Question 1

The accounting procedures for the marketing and administrative costs of manufacturing firms resemble those for merchandising firms.

Accepted Answer

A) True 
 B)False

Question 2

What costs are included in inventory of manufacturing and merchandising firms?

Accepted Answer

COSTS INCLUDED IN INVENTORY
The principl

Question 3

U.S.GAAP specifies that, in the context of inventories, market means replacement cost, except that market may not exceed net realizable value and may not be less than net realizable value reduced by a normal profit margin.

Accepted Answer

A) True 
 B)False

Question 4

Examples of restructuring activities include selling or closing divisions or plants, combining offices, moving operations from one location to another, terminating employees or leases, and selling assets.

Accepted Answer

A) True 
 B)False

Question 5

A firm using FIFO had a beginning inventory of $48,000, an ending inventory of $56,000, and a pretax income of $400,000.If it had used LIFO, its beginning inventory would have been $20,000, its ending inventory would have been $16,000, and its pretax income would have been:

Accepted Answer

A) $374,000 
B) $388,000 
C) $396,000 
D) $404,000 
E) $412,000 
A) $374,000 
B) $388,000 
C) $396,000 
D) $404,000 
E) $412,000

Question 6

Compare and contrast the effect on net income, cost of goods sold, and inventory of the FIFO, LIFO, and weighted-average cost flow assumptions.

Accepted Answer

COMPARISON OF AND CHOICE AMONG COST-FLOW

Question 7

Which of the following accounts would you expect to find on the balance sheet of a manufacturing company?

Accepted Answer

A) finished goods inventory, raw materials inventory, and merchandise inventory 
B) finished goods inventory, work-in-process inventory, and merchandise inventory 
C) raw materials inventory, work-in-process inventory, and merchandise inventory 
D) finished goods inventory, raw materials inventory, and work-in-process inventory 
E) none of the above 
A) finished goods inventory, raw materials inventory, and merchandise inventory 
B) finished goods inventory, work-in-process inventory, and merchandise inventory 
C) raw materials inventory, work-in-process inventory, and merchandise inventory 
D) finished goods inventory, raw materials inventory, and work-in-process inventory 
E) none of the above

Question 8

Which of the following is/are not true regarding a manufacturing firm?

Accepted Answer

A) A manufacturing firm incurs costs as it produces goods by changing the physical form of raw materials. 
B) The product costs for a manufacturing firm are the costs incurred in manufacturing goods for sale. 
C) The costs to produce finished goods inventory for a manufacturing firm do not become expenses until the firm sells the product. 
D) Prior to sale, the production costs of a a manufacturing firm represent the transformation of assets from one form into another. 
E) Product costs for a manufacturing firm are treated as period costs during the period that the inventory is finished and ready for sale. 
A) A manufacturing firm incurs costs as it produces goods by changing the physical form of raw materials. 
B) The product costs for a manufacturing firm are the costs incurred in manufacturing goods for sale. 
C) The costs to produce finished goods inventory for a manufacturing firm do not become expenses until the firm sells the product. 
D) Prior to sale, the production costs of a a manufacturing firm represent the transformation of assets from one form into another. 
E) Product costs for a manufacturing firm are treated as period costs during the period that the inventory is finished and ready for sale.

Question 9

Under U.S.GAAP, the cost of a product warranty should be included as an expense in the

Accepted Answer

A) period the cash is collected for a product sold on account. 
B) future period when the cost of repairing the product is paid. 
C) period of the sale of the product. 
D) future period when the product is repaired or replaced. 
E) past period when the product is under development. 
A) period the cash is collected for a product sold on account. 
B) future period when the cost of repairing the product is paid. 
C) period of the sale of the product. 
D) future period when the product is repaired or replaced. 
E) past period when the product is under development.

Question 10

The principle for cost inclusion is that the balance sheet amount for inventory should include all costs incurred to acquire goods but not to prepare them for sale.

Accepted Answer

A) True 
 B)False

Question 11

Using either the FIFO and LIFO cost flow assumption will result in the same cost of goods sold when

Accepted Answer

A) the number of units in beginning and ending inventory are the same. 
B) two consecutive years are combined. 
C) the prices of the goods do not change. 
D) lower-of-cost-or-market is applied. 
E) none of the above 
A) the number of units in beginning and ending inventory are the same. 
B) two consecutive years are combined. 
C) the prices of the goods do not change. 
D) lower-of-cost-or-market is applied. 
E) none of the above

Question 12

Forgone Company had beginning inventory of $19,000, purchases were $100,000, and ending inventory had a cost of $25,000 and a market value of $20,000.The same inventory increased $3,000 in market value in the subsequent period.Which of the following is/are not true?

Accepted Answer

A) Under U.S.GAAP, the firm would continue to record the inventory at $20,000, the lower of cost or market. 
B) Under IFRS, the firm would reverse a portion of its previous impairment. 
C) If Forgone Company is in an industry that frequently experience inventory price fluctuations, the firm may use an allowance account to record lower-of-cost-or-market adjustments. 
D) The firm should disclose the existence of large inventory write-ups in Managements' Discussion and Analysis so that users of financial statements understand the reversal of the previous asset impairment. 
E) none of the above 
A) Under U.S.GAAP, the firm would continue to record the inventory at $20,000, the lower of cost or market. 
B) Under IFRS, the firm would reverse a portion of its previous impairment. 
C) If Forgone Company is in an industry that frequently experience inventory price fluctuations, the firm may use an allowance account to record lower-of-cost-or-market adjustments. 
D) The firm should disclose the existence of large inventory write-ups in Managements' Discussion and Analysis so that users of financial statements understand the reversal of the previous asset impairment. 
E) none of the above

Question 13

Which of the following cost flow assumptions will report ending inventory closest to current cost?

Accepted Answer

A) LIFO method 
B) FIFO method 
C) weighted-average method 
D) acquisition cost 
E) specific identification method 
A) LIFO method 
B) FIFO method 
C) weighted-average method 
D) acquisition cost 
E) specific identification method

Question 14

In a time of rising prices, unrealized holding gains on ending inventory are

Accepted Answer

A) higher under LIFO than FIFO. 
B) higher under FIFO than LIFO. 
C) reported on the income statement. 
D) required to be reported in notes to the financial statements. 
E) none of the above 
A) higher under LIFO than FIFO. 
B) higher under FIFO than LIFO. 
C) reported on the income statement. 
D) required to be reported in notes to the financial statements. 
E) none of the above

Question 15

The U.S.GAAP requires firms using LIFO to disclose in notes to the financial statements

Accepted Answer

A) the amounts by which inventories based on FIFO or current cost exceed their amounts as reported on a LIFO basis. 
B) the amounts by which inventories based on LIFO exceed their amounts as reported on a FIFO or current cost basis. 
C) the amounts by which inventories based on LIFO exceed their amounts as reported on a specific identification or current cost basis. 
D) the amounts by which inventories based on specific identification or current cost exceed their amounts as reported on a LIFO basis. 
E) none of the above 
A) the amounts by which inventories based on FIFO or current cost exceed their amounts as reported on a LIFO basis. 
B) the amounts by which inventories based on LIFO exceed their amounts as reported on a FIFO or current cost basis. 
C) the amounts by which inventories based on LIFO exceed their amounts as reported on a specific identification or current cost basis. 
D) the amounts by which inventories based on specific identification or current cost exceed their amounts as reported on a LIFO basis. 
E) none of the above

Question 16

Of the three cost-flow assumptions, FIFO usually results in the smallest net income when inventory costs are rising and the largest net income when inventory costs are falling.

Accepted Answer

A) True 
 B)False

Question 17

_____ firms transform raw materials, purchased parts, and components into finished products in their factories.

Accepted Answer

A) Merchandising 
B) Manufacturing 
C) Consulting 
D) Staffing 
E) Health Care 
A) Merchandising 
B) Manufacturing 
C) Consulting 
D) Staffing 
E) Health Care

Question 18

As time passes, firms gain information about both actual warranty usage and actual warranty expenditures.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is/are not true regarding a merchandising firm?

Accepted Answer

A) Inventory appears on the merchandiser's balance sheet initially as an asset. 
B) Inventory is measured at acquisition cost. 
C) When a sale takes place, the firm recognizes the cost of the inventory as an expense (cost of goods sold) on the income statement. 
D) When a sale takes place, the firm recognizes the inventory reduction on the statement of cash flows. 
E) All of the above are false regarding a merchandising firm. 
A) Inventory appears on the merchandiser's balance sheet initially as an asset. 
B) Inventory is measured at acquisition cost. 
C) When a sale takes place, the firm recognizes the cost of the inventory as an expense (cost of goods sold) on the income statement. 
D) When a sale takes place, the firm recognizes the inventory reduction on the statement of cash flows. 
E) All of the above are false regarding a merchandising firm.

Question 20

Match between columns
                        Premises: Accounts payable will be __________.
On the statement of cash flows, cash provided by operating activities will be __________.
Total shareholders' equity will be __________.
Deferred tax balance on the balance sheet will be __________.
Working capital will be __________.
Inventory turnover will be __________.

Accepted Answer

The Answer of unchanged and smaller and larger is...

The accounting procedures for the marketing and administrative costs of manufacturing firms resemble those for merchandising firms.

What costs are included in inventory of manufacturing and merchandising firms?

U.S.GAAP specifies that, in the context of inventories, market means replacement cost, except that market may not exceed net realizable value and may not be less than net realizable value reduced by a normal profit margin.

Examples of restructuring activities include selling or closing divisions or plants, combining offices, moving operations from one location to another, terminating employees or leases, and selling assets.

A firm using FIFO had a beginning inventory of $48,000, an ending inventory of $56,000, and a pretax income of $400,000.If it had used LIFO, its beginning inventory would have been $20,000, its ending inventory would have been $16,000, and its pretax income would have been:

Compare and contrast the effect on net income, cost of goods sold, and inventory of the FIFO, LIFO, and weighted-average cost flow assumptions.

Which of the following accounts would you expect to find on the balance sheet of a manufacturing company?

Which of the following is/are not true regarding a manufacturing firm?

Under U.S.GAAP, the cost of a product warranty should be included as an expense in the

The principle for cost inclusion is that the balance sheet amount for inventory should include all costs incurred to acquire goods but not to prepare them for sale.

Using either the FIFO and LIFO cost flow assumption will result in the same cost of goods sold when

Forgone Company had beginning inventory of $19,000, purchases were $100,000, and ending inventory had a cost of $25,000 and a market value of $20,000.The same inventory increased $3,000 in market value in the subsequent period.Which of the following is/are not true?

Which of the following cost flow assumptions will report ending inventory closest to current cost?

In a time of rising prices, unrealized holding gains on ending inventory are

The U.S.GAAP requires firms using LIFO to disclose in notes to the financial statements

Of the three cost-flow assumptions, FIFO usually results in the smallest net income when inventory costs are rising and the largest net income when inventory costs are falling.

_____ firms transform raw materials, purchased parts, and components into finished products in their factories.

As time passes, firms gain information about both actual warranty usage and actual warranty expenditures.

Which of the following is/are not true regarding a merchandising firm?

Introduction to Business Activities and Overview of Financial Statements and the Reporting Process

The Basics of Record Keeping and Financial Statement Preparation: Balance Sheet

The Basics of Record Keeping and Financial Statement Preparation: Income Statement

Balance Sheet: Presenting and Analyzing Resources and Financing

Income Statement: Reporting Results of Operating Activities

Statement of Cash Flows

Introduction to Financial Statement Analysis

Revenue Recognition, Receivables, and Advances From Customers

Long-Lived Tangible and Intangible Assets

Notes, Bonds, and Leases

Liabilities: Off-Balance Sheet Financing, Retirement Benefits, and Income Taxes

Marketable Securities and Derivatives

Intercorporate Investments in Common Stock

Shareholders Equity: Capital Contributions and Distributions

Statement of Cash Flows: Another Look

Synthesis and Extensions

Filters

Exam 9: Working Capital

The accounting procedures for the marketing and administrative costs of manufacturing firms resemble those for merchandising firms.

What costs are included in inventory of manufacturing and merchandising firms?

U.S.GAAP specifies that, in the context of inventories, market means replacement cost, except that market may not exceed net realizable value and may not be less than net realizable value reduced by a normal profit margin.

Examples of restructuring activities include selling or closing divisions or plants, combining offices, moving operations from one location to another, terminating employees or leases, and selling assets.

A firm using FIFO had a beginning inventory of $48,000, an ending inventory of $56,000, and a pretax income of $400,000.If it had used LIFO, its beginning inventory would have been $20,000, its ending inventory would have been $16,000, and its pretax income would have been:

Compare and contrast the effect on net income, cost of goods sold, and inventory of the FIFO, LIFO, and weighted-average cost flow assumptions.

Which of the following accounts would you expect to find on the balance sheet of a manufacturing company?

Which of the following is/are not true regarding a manufacturing firm?

Under U.S.GAAP, the cost of a product warranty should be included as an expense in the

The principle for cost inclusion is that the balance sheet amount for inventory should include all costs incurred to acquire goods but not to prepare them for sale.

Using either the FIFO and LIFO cost flow assumption will result in the same cost of goods sold when

Forgone Company had beginning inventory of $19,000, purchases were $100,000, and ending inventory had a cost of $25,000 and a market value of $20,000.The same inventory increased $3,000 in market value in the subsequent period.Which of the following is/are not true?

Which of the following cost flow assumptions will report ending inventory closest to current cost?

In a time of rising prices, unrealized holding gains on ending inventory are

The U.S.GAAP requires firms using LIFO to disclose in notes to the financial statements

Of the three cost-flow assumptions, FIFO usually results in the smallest net income when inventory costs are rising and the largest net income when inventory costs are falling.

_____ firms transform raw materials, purchased parts, and components into finished products in their factories.

As time passes, firms gain information about both actual warranty usage and actual warranty expenditures.

Which of the following is/are not true regarding a merchandising firm?

Introduction to Business Activities and Overview of Financial Statements and the Reporting Process

The Basics of Record Keeping and Financial Statement Preparation: Balance Sheet

The Basics of Record Keeping and Financial Statement Preparation: Income Statement

Balance Sheet: Presenting and Analyzing Resources and Financing

Income Statement: Reporting Results of Operating Activities

Statement of Cash Flows

Introduction to Financial Statement Analysis

Revenue Recognition, Receivables, and Advances From Customers

Long-Lived Tangible and Intangible Assets

Notes, Bonds, and Leases

Liabilities: Off-Balance Sheet Financing, Retirement Benefits, and Income Taxes

Marketable Securities and Derivatives

Intercorporate Investments in Common Stock

Shareholders Equity: Capital Contributions and Distributions

Statement of Cash Flows: Another Look

Synthesis and Extensions

Filters