Question 1

The retail inventory method of estimating inventory uses the ratio of goods available for sale at cost to goods available for sale at retail.

Accepted Answer

A) True 
 B)False

Question 2

Acceptable inventory cost flow assumptions in Canada include:

Accepted Answer

A)  FIFO. 
B)  Specific identification. 
C)  Weighted-average method. 
D)  FIFO and specific identification. 
E)  All of these answers are correct. 
A)  FIFO. 
B)  Specific identification. 
C)  Weighted-average method. 
D)  FIFO and specific identification. 
E)  All of these answers are correct.

Question 3

Trekking Company markets a climbing kit and uses a perpetual inventory system to account for its merchandise.The beginning balance of the inventory and transactions during January were as follows:   If the ending inventory is valued at $357,what inventory cost flow assumption was used?

Accepted Answer

A)  Average costing. 
B)  FIFO. 
C)  Weighted-average. 
D)  Specific identification. 
E)  Retail. 
A)  Average costing. 
B)  FIFO. 
C)  Weighted-average. 
D)  Specific identification. 
E)  Retail.

Question 4

Merchandise inventory includes:

Accepted Answer

A)  All goods owned by a company and held for sale. 
B)  Goods in transit. 
C)  Goods on consignment. 
D)  Damaged goods. 
E)  All of these answers are correct. 
A)  All goods owned by a company and held for sale. 
B)  Goods in transit. 
C)  Goods on consignment. 
D)  Damaged goods. 
E)  All of these answers are correct.

Question 5

The merchandise turnover ratio is used to measure profitability.

Accepted Answer

A) True 
 B)False

Question 6

What are the effects of inventory methods on financial and tax reporting?

Accepted Answer

The specific identification method exact

Question 7

When preparing the financial statements,management can choose the inventory cost flow assumption it will use for a particular year in order to impact the reported net income.

Accepted Answer

A) True 
 B)False

Question 8

An advantage of the moving weighted-average method is that it tends to smooth out price changes.

Accepted Answer

A) True 
 B)False

Question 9

The full disclosure principle:

Accepted Answer

A)  Requires that when a change in inventory cost flow assumption is made,the notes to the statements report the type of change. 
B)  Requires that when a change in inventory cost flow assumption is made,the notes to the statements report the justification for the change. 
C)  Requires that any change in net income due to changes in the inventory cost assumption be disclosed. 
D)  Does not require a company to use one cost flow assumption exclusively. 
E)  All of these answers are correct. 
A)  Requires that when a change in inventory cost flow assumption is made,the notes to the statements report the type of change. 
B)  Requires that when a change in inventory cost flow assumption is made,the notes to the statements report the justification for the change. 
C)  Requires that any change in net income due to changes in the inventory cost assumption be disclosed. 
D)  Does not require a company to use one cost flow assumption exclusively. 
E)  All of these answers are correct.

Question 10

Trekking Company reported the following data:   Instructions:
(1)Calculate Trekking Company's merchandise turnover for each year to two decimal places.
(2)Comment on the company's efficiency in managing its inventory.

Accepted Answer

The answer of Trekking Company reported the following data: ...

Question 11

The advantage of FIFO is that it assigns the most recent costs to cost of goods sold,and better matches current costs with revenues on the income statement.

Accepted Answer

A) True 
 B)False

Question 12

Interim statements:

Accepted Answer

A)  Are required by CRA. 
B)  Are necessary to achieve full disclosure about a business's operations. 
C)  Are usually monthly or quarterly statements prepared in between the traditional,annual statements. 
D)  Are required by CRA and are necessary to achieve full disclosure about a business's operations. 
E)  All of these answers are correct. 
A)  Are required by CRA. 
B)  Are necessary to achieve full disclosure about a business's operations. 
C)  Are usually monthly or quarterly statements prepared in between the traditional,annual statements. 
D)  Are required by CRA and are necessary to achieve full disclosure about a business's operations. 
E)  All of these answers are correct.

Question 13

When purchase prices do not change,the choice of an inventory costing method is unimportant.

Accepted Answer

A) True 
 B)False

Question 14

Goods on consignment are goods shipped by their owner,called the _______________,to another party called the _______________.

Accepted Answer

The answer of Goods on consignment are goods shipped by...

Question 15

Goods on consignment are goods shipped by their owner,called the consignee,to another party called the consignor.

Accepted Answer

A) True 
 B)False

Question 16

The consistency principle means that one costing method,such as FIFO or moving weighted average,has to be used exclusively.

Accepted Answer

A) True 
 B)False

Question 17

Normandy Company has collected the following inventory data prior to preparing financial statements for the month of October.All purchases and sales are on credit.   Assuming the periodic inventory system is used,determine the cost of the ending inventory and cost of goods sold using FIFO.
Prepare the appropriate journal entries to record:
(A)The October 6 purchase.
(B)The October 12 sale.
(C)The entries to close the October income statement items to Income Summary.(Assume that sales revenue and the elements of cost of goods sold are the only income statement items.)

Accepted Answer

The answer of Normandy Company has collected the following inventory...

Question 18

The inventory cost flow assumption that assigns the highest cost to ending inventory in a period of rising prices is moving weighted average.

Accepted Answer

A) True 
 B)False

Question 19

Toys "R" Us had cost of goods sold of $6,000 million,ending inventory of $2,500 million,and average inventory of $2,000 million.The merchandise turnover is:

Accepted Answer

A)  2.40. 
B)  3.00. 
C)  0.33. 
D)  0.42. 
E)  12.00. 
A)  2.40. 
B)  3.00. 
C)  0.33. 
D)  0.42. 
E)  12.00.

Question 20

Trekking Company had the following purchases during the year:   On December 31,there were 26 units in ending inventory.These 26 units consisted of 2 from January,4 from February,6 from May,4 from September,and 10 from November.Using the specific identification method,what is the cost of the ending inventory?

Accepted Answer

A)  $3,500. 
B)  $3,800. 
C)  $3,960. 
D)  $3,280. 
E)  $3,640. 
A)  $3,500. 
B)  $3,800. 
C)  $3,960. 
D)  $3,280. 
E)  $3,640.

The retail inventory method of estimating inventory uses the ratio of goods available for sale at cost to goods available for sale at retail.

Acceptable inventory cost flow assumptions in Canada include:

Trekking Company markets a climbing kit and uses a perpetual inventory system to account for its merchandise.The beginning balance of the inventory and transactions during January were as follows: If the ending inventory is valued at $357,what inventory cost flow assumption was used?

Merchandise inventory includes:

The merchandise turnover ratio is used to measure profitability.

What are the effects of inventory methods on financial and tax reporting?

When preparing the financial statements,management can choose the inventory cost flow assumption it will use for a particular year in order to impact the reported net income.

An advantage of the moving weighted-average method is that it tends to smooth out price changes.

The full disclosure principle:

Trekking Company reported the following data: Instructions: (1)Calculate Trekking Company's merchandise turnover for each year to two decimal places. (2)Comment on the company's efficiency in managing its inventory.

The advantage of FIFO is that it assigns the most recent costs to cost of goods sold,and better matches current costs with revenues on the income statement.

Interim statements:

When purchase prices do not change,the choice of an inventory costing method is unimportant.

Goods on consignment are goods shipped by their owner,called the _,to another party called the _.

Goods on consignment are goods shipped by their owner,called the consignee,to another party called the consignor.

The consistency principle means that one costing method,such as FIFO or moving weighted average,has to be used exclusively.

The inventory cost flow assumption that assigns the highest cost to ending inventory in a period of rising prices is moving weighted average.

Toys "R" Us had cost of goods sold of $6,000 million,ending inventory of $2,500 million,and average inventory of $2,000 million.The merchandise turnover is:

Accounting in Business

Analyzing and Reporting Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Accounting Information Systems

Internal Control and Cash

Receivables

Filters

Exam 6: Merchandise Inventory and Cost of Sales

The retail inventory method of estimating inventory uses the ratio of goods available for sale at cost to goods available for sale at retail.

Acceptable inventory cost flow assumptions in Canada include:

Trekking Company markets a climbing kit and uses a perpetual inventory system to account for its merchandise.The beginning balance of the inventory and transactions during January were as follows: If the ending inventory is valued at $357,what inventory cost flow assumption was used?

Merchandise inventory includes:

The merchandise turnover ratio is used to measure profitability.

What are the effects of inventory methods on financial and tax reporting?

When preparing the financial statements,management can choose the inventory cost flow assumption it will use for a particular year in order to impact the reported net income.

An advantage of the moving weighted-average method is that it tends to smooth out price changes.

The full disclosure principle:

Trekking Company reported the following data: Instructions: (1)Calculate Trekking Company's merchandise turnover for each year to two decimal places. (2)Comment on the company's efficiency in managing its inventory.

The advantage of FIFO is that it assigns the most recent costs to cost of goods sold,and better matches current costs with revenues on the income statement.

Interim statements:

When purchase prices do not change,the choice of an inventory costing method is unimportant.

Goods on consignment are goods shipped by their owner,called the _______________,to another party called the _______________.

Goods on consignment are goods shipped by their owner,called the consignee,to another party called the consignor.

The consistency principle means that one costing method,such as FIFO or moving weighted average,has to be used exclusively.

The inventory cost flow assumption that assigns the highest cost to ending inventory in a period of rising prices is moving weighted average.

Toys "R" Us had cost of goods sold of $6,000 million,ending inventory of $2,500 million,and average inventory of $2,000 million.The merchandise turnover is:

Accounting in Business

Analyzing and Reporting Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Accounting Information Systems

Internal Control and Cash

Receivables

Filters

Goods on consignment are goods shipped by their owner,called the _,to another party called the _.