Question 1

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 2

[The following information applies to the questions displayed below.]
Harding Systems,Inc.uses a periodic inventory system.The purchases of a particular product during the year are shown below:
   At December 31 the ending inventory consisted of 1,500 units.
-Refer to the information above.Compute the cost of the ending inventory based on the LIFO method of inventory valuation.

Accepted Answer

A) $12,500 
B) $27,650 
C) $10,975 
D) $29,175 
A) $12,500 
B) $27,650 
C) $10,975 
D) $29,175

Question 3

Periodic inventory systems
Tres Chic uses a periodic inventory system.The beginning inventory of a particular product,and the purchases during the current year,were as follows:
   At December 31,the ending inventory of this product consisted of 850 units.
Determine the cost of the year-end inventory and the cost of goods sold for this product under each of the following methods of inventory valuation (Rounded):

Accepted Answer

The answer of Periodic inventory systems
Tres Chic uses a periodic...

Question 4

If all things are equal,except one company uses LIFO during inflation and the other uses FIFO,then:

Accepted Answer

A) The LIFO company will have a higher inventory turnover. 
B) The FIFO company will have a higher inventory turnover. 
C) The two companies will have the same inventory turnover. 
D) The two companies will rely upon an industry inventory turnover measurement. 
A) The LIFO company will have a higher inventory turnover. 
B) The FIFO company will have a higher inventory turnover. 
C) The two companies will have the same inventory turnover. 
D) The two companies will rely upon an industry inventory turnover measurement.

Question 5

A company with a liquid inventory will have:

Accepted Answer

A) A high inventory turnover and a high average number of days to sell inventory. 
B) A high inventory turnover and a low average number of days to sell inventory. 
C) A low inventory turnover and a high average number of days to sell inventory. 
D) A low inventory turnover and a low average number of days to sell inventory. 
A) A high inventory turnover and a high average number of days to sell inventory. 
B) A high inventory turnover and a low average number of days to sell inventory. 
C) A low inventory turnover and a high average number of days to sell inventory. 
D) A low inventory turnover and a low average number of days to sell inventory.

Question 6

The retail inventory method requires a company to state inventory on the year-end balance sheet at its retail value.

Accepted Answer

A) True 
 B)False

Question 7

Inventory flow assumptions
Flat TV uses a perpetual inventory system.Shown below are Flat TV's beginning inventory of a particular product and purchases during January:
   On January 23 (prior to the purchase on January 25),Flat TV sold 13 units of this product.
Determine the cost of goods sold relating to the sale on January 23 under each of the following flow assumptions.(Show your computations. )

Accepted Answer

The answer of Inventory flow assumptions
Flat TV uses a perpetual...

Question 8

Under the FIFO cost flow assumption,the cost of these items to be included in inventory in the company's year-end balance sheet is:

Accepted Answer

A) $36,000. 
B) $36,500. 
C) $42,000. 
D) $37,500. 
A) $36,000. 
B) $36,500. 
C) $42,000. 
D) $37,500.

Question 9

Assuming a 365-day year,the average number of days required for Carl Equipment to sell its inventory is: (Round your final answer to one decimal place. )

Accepted Answer

A) 36.36.5 days. 
B) 73.0 days. 
C) 24.3 days. 
D) 304.2 days. 
A) 36.36.5 days. 
B) 73.0 days. 
C) 24.3 days. 
D) 304.2 days.

Question 10

[The following information applies to the questions displayed below.]
Beech Soda,Inc.uses a perpetual inventory system.The company's beginning inventory of a particular product and its purchases during the month of January were as follows:
   On January 14,Beech Soda,Inc.sold 25 units of this product.The other 28 units remained in inventory at January 31.
-Assuming that Beech Soda uses the LIFO cost 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 11

Which of the following will cause net income to be overstated for the following year?

Accepted Answer

A) The current year's ending inventory is understated. 
B) The current year's ending inventory is overstated. 
C) Next year's beginning inventory is overstated. 
D) Next year's ending inventory is understated. 
A) The current year's ending inventory is understated. 
B) The current year's ending inventory is overstated. 
C) Next year's beginning inventory is overstated. 
D) Next year's ending inventory is understated.

Question 12

If an error in valuing inventory occurs in one year:

Accepted Answer

A) It has no effect upon income in the following year. 
B) It has no effect upon the income statement,only on the balance sheet. 
C) It is self-correcting after two years. 
D) Retained earnings will be adversely affected until corrected. 
A) It has no effect upon income in the following year. 
B) It has no effect upon the income statement,only on the balance sheet. 
C) It is self-correcting after two years. 
D) Retained earnings will be adversely affected until corrected.

Question 13

During periods of inflation,the LIFO cost flow assumption will yield a lower inventory value than FIFO.

Accepted Answer

A) True 
 B)False

Question 14

[The following information applies to the questions displayed below.]
Midwest Office Products uses the retail method to estimate ending inventory in its monthly financial statements.The following information is available for the month ended May 31:
  
-Refer to the information above.Determine the cost ratio that should be used in estimating the May 31 inventory using the retail method.(Round your final answer percentage to one decimal point)

Accepted Answer

A) 63.8% 
B) 69.4% 
C) 66.0% 
D) 68.4% 
A) 63.8% 
B) 69.4% 
C) 66.0% 
D) 68.4%

Question 15

The write-down of inventory:

Accepted Answer

A) Only affects the balance sheet and not the income statement. 
B) Only affects the income statement and not the balance sheet. 
C) Affects both the income statement and the balance sheet. 
D) Affects neither the income statement nor the balance sheet. 
A) Only affects the balance sheet and not the income statement. 
B) Only affects the income statement and not the balance sheet. 
C) Affects both the income statement and the balance sheet. 
D) Affects neither the income statement nor the balance sheet.

Question 16

Which of the following results in the cost of goods sold being stated at the most current acquisition costs?

Accepted Answer

A) Average cost 
B) Specific identification 
C) FIFO 
D) LIFO 
A) Average cost 
B) Specific identification 
C) FIFO 
D) LIFO

Question 17

In a periodic inventory system,the cost of goods sold is determined as follows:

Accepted Answer

A) Year-end inventory,plus purchases during the year,less the inventory at the beginning of the year. 
B) Net sales,less the balance in the Gross Profit account. 
C) Cost of goods available for sale during the year,less the ending inventory. 
D) A physical count is made of all items sold throughout the year,and a cost flow assumption is applied at year-end. 
A) Year-end inventory,plus purchases during the year,less the inventory at the beginning of the year. 
B) Net sales,less the balance in the Gross Profit account. 
C) Cost of goods available for sale during the year,less the ending inventory. 
D) A physical count is made of all items sold throughout the year,and a cost flow assumption is applied at year-end.

Question 18

The lower-of-cost-or-market rule may be applied by comparing the market value of the inventory to the cost of the inventory based on any of the following except:

Accepted Answer

A) Individual inventory items. 
B) Major inventory categories. 
C) The entire inventory. 
D) Industry inventory standards. 
A) Individual inventory items. 
B) Major inventory categories. 
C) The entire inventory. 
D) Industry inventory standards.

Question 19

Which of the following methods of measuring the cost of goods sold most closely parallels the actual physical flow of the merchandise?

Accepted Answer

A) LIFO 
B) FIFO 
C) Average cost 
D) Specific identification 
A) LIFO 
B) FIFO 
C) Average cost 
D) Specific identification

Question 20

The CPA firm auditing Capri Corporation found that net income had been overstated.Which of the following could be the cause?

Accepted Answer

A) Failure to take advantage of purchase discounts by paying within the discount period. 
B) Overstatement of inventory at year-end. 
C) Use of the last-in,first-out (LIFO)method of valuing inventory in a period of rising prices. 
D) Failure to record payment of an account payable to a supplier on the last day of the year. 
A) Failure to take advantage of purchase discounts by paying within the discount period. 
B) Overstatement of inventory at year-end. 
C) Use of the last-in,first-out (LIFO)method of valuing inventory in a period of rising prices. 
D) Failure to record payment of an account payable to a supplier on the last day of the year.

Exam 8: Inventories and the Cost of Goods Sold

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.

If all things are equal,except one company uses LIFO during inflation and the other uses FIFO,then:

A company with a liquid inventory will have:

The retail inventory method requires a company to state inventory on the year-end balance sheet at its retail value.

Under the FIFO cost flow assumption,the cost of these items to be included in inventory in the company's year-end balance sheet is:

Assuming a 365-day year,the average number of days required for Carl Equipment to sell its inventory is: (Round your final answer to one decimal place. )

Which of the following will cause net income to be overstated for the following year?

If an error in valuing inventory occurs in one year:

During periods of inflation,the LIFO cost flow assumption will yield a lower inventory value than FIFO.

The write-down of inventory:

Which of the following results in the cost of goods sold being stated at the most current acquisition costs?

In a periodic inventory system,the cost of goods sold is determined as follows:

The lower-of-cost-or-market rule may be applied by comparing the market value of the inventory to the cost of the inventory based on any of the following except:

Which of the following methods of measuring the cost of goods sold most closely parallels the actual physical flow of the merchandise?

The CPA firm auditing Capri Corporation found that net income had been overstated.Which of the following could be the cause?

Accounting: Information for Decision Making

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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

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Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

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Costing and the Value Chain

Cost-Volume-Profit Analysis

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Responsibility Accounting and Transfer Pricing

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Standard Cost Systems

Rewarding Business Performance

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the Time Value of Money: Future Amounts and Present Values

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