Exam 8: Inventories and the Cost of Goods Sold

At year-end, Venus restates the carrying value of its inventory using periodic LIFO costing procedures. Under periodic costing procedures, the LIFO cost of the inventory is:

The primary reason for the popularity of the LIFO flow assumption is that this method:

Compute the cost of goods sold for the current year based on the average- cost method of inventory valuation.

During periods of rising prices, and being primarily concerned with tax implications, most companies would select:

Which of the following is not considered an acceptable inventory cost method according to GAAP?

Assuming that Ace Systems uses the FIFO flow assump?tion, the 12 units of this product in inventory at January 31 have a total cost of:

During the course of an audit of a company's financial statements, an auditor will be concerned that the company's inventory:

Busch, Inc. is a successful company, but has a lower inventory turnover rate than the industry average. Of the following, the most likely explanation is that Busch

Retail method Many large retailers take a physical inventory near year-end and state in their annual report that inventory has been valued by the "retail method." What does this mean? (Your answer should address [1] whether inventory is valued in the financial statements at cost or retail prices, and [2] how this dollar amount is determined.)

A company with a liquid inventory will have:

Determine the cost of goods sold using each of the following flow assumptions: (1) LIFO $_____________ (2) FIFO $_____________ (3) Average cost $_____________

T-Shirt City uses a periodic inventory system. During the first year of operations, the company made four purchases of a particular product. Each purchase was for 500 units and the prices were: $9 per unit in the first purchase, $10 per unit in the second purchase, $12 per unit in the third purchase, and $13 per unit in the fourth purchase. At year-end, 650 of these units remained unsold. Compute the cost of goods sold under the FIFO method and LIFO method, respectively.

Assuming that Anderson uses the FIFO flow assumption, it should record this inventory shrinkage by:

An advocate of just-in-time inventory system would say:

Some companies that use a perpetual inventory system and the LIFO flow assumption restate their inventories at year-end to the amount indicated by periodic LIFO costing procedures. The primary reason for this adjustment is that:

Which of the following inventory cost flow assumptions is not in accord with the physical flow of merchandise in most businesses?

The primary advantage of a just-in-time inventory system is:

What was the gross profit for the month?

Compute the cost of the ending inventory based on the average-cost method of inventory valuation. (Rounded)

A perpetual inventory system eliminates the need for periodically taking a physical inventory.