6,000 
B) $24,360 
C) $21,000 
D) $27,000 
A) $6,000 
B) $24,360 
C) $21,000 
D) $27,000

Question 4

When inventory costs are rising,a company using the LIFO costing method will generally pay less taxes than if the company had been using the FIFO method.

Accepted Answer

A) True 
 B)False

Question 5

Given the following data,what is cost of goods sold as determined by the FIFO method?

Accepted Answer

A) $2,170 
B) $2,200 
C) $2,278 
D) $2,480 
A) $2,170 
B) $2,200 
C) $2,278 
D) $2,480

Question 6

The gross profit percentage equals net sales divided by gross profit.

Accepted Answer

A) True 
 B)False

Question 7

A purchase discount decreases the cost of the inventory.

Accepted Answer

A) True 
 B)False

Question 8

The choice of an inventory costing method does not impact a company's balance sheet.

Accepted Answer

A) True 
 B)False

Question 9

Seifert Company uses the periodic inventory system.At the end of the accounting period,on December 31,ending inventory is $18,000 and beginning inventory is $7,000.Purchases for the period are $102,000.Which of the following journal entries did Seifert Company prepare on December 31?

Accepted Answer

A) debit Cost of Goods Sold for $102,000 and credit Purchases for $102,000 
B) debit Cost of Goods Sold for $18,000 and credit Inventory for $18,000 
C) debit Inventory for $7,000 and credit Cost of Goods Sold for $7,000 
D) all of the above 
A) debit Cost of Goods Sold for $102,000 and credit Purchases for $102,000 
B) debit Cost of Goods Sold for $18,000 and credit Inventory for $18,000 
C) debit Inventory for $7,000 and credit Cost of Goods Sold for $7,000 
D) all of the above

Question 10

The following data are for Steve's Candy Store for January:   What is the company's estimated ending inventory for the month?

Accepted Answer

A) $345,000 
B) $244,000 
C) $366,000 
D) $467,000 
A) $345,000 
B) $244,000 
C) $366,000 
D) $467,000

Question 11

The journal entry to remove the beginning inventory under the periodic inventory system is:

Accepted Answer

A) debit Purchases and credit Cost of Goods Sold. 
B) debit Purchases and credit Inventory. 
C) debit Inventory and credit Cost of Goods Sold. 
D) debit Cost of Goods Sold and credit Inventory. 
A) debit Purchases and credit Cost of Goods Sold. 
B) debit Purchases and credit Inventory. 
C) debit Inventory and credit Cost of Goods Sold. 
D) debit Cost of Goods Sold and credit Inventory.

Question 12

A company purchased inventory for $1,300 per unit.The company later sold one unit of the inventory for cash of $1,900.Under the perpetual inventory system,which accounts will be debited to record the sale?

Accepted Answer

A) Cash,$1,900;Inventory,$1,300 
B) Cash,$1,900;Cost of Goods Sold,$1,300 
C) Cash,$1,900;Cost of Goods Sold,$600 
D) Cash,$1,900;Inventory,$600 
A) Cash,$1,900;Inventory,$1,300 
B) Cash,$1,900;Cost of Goods Sold,$1,300 
C) Cash,$1,900;Cost of Goods Sold,$600 
D) Cash,$1,900;Inventory,$600

Question 13

Blue Company has the following data for the year:   What is the estimated ending inventory? (Round your final answer to the nearest dollar. )

Accepted Answer

A) $90,000 
B) $231,000 
C) $222,000 
D) $321,000 
A) $90,000 
B) $231,000 
C) $222,000 
D) $321,000

Question 14

If a company uses LIFO for tax purposes,they must use LIFO for financial reporting purposes.

Accepted Answer

A) True 
 B)False

Question 15

There is an error in computing ending inventory in Year 1.Which statement is TRUE?

Accepted Answer

A) The error will have no effect on Year 2 financial statements. 
B) After three years,the inventory error will counterbalance. 
C) Gross profit will continue to be incorrect until an adjusting entry is made. 
D) The total gross profit for Year 1 and Year 2 combined will be correct. 
A) The error will have no effect on Year 2 financial statements. 
B) After three years,the inventory error will counterbalance. 
C) Gross profit will continue to be incorrect until an adjusting entry is made. 
D) The total gross profit for Year 1 and Year 2 combined will be correct.

Question 16

The lower-of-cost-or-market rule is based on the principles of relevance and representational faithfulness.

Accepted Answer

A) True 
 B)False

Question 17

An error in ending inventory creates errors for two accounting periods.

Accepted Answer

A) True 
 B)False

Question 18

The inventory method used by a company affects:

Accepted Answer

A) net income on the income statement. 
B) the income taxes to be paid. 
C) the ending inventory on the balance sheet. 
D) all of the above. 
A) net income on the income statement. 
B) the income taxes to be paid. 
C) the ending inventory on the balance sheet. 
D) all of the above.

Question 19

Carboni Company had the following data available for the current month:
FIFO Cost of Goods Sold:
   LIFO Cost of Goods Sold:
   The income tax rate is 30%.
Required:
How much would Carboni Company save in income taxes if they used LIFO instead of FIFO?

Accepted Answer

($2,525 -

Question 20

Tomasino's inventory records show the following data at January 31:   At January 31,240 units are still on hand.What is the cost of the ending inventory at January 31 if Tomasino uses the FIFO method?

Accepted Answer

A) $1,680 
B) $1,950 
C) $2,520 
D) $2,130 
A) $1,680 
B) $1,950 
C) $2,520 
D) $2,130

The Internal Revenue Service allows companies to use LIFO for income tax purposes even if they use FIFO for financial reporting.

When using FIFO for inventories,market value generally refers to under U.S.GAAP and under IFRS.

The following data was extracted from the records of Today Company: What is the gross profit using the LIFO method?

When inventory costs are rising,a company using the LIFO costing method will generally pay less taxes than if the company had been using the FIFO method.

Given the following data,what is cost of goods sold as determined by the FIFO method?

The gross profit percentage equals net sales divided by gross profit.

A purchase discount decreases the cost of the inventory.

The choice of an inventory costing method does not impact a company's balance sheet.

Seifert Company uses the periodic inventory system.At the end of the accounting period,on December 31,ending inventory is $18,000 and beginning inventory is $7,000.Purchases for the period are $102,000.Which of the following journal entries did Seifert Company prepare on December 31?

The following data are for Steve's Candy Store for January: What is the company's estimated ending inventory for the month?

The journal entry to remove the beginning inventory under the periodic inventory system is:

A company purchased inventory for $1,300 per unit.The company later sold one unit of the inventory for cash of $1,900.Under the perpetual inventory system,which accounts will be debited to record the sale?

Blue Company has the following data for the year: What is the estimated ending inventory? (Round your final answer to the nearest dollar. )

If a company uses LIFO for tax purposes,they must use LIFO for financial reporting purposes.

There is an error in computing ending inventory in Year 1.Which statement is TRUE?

The lower-of-cost-or-market rule is based on the principles of relevance and representational faithfulness.

An error in ending inventory creates errors for two accounting periods.

The inventory method used by a company affects:

Carboni Company had the following data available for the current month: FIFO Cost of Goods Sold: LIFO Cost of Goods Sold: The income tax rate is 30%. Required: How much would Carboni Company save in income taxes if they used LIFO instead of FIFO?

Tomasino's inventory records show the following data at January 31: At January 31,240 units are still on hand.What is the cost of the ending inventory at January 31 if Tomasino uses the FIFO method?

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Receivables and Revenue

Plant Assets, natural Resources, Intangibles

Current and Contingent Liabilities

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Investments

Time Value of Money

Filters

Exam 6: Inventory Cost of Goods Sold

The Internal Revenue Service allows companies to use LIFO for income tax purposes even if they use FIFO for financial reporting.

When using FIFO for inventories,market value generally refers to ________ under U.S.GAAP and ________ under IFRS.

The following data was extracted from the records of Today Company: What is the gross profit using the LIFO method?

When inventory costs are rising,a company using the LIFO costing method will generally pay less taxes than if the company had been using the FIFO method.

Given the following data,what is cost of goods sold as determined by the FIFO method?

The gross profit percentage equals net sales divided by gross profit.

A purchase discount decreases the cost of the inventory.

The choice of an inventory costing method does not impact a company's balance sheet.

Seifert Company uses the periodic inventory system.At the end of the accounting period,on December 31,ending inventory is $18,000 and beginning inventory is $7,000.Purchases for the period are $102,000.Which of the following journal entries did Seifert Company prepare on December 31?

The following data are for Steve's Candy Store for January: What is the company's estimated ending inventory for the month?

The journal entry to remove the beginning inventory under the periodic inventory system is:

A company purchased inventory for $1,300 per unit.The company later sold one unit of the inventory for cash of $1,900.Under the perpetual inventory system,which accounts will be debited to record the sale?

Blue Company has the following data for the year: What is the estimated ending inventory? (Round your final answer to the nearest dollar. )

If a company uses LIFO for tax purposes,they must use LIFO for financial reporting purposes.

There is an error in computing ending inventory in Year 1.Which statement is TRUE?

The lower-of-cost-or-market rule is based on the principles of relevance and representational faithfulness.

An error in ending inventory creates errors for two accounting periods.

The inventory method used by a company affects:

Carboni Company had the following data available for the current month: FIFO Cost of Goods Sold: LIFO Cost of Goods Sold: The income tax rate is 30%. Required: How much would Carboni Company save in income taxes if they used LIFO instead of FIFO?

Tomasino's inventory records show the following data at January 31: At January 31,240 units are still on hand.What is the cost of the ending inventory at January 31 if Tomasino uses the FIFO method?

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Receivables and Revenue

Plant Assets, natural Resources, Intangibles

Current and Contingent Liabilities

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Investments

Time Value of Money

Filters

When using FIFO for inventories,market value generally refers to under U.S.GAAP and under IFRS.