Question 1

During a period of consistently rising prices, the method of inventory that will result in reporting the greatest cost of merchandise sold is

Accepted Answer

A)  FIFO 
B)  LIFO 
C)  average cost 
D)  weighted average 
A)  FIFO 
B)  LIFO 
C)  average cost 
D)  weighted average

Question 2

On the basis of the following data, determine the value of the inventory at the lower of cost or market. Apply lower of cost or market to each inventory item. Show your work.
 $\begin{array} { | l | l | l | l | } 
\hline \text { Item } & \text { Inventory Quantity } & \text { Unit Cost Price } & \text { Unit Market Price } \
\hline \text { Product C } & 420 & \$ 6 & \$ 5 \
\hline \text { Product D } & 370 & 12 & 14 \
\hline
\end{array}$

Accepted Answer

The answer of On the basis of the following data,...

Question 3

Using a LIFO perpetual cost flow, calculate the value of the ending inventory and the cost of goods sold for the month of November of Beamer Company using the data below.
   Calculate the following:
1. Inventory valuation at the end of November
2. Calculate the Cost of Goods Sold for November

Accepted Answer

1. Inventory valuation
400 @ 80 = 32,000

Question 4

The three inventory costing methods will normally each yield different amounts of net income.

Accepted Answer

A) True 
 B)False

Question 5

During periods of increasing costs, the use of the FIFO method of costing inventory will yield an inventory amount for the balance sheet that is higher than LIFO would produce.

Accepted Answer

A) True 
 B)False

Question 6

The following lots of a particular commodity were available for sale during the year: $\begin{array}{lc}
\text { Beginning invent ory } & 5 \text { units at } \$ 61 \
\text { First purchase } & 15 \text { units at } \$ 63 \
\text { Second purchase } & 10 \text { units at } \$ 74 \
\text { Third purchase } & 10 \text { units at } \$ 77
\end{array}$ The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year.
What is the amount of cost of goods sold for the year according to the LIFO method?

Accepted Answer

A)  $1,380 
B)  $1,375 
C)  $1,510 
D)  $1,250 
A)  $1,380 
B)  $1,375 
C)  $1,510 
D)  $1,250

Question 7

Use the following information to answer the following questions. The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1.
$\begin{array}{|l|l|l|l|}
\hline \text { Date } & \text { Product Z } & \text { Units } & \text { Cost } \
\hline \text { May 3 } & \text { Purchase } & 5 & \$ 20 \
\hline \text { May 10 } & \text { Sale } & 3 & \
\hline \text { May 17 } & \text { Purchase } & 10 & \$ 24 \
\hline \text { May 20 } & \text { Sale } & 6 & \
\hline \text { May 23 } & \text { Sale } & 3 & \
\hline \text { May 30 } & \text { Purchase } & 10 & \$ 30 \
\hline
\end{array}$Assuming that the company uses the perpetual inventory system, determine the cost of merchandise sold for the sale of May 20 using the LIFO inventory cost method.

Accepted Answer

A)  $136 
B)  $144 
C)  $180 
D)  $120 
A)  $136 
B)  $144 
C)  $180 
D)  $120

Question 8

Complete the chart using the LIFO and FIFO costing methods, assuming a period of increasing costs:
 $\begin{array} { | l | l | l | } 
\hline & \text { Highest Amount } & \text { Lowest Amount } \
\hline \text { Cost of merchandise sold } & & \
\hline \text { Gross Profit } & & \
\hline \text { Net Income } & & \
\hline \text { Ending Merchandise Inventory } & & \
\hline
\end{array}$

Accepted Answer

The answer of Complete the chart using the LIFO and...

Question 9

Beginning inventory, purchases, and sales for Product - Weld TM are as follows:
   Assuming a perpetual inventory system and the first-in, first-out method, determine (a) the cost of the merchandise sold for the September 30 sale and (b) the inventory on September 30.

Accepted Answer

a) Cost of merchandise sold:
7

Question 10

On the basis of the following data, what is the estimated cost of the merchandise inventory on May 31 using the retail method?

Accepted Answer

A)  $250,000 
B)  $360,000 
C)  $172,500 
D)  $187,500 
A)  $250,000 
B)  $360,000 
C)  $172,500 
D)  $187,500

Question 11

Which of the following measures the relationship between cost of merchandise sold and the amount of inventory carried during the period?

Accepted Answer

A)  inventory turnover 
B)  Fixed asset turnover 
C)  retail method of inventory costing 
D)  gross profit method of inventory costing 
A)  inventory turnover 
B)  Fixed asset turnover 
C)  retail method of inventory costing 
D)  gross profit method of inventory costing

Question 12

The units of Product Green-2 available for sale during the year were as follows:
   There are 17 units of the product in the physical inventory at Sep 30. The periodic inventory system is used. Determine the cost of merchandise sold by (a) FIFO, (b) LIFO, and (c) average cost methods.

Accepted Answer

The answer of The units of Product Green-2 available for...

Question 13

Assume that three identical units of merchandise are purchased during October, as follows:
 $\begin{array} { | l | l | l | l | l | } 
\hline & & & \text { Units } & \text { Cost } \
\hline \text { October } & 5 & \text { Purchase } & 1 & \$ 5 \
\hline & 12 & \text { Purchase } & 1 & 13 \
\hline & 28 & \text { Purchase } & \underline { 1 } & 15 \
\hline \text { Total } & & & \underline { 3 } & \$33 \
\hline
\end{array}$ Assume one unit is sold on October 31 for $28. Determine Cost of Merchandise Sold, Gross profit, and Ending Inventory under the FIFO method.

Accepted Answer

The answer of Assume that three identical units of merchandise...

Question 14

Based on the following information: compute (a) Inventory turnover; (b) Average daily cost of merchandise sold; and (c) Number of days' sales in inventory for 2011. Use a 365-day year. (d) If an inventory turnover of 12 is average for the industry, how is this company doing?

Accepted Answer

The answer of Based on the following information: compute (a)...

Question 15

Beginning inventory, purchases, and sales for Product - Weld TM are as follows:
   Assuming a perpetual inventory system and the last-in, first-out method, determine (a) the cost of the merchandise sold for the September 30 sale and (b) the inventory on September 30.

Accepted Answer

a) Cost of merchandise sold:
8

Question 16

Under a perpetual inventory system, the amount of each type of merchandise on hand is available in the

Accepted Answer

A)  customer's ledger 
B)  creditor's ledger 
C)  inventory ledger 
D)  purchase ledger 
A)  customer's ledger 
B)  creditor's ledger 
C)  inventory ledger 
D)  purchase ledger

Question 17

The following lots of a particular commodity were available for sale during the year: $\begin{array}{ll}
\text { Beginning invent ory } & 10 \text { units at } \$ 30 \
\text { First purchase } & 25 \text { units at } \$ 32 \
\text { Second purchase } & 30 \text { units at } \$ 34 \
\text { Third purchase } & 10 \text { units at } \$ 35
\end{array}$ The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year. What is the amount of inventory at the end of the year according to the FIFO method?

Accepted Answer

A)  $655 
B)  $620 
C)  $690 
D)  $659 
A)  $655 
B)  $620 
C)  $690 
D)  $659

Question 18

When using a perpetual inventory system, the journal entry to record the cost of merchandise sold is:

Accepted Answer

A)  debit Cost of Merchandise Sold; credit Sales 
B)  debit Cost of Merchandise Sold; credit Merchandise Inventory 
C)  debit Merchandise Inventory; credit Cost of Merchandise Sold 
D)  No journal entry is made to record the cost of merchandise sold. 
A)  debit Cost of Merchandise Sold; credit Sales 
B)  debit Cost of Merchandise Sold; credit Merchandise Inventory 
C)  debit Merchandise Inventory; credit Cost of Merchandise Sold 
D)  No journal entry is made to record the cost of merchandise sold.

Question 19

The following units of an inventory item were available for sale during the year: $\begin{array}{ll}
\text { Beginning inventory } & 10 \text { units at } \$ 55 \
\text { First purchase } & 25 \text { units at } \$ 60 \
\text { Second purchase } & 30 \text { units at } \$ 65 \
\text { Third purchase } & 15 \text { units at } \$ 70
\end{array}$ The firm uses the periodic inventory system. During the year, 60 units of the item were sold.
The value of ending inventory using FIFO is:

Accepted Answer

A)  $1,250 
B)  $1,350 
C)  $1,375 
D)  $1,150 
A)  $1,250 
B)  $1,350 
C)  $1,375 
D)  $1,150

Question 20

Use the following information to answer the following questions. The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1.
$\begin{array}{|l|l|l|l|}
\hline \text { Date } & \text { Product Z } & \text { Units } & \text { Cost } \
\hline \text { May 3 } & \text { Purchase } & 5 & \$ 20 \
\hline \text { May 10 } & \text { Sale } & 3 & \
\hline \text { May 17 } & \text { Purchase } & 10 & \$ 24 \
\hline \text { May 20 } & \text { Sale } & 6 & \
\hline \text { May 23 } & \text { Sale } & 3 & \
\hline \text { May 30 } & \text { Purchase } & 10 & \$ 30 \
\hline
\end{array}$ Assuming that the company uses the perpetual inventory system, determine the gross profit for the sale of May 23 using the FIFO inventory cost method.

Accepted Answer

A)  $108 
B)  $120 
C)  $72 
D)  $180 
A)  $108 
B)  $120 
C)  $72 
D)  $180

Exam 6: Inventories

During a period of consistently rising prices, the method of inventory that will result in reporting the greatest cost of merchandise sold is

On the basis of the following data, determine the value of the inventory at the lower of cost or market. Apply lower of cost or market to each inventory item. Show your work. Item Inventory Quantity Unit Cost Price Unit Market Price Product C 420 \ 6 \ 5 Product D 370 12 14

Using a LIFO perpetual cost flow, calculate the value of the ending inventory and the cost of goods sold for the month of November of Beamer Company using the data below. Calculate the following: 1. Inventory valuation at the end of November 2. Calculate the Cost of Goods Sold for November

The three inventory costing methods will normally each yield different amounts of net income.

During periods of increasing costs, the use of the FIFO method of costing inventory will yield an inventory amount for the balance sheet that is higher than LIFO would produce.

Complete the chart using the LIFO and FIFO costing methods, assuming a period of increasing costs: Highest Amount Lowest Amount Cost of merchandise sold Gross Profit Net Income Ending Merchandise Inventory

Beginning inventory, purchases, and sales for Product - Weld TM are as follows: Assuming a perpetual inventory system and the first-in, first-out method, determine (a) the cost of the merchandise sold for the September 30 sale and (b) the inventory on September 30.

On the basis of the following data, what is the estimated cost of the merchandise inventory on May 31 using the retail method?

Which of the following measures the relationship between cost of merchandise sold and the amount of inventory carried during the period?

The units of Product Green-2 available for sale during the year were as follows: There are 17 units of the product in the physical inventory at Sep 30. The periodic inventory system is used. Determine the cost of merchandise sold by (a) FIFO, (b) LIFO, and (c) average cost methods.

Based on the following information: compute (a) Inventory turnover; (b) Average daily cost of merchandise sold; and (c) Number of days' sales in inventory for 2011. Use a 365-day year. (d) If an inventory turnover of 12 is average for the industry, how is this company doing?

Beginning inventory, purchases, and sales for Product - Weld TM are as follows: Assuming a perpetual inventory system and the last-in, first-out method, determine (a) the cost of the merchandise sold for the September 30 sale and (b) the inventory on September 30.

Under a perpetual inventory system, the amount of each type of merchandise on hand is available in the

When using a perpetual inventory system, the journal entry to record the cost of merchandise sold is:

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Cost Management for Just-In-Time Environments

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