Question 1

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 2

The inventory costing method that reports the most current prices in ending inventory is

Accepted Answer

A)  FIFO 
B)  Specific identification 
C)  LIFO 
D)  Average cost 
A)  FIFO 
B)  Specific identification 
C)  LIFO 
D)  Average cost

Question 3

Inventory controls start when the merchandise is shelved in the store area.

Accepted Answer

A) True 
 B)False

Question 4

The inventory data for an item for November are:   Using a perpetual system, what is the cost of the merchandise sold for November if the company uses LIFO?

Accepted Answer

A)  $610 
B)  $600 
C)  $590 
D)  $580 
A)  $610 
B)  $600 
C)  $590 
D)  $580

Question 5

The following units of a particular item were available for sale during the year:
   The firm uses the perpetual inventory system and there are 240 units of the item on hand at the end of the year. What is the total cost of ending inventory according to LIFO?

Accepted Answer

$187,700 [($755 × 30

Question 6

The following units of an inventory item were available for sale during the year:   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 7

Safeguarding inventory from damage or theft is a primary objective for the control of inventory. If you were running a clothing store, name three specific controls you would implement to guard inventory from theft.

Accepted Answer

Answers may vary. Some of these include

Question 8

Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items?

Accepted Answer

A)  FIFO 
B)  LIFO 
C)  average 
D)  specific identification 
A)  FIFO 
B)  LIFO 
C)  average 
D)  specific identification

Question 9

Three identical units of Item Steele Plate are purchased during March, as shown below.
   Assume that one unit is sold on March 23 for $1,125. Determine the gross profit for March and ending inventory on March 31 using (a) FIFO, (b) LIFO, and (c) average cost methods.

Accepted Answer

@#IMG-DLM&_TB2085_00

Question 10

Using the lower of cost or market, what should the total inventory value be for the following items:
   Apply the lower-of-cost-or-market method to inventory as a whole.

Accepted Answer

@#IMG-DLM&_TB2085_00

Question 11

If the cost of an item of inventory is $60 and the current replacement cost is $75, the amount included in inventory according to the lower of cost or market is

Accepted Answer

A)  $15 
B)  $60 
C)  $75 
D)  $135 
A)  $15 
B)  $60 
C)  $75 
D)  $135

Question 12

If ending inventory for the year is overstated, owner's equity reported on the balance sheet at the end of the year is understated.

Accepted Answer

A) True 
 B)False

Question 13

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.
  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

Question 14

Too much inventory on hand

Accepted Answer

A)  reduces solvency 
B)  increases the cost to safeguard the assets 
C)  increases the losses due to price declines 
D)  all of the above 
A)  reduces solvency 
B)  increases the cost to safeguard the assets 
C)  increases the losses due to price declines 
D)  all of the above

Question 15

Based on the following information, compute (a) Inventory turnover; (b) Average daily cost of merchandise sold using a 365 day year; and (c) Number of days' sales in inventory.

Accepted Answer

(a) $ 195,640 ¸ (($20,500+18,6

Question 16

Based on the following data, calculate the estimated cost of the merchandise inventory on March 31 using the retail method.

Accepted Answer

@#IMG-DLM&_TB2085_00

Question 17

Garrison Company uses the retail method of inventory costing. They started the year with an inventory that had a retail cost of $45,000. During the year they purchased an inventory with a retail cost of $300,000. After performing a physical inventory, they calculated their inventory cost at retail to be $80,000. The mark up is 100% of cost. Determine the ending inventory at its estimated cost.

Accepted Answer

A)  $160,000 
B)  $80,000 
C)  $40,000 
D)  $45,000 
A)  $160,000 
B)  $80,000 
C)  $40,000 
D)  $45,000

Question 18

If a fire destroys the merchandise inventory, the gross profit method can be used to estimate the cost of merchandise destroyed.

Accepted Answer

A) True 
 B)False

Question 19

One effect of carrying too much inventory is risk that customers will change their buying habits.

Accepted Answer

A) True 
 B)False

Question 20

Unsold consigned merchandise should be included in the consignee's inventory.

Accepted Answer

A) True 
 B)False

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

The inventory costing method that reports the most current prices in ending inventory is

Inventory controls start when the merchandise is shelved in the store area.

The inventory data for an item for November are: Using a perpetual system, what is the cost of the merchandise sold for November if the company uses LIFO?

The following units of a particular item were available for sale during the year: The firm uses the perpetual inventory system and there are 240 units of the item on hand at the end of the year. What is the total cost of ending inventory according to LIFO?

The following units of an inventory item were available for sale during the year: 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:

Safeguarding inventory from damage or theft is a primary objective for the control of inventory. If you were running a clothing store, name three specific controls you would implement to guard inventory from theft.

Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items?

Three identical units of Item Steele Plate are purchased during March, as shown below. Assume that one unit is sold on March 23 for $1,125. Determine the gross profit for March and ending inventory on March 31 using (a) FIFO, (b) LIFO, and (c) average cost methods.

Using the lower of cost or market, what should the total inventory value be for the following items: Apply the lower-of-cost-or-market method to inventory as a whole.

If the cost of an item of inventory is $60 and the current replacement cost is $75, the amount included in inventory according to the lower of cost or market is

If ending inventory for the year is overstated, owner's equity reported on the balance sheet at the end of the year is understated.

Too much inventory on hand

Based on the following information, compute (a) Inventory turnover; (b) Average daily cost of merchandise sold using a 365 day year; and (c) Number of days' sales in inventory.

Based on the following data, calculate the estimated cost of the merchandise inventory on March 31 using the retail method.

If a fire destroys the merchandise inventory, the gross profit method can be used to estimate the cost of merchandise destroyed.

One effect of carrying too much inventory is risk that customers will change their buying habits.

Unsold consigned merchandise should be included in the consignee's inventory.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 7: Inventories

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

The inventory costing method that reports the most current prices in ending inventory is

Inventory controls start when the merchandise is shelved in the store area.

The inventory data for an item for November are: Using a perpetual system, what is the cost of the merchandise sold for November if the company uses LIFO?

The following units of a particular item were available for sale during the year: The firm uses the perpetual inventory system and there are 240 units of the item on hand at the end of the year. What is the total cost of ending inventory according to LIFO?

The following units of an inventory item were available for sale during the year: 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:

Safeguarding inventory from damage or theft is a primary objective for the control of inventory. If you were running a clothing store, name three specific controls you would implement to guard inventory from theft.

Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items?

Three identical units of Item Steele Plate are purchased during March, as shown below. Assume that one unit is sold on March 23 for $1,125. Determine the gross profit for March and ending inventory on March 31 using (a) FIFO, (b) LIFO, and (c) average cost methods.

Using the lower of cost or market, what should the total inventory value be for the following items: Apply the lower-of-cost-or-market method to inventory as a whole.

If the cost of an item of inventory is $60 and the current replacement cost is $75, the amount included in inventory according to the lower of cost or market is

If ending inventory for the year is overstated, owner's equity reported on the balance sheet at the end of the year is understated.

Too much inventory on hand

Based on the following information, compute (a) Inventory turnover; (b) Average daily cost of merchandise sold using a 365 day year; and (c) Number of days' sales in inventory.

Based on the following data, calculate the estimated cost of the merchandise inventory on March 31 using the retail method.

If a fire destroys the merchandise inventory, the gross profit method can be used to estimate the cost of merchandise destroyed.

One effect of carrying too much inventory is risk that customers will change their buying habits.

Unsold consigned merchandise should be included in the consignee's inventory.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters