Question 1

Goods in transit are automatically included in inventory.

Accepted Answer

A) True 
 B)False

Question 2

A business that has inventory items that are ordinarily interchangeable is required to use the specific identification method of assigning costs to inventory.

Accepted Answer

A) True 
 B)False

Question 3

Incidental costs added to the value of inventory include import duties,transportation-in,storage,and insurance.

Accepted Answer

A) True 
 B)False

Question 4

In the process of adjusting inventory,how can the lower of cost and net realizable value be applied to the ending inventory?

Accepted Answer

A)  The inventory as a whole. 
B)  Current replacement cost. 
C)  Current sales price. 
D)  To groups of similar or related items. 
E)  Purchase price. 
A)  The inventory as a whole. 
B)  Current replacement cost. 
C)  Current sales price. 
D)  To groups of similar or related items. 
E)  Purchase price.

Question 5

Which ratio measures the portion of net sales that is gross profit?

Accepted Answer

A)  Gross margin ratio. 
B)  Net sales ratio. 
C)  Gross profit ratio. 
D)  Gross margin ratio and gross profit ratio 
E)  All of these answers are correct 
A)  Gross margin ratio. 
B)  Net sales ratio. 
C)  Gross profit ratio. 
D)  Gross margin ratio and gross profit ratio 
E)  All of these answers are correct

Question 6

The _____________________ method is used to estimate the value of inventory that has been destroyed,lost,or stolen.

Accepted Answer

The answer of The _____________________ method is used to estimate...

Question 7

If obsolete or damaged goods can be sold,they will be included in inventory at their net realizable value if it is less than cost.

Accepted Answer

A) True 
 B)False

Question 8

Damaged or obsolete goods:

Accepted Answer

A)  Are not counted as saleable inventory. 
B)  Are counted at full cost. 
C)  Are included in inventory at net realizable value if that is less than cost. 
D)  Are not counted as saleable inventory or are counted at full cost. 
E)  Are not counted as saleable inventory and are included in inventory at net realizable value if that is less than cost. 
A)  Are not counted as saleable inventory. 
B)  Are counted at full cost. 
C)  Are included in inventory at net realizable value if that is less than cost. 
D)  Are not counted as saleable inventory or are counted at full cost. 
E)  Are not counted as saleable inventory and are included in inventory at net realizable value if that is less than cost.

Question 9

In a period of inflation,FIFO usually gives a lower taxable income and thus a tax advantage.

Accepted Answer

A) True 
 B)False

Question 10

Days' sales in inventory:

Accepted Answer

A)  Is a ratio that estimates how many days it will take to convert inventory on hand to accounts receivable or cash. 
B)  Is a ratio that tells us how much inventory a firm has on hand in terms of days' sales. 
C)  Is the number of days we can sell from inventory if no new items are purchased. 
D)  All of these answers are correct. 
E)  Is a ratio that estimates how many days it will take to convert inventory on hand to accounts receivable or cash and is a ratio that tells us how much inventory a firm has on hand in terms of days' sales. 
A)  Is a ratio that estimates how many days it will take to convert inventory on hand to accounts receivable or cash. 
B)  Is a ratio that tells us how much inventory a firm has on hand in terms of days' sales. 
C)  Is the number of days we can sell from inventory if no new items are purchased. 
D)  All of these answers are correct. 
E)  Is a ratio that estimates how many days it will take to convert inventory on hand to accounts receivable or cash and is a ratio that tells us how much inventory a firm has on hand in terms of days' sales.

Question 11

An overstatement of beginning inventory will __________________ cost of goods sold,and _________________ net income.

Accepted Answer

Overstate;

Question 12

Toys "R" Us had cost of goods sold of $6,900 million.Its ending inventory was $2,000 million.Therefore its days' sales in inventory was 90 days.

Accepted Answer

A) True 
 B)False

Question 13

DVDs usually sell for $14 per unit,and have a profit margin of 25%.However,the expected selling price has fallen to $7 per unit.The Movie Company's current inventory includes 200 units purchased at $10 per unit.Calculate the value of the inventory at the lower of cost and net realizable value.

Accepted Answer

A)  $1,350. 
B)  $1,400. 
C)  $1,500. 
D)  $1,800. 
E)  $2,000. 
A)  $1,350. 
B)  $1,400. 
C)  $1,500. 
D)  $1,800. 
E)  $2,000.

Question 14

The inventory cost flow assumption that assigns the highest cost to cost of goods sold in a period of rising prices is FIFO.

Accepted Answer

A) True 
 B)False

Question 15

Trekking Company's total cost of inventory was $305,000.The net realizable value is $297,000.Under LCNRV,the amount reported should be $305,000.

Accepted Answer

A) True 
 B)False

Question 16

All businesses should take an inventory count once each year to identify inventory errors or shortages.

Accepted Answer

A) True 
 B)False

Question 17

The cost of an inventory item includes its invoice price plus any added or incidental costs necessary to put it in a place and condition for sale.

Accepted Answer

A) True 
 B)False

Question 18

Harlingen Store uses the retail method and has the following information available concerning their most recent accounting period:   (1)What is the cost ratio using the retail method?
(2)What is the estimated cost of the ending inventory?

Accepted Answer

The answer of Harlingen Store uses the retail method and...

Question 19

During January,a company that uses a perpetual inventory system had beginning inventory,purchases,and sales as follows:   Prepare a schedule to show the cost of goods sold and ending inventory using the moving weighted average method of costing rounding calculations to two decimals.

Accepted Answer

The answer of During January,a company that uses a perpetual...

Question 20

Coronado Company sells two types of inventory,MP3 players and Blu Ray players.The MP3 players originally cost $2,250 and have a net realizable value $1,075 while the Blu Ray players had an original cost of $500 and have a net realizable value of $700.Calculate the year end adjustment to inventory when applying the lower of cost and net realizable value on an item by item basis.

Accepted Answer

A)  $375. 
B)  $1,175. 
C)  $1,112. 
D)  $1,575. 
E)  $2,950. 
A)  $375. 
B)  $1,175. 
C)  $1,112. 
D)  $1,575. 
E)  $2,950.

Goods in transit are automatically included in inventory.

A business that has inventory items that are ordinarily interchangeable is required to use the specific identification method of assigning costs to inventory.

Incidental costs added to the value of inventory include import duties,transportation-in,storage,and insurance.

In the process of adjusting inventory,how can the lower of cost and net realizable value be applied to the ending inventory?

Which ratio measures the portion of net sales that is gross profit?

The _____________________ method is used to estimate the value of inventory that has been destroyed,lost,or stolen.

If obsolete or damaged goods can be sold,they will be included in inventory at their net realizable value if it is less than cost.

Damaged or obsolete goods:

In a period of inflation,FIFO usually gives a lower taxable income and thus a tax advantage.

Days' sales in inventory:

An overstatement of beginning inventory will __ cost of goods sold,and _ net income.

Toys "R" Us had cost of goods sold of $6,900 million.Its ending inventory was $2,000 million.Therefore its days' sales in inventory was 90 days.

DVDs usually sell for $14 per unit,and have a profit margin of 25%.However,the expected selling price has fallen to $7 per unit.The Movie Company's current inventory includes 200 units purchased at $10 per unit.Calculate the value of the inventory at the lower of cost and net realizable value.

The inventory cost flow assumption that assigns the highest cost to cost of goods sold in a period of rising prices is FIFO.

Trekking Company's total cost of inventory was $305,000.The net realizable value is $297,000.Under LCNRV,the amount reported should be $305,000.

All businesses should take an inventory count once each year to identify inventory errors or shortages.

The cost of an inventory item includes its invoice price plus any added or incidental costs necessary to put it in a place and condition for sale.

Harlingen Store uses the retail method and has the following information available concerning their most recent accounting period: (1)What is the cost ratio using the retail method? (2)What is the estimated cost of the ending inventory?

During January,a company that uses a perpetual inventory system had beginning inventory,purchases,and sales as follows: Prepare a schedule to show the cost of goods sold and ending inventory using the moving weighted average method of costing rounding calculations to two decimals.

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

Goods in transit are automatically included in inventory.

A business that has inventory items that are ordinarily interchangeable is required to use the specific identification method of assigning costs to inventory.

Incidental costs added to the value of inventory include import duties,transportation-in,storage,and insurance.

In the process of adjusting inventory,how can the lower of cost and net realizable value be applied to the ending inventory?

Which ratio measures the portion of net sales that is gross profit?

The _____________________ method is used to estimate the value of inventory that has been destroyed,lost,or stolen.

If obsolete or damaged goods can be sold,they will be included in inventory at their net realizable value if it is less than cost.

Damaged or obsolete goods:

In a period of inflation,FIFO usually gives a lower taxable income and thus a tax advantage.

Days' sales in inventory:

An overstatement of beginning inventory will __________________ cost of goods sold,and _________________ net income.

Toys "R" Us had cost of goods sold of $6,900 million.Its ending inventory was $2,000 million.Therefore its days' sales in inventory was 90 days.

DVDs usually sell for $14 per unit,and have a profit margin of 25%.However,the expected selling price has fallen to $7 per unit.The Movie Company's current inventory includes 200 units purchased at $10 per unit.Calculate the value of the inventory at the lower of cost and net realizable value.

The inventory cost flow assumption that assigns the highest cost to cost of goods sold in a period of rising prices is FIFO.

Trekking Company's total cost of inventory was $305,000.The net realizable value is $297,000.Under LCNRV,the amount reported should be $305,000.

All businesses should take an inventory count once each year to identify inventory errors or shortages.

The cost of an inventory item includes its invoice price plus any added or incidental costs necessary to put it in a place and condition for sale.

Harlingen Store uses the retail method and has the following information available concerning their most recent accounting period: (1)What is the cost ratio using the retail method? (2)What is the estimated cost of the ending inventory?

During January,a company that uses a perpetual inventory system had beginning inventory,purchases,and sales as follows: Prepare a schedule to show the cost of goods sold and ending inventory using the moving weighted average method of costing rounding calculations to two decimals.

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

An overstatement of beginning inventory will __ cost of goods sold,and _ net income.