Question 1

If the beginning inventory of the current year and the ending inventory of the past year were overstated by the same amount:

Accepted Answer

A)  Retained earnings at the end of the current year would be correct. 
B)  Retained earnings at the end of the current year would be overstated. 
C)  Retained earnings at the end of the current year would be understated. 
D)  Net income for the current year would be correct. 
A)  Retained earnings at the end of the current year would be correct. 
B)  Retained earnings at the end of the current year would be overstated. 
C)  Retained earnings at the end of the current year would be understated. 
D)  Net income for the current year would be correct.

Question 2

Retail method
Global Office Supply uses the retail method to estimate ending inventory in its monthly financial statements. The following information is available for the month ended July 31:
  
Using the retail method:

Accepted Answer

The answer of Retail method
Global Office Supply uses the retail...

Question 3

The higher a company's inventory turnover rate, the higher its gross profit.

Accepted Answer

A) True 
 B)False

Question 4

Allied Products maintains a large inventory. The company has used the LIFO inventory method for many years, during which the purchase costs of its products have risen substantially. (More than one of the following answers may be correct.)

Accepted Answer

A)  Allied would have reported a higher net income in past years if it had been using the average cost method. 
B)  Allied's financial statements imply a lower inventory turnover rate than they would if the company were using FIFO. 
C)  If Allied were to let its inventory fall far below normal levels, the company's gross profit rate would decline. 
D)  Allied would have paid more income taxes in past years if it had been using the FIFO method. 
A)  Allied would have reported a higher net income in past years if it had been using the average cost method. 
B)  Allied's financial statements imply a lower inventory turnover rate than they would if the company were using FIFO. 
C)  If Allied were to let its inventory fall far below normal levels, the company's gross profit rate would decline. 
D)  Allied would have paid more income taxes in past years if it had been using the FIFO method.

Question 5

Ace Auto Supply uses a perpetual inventory record. On March 10, the company sells two Shelby four-barrel carburetors. Immediately prior to this sale, the perpetual inventory records indicate three of these carburetors on hand, as shown below: With respect to the sale on March 10: (More than one of the following answers may be correct.)

Accepted Answer

A)  If the average cost method is used, the cost of goods sold is $460. 
B)  If these carburetors have identification num?bers, Ace must use the specific identification method in determining the cost of goods sold. 
C)  If the company uses LIFO, the cost of goods sold will be $15 higher than if it were using FIFO. 
D)  If the company uses LIFO, the carburetor remaining in inventory after the sales will be assumed to have cost $220. 
A)  If the average cost method is used, the cost of goods sold is $460. 
B)  If these carburetors have identification num?bers, Ace must use the specific identification method in determining the cost of goods sold. 
C)  If the company uses LIFO, the cost of goods sold will be $15 higher than if it were using FIFO. 
D)  If the company uses LIFO, the carburetor remaining in inventory after the sales will be assumed to have cost $220.

Question 6

If the terms of a sale are
F.O.B. shipping point, the sale should not be recorded until the goods are delivered to the buyer.

Accepted Answer

A) True 
 B)False

Question 7

What was the ending inventory for the month?

Accepted Answer

A)  $60,000. 
B)  $64,000. 
C)  $129,000. 
D)  $175,000. 
A)  $60,000. 
B)  $64,000. 
C)  $129,000. 
D)  $175,000.

Question 8

Assuming that Beech Soda uses the LIFO flow assumption, the 28 units of this product in inventory at January 31 have a total cost of:

Accepted Answer

A)  $400. 
B)  $395. 
C)  $405. 
D)  $410. 
A)  $400. 
B)  $395. 
C)  $405. 
D)  $410.

Question 9

Shrinkage losses
At year-end, the perpetual inventory records of James Products indicate 105 units of a particular product in inventory, acquired at the following dates and unit costs:
  
A complete physical inventory taken at year-end indicates only 93 units of this product actually are on hand.
Determine the dollar amount of the shrinkage loss assuming that James uses:

Accepted Answer

The answer of Shrinkage losses
At year-end, the perpetual inventory records...

If the beginning inventory of the current year and the ending inventory of the past year were overstated by the same amount:

Retail method Global Office Supply uses the retail method to estimate ending inventory in its monthly financial statements. The following information is available for the month ended July 31: Using the retail method:

The higher a company's inventory turnover rate, the higher its gross profit.

Allied Products maintains a large inventory. The company has used the LIFO inventory method for many years, during which the purchase costs of its products have risen substantially. (More than one of the following answers may be correct.)

If the terms of a sale are F.O.B. shipping point, the sale should not be recorded until the goods are delivered to the buyer.

What was the ending inventory for the month?

Assuming that Beech Soda uses the LIFO flow assumption, the 28 units of this product in inventory at January 31 have a total cost of:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values Answer Key

Filters

Exam 8: Inventories and the Cost of Goods Sold

If the beginning inventory of the current year and the ending inventory of the past year were overstated by the same amount:

Retail method Global Office Supply uses the retail method to estimate ending inventory in its monthly financial statements. The following information is available for the month ended July 31: Using the retail method:

The higher a company's inventory turnover rate, the higher its gross profit.

Allied Products maintains a large inventory. The company has used the LIFO inventory method for many years, during which the purchase costs of its products have risen substantially. (More than one of the following answers may be correct.)

If the terms of a sale are F.O.B. shipping point, the sale should not be recorded until the goods are delivered to the buyer.

What was the ending inventory for the month?

Assuming that Beech Soda uses the LIFO flow assumption, the 28 units of this product in inventory at January 31 have a total cost of:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values Answer Key

Filters