Question 1

Which of the following describes the flow of product costs through the inventory accounts of a manufacturer?

Accepted Answer

A)  Raw materials,goods in process,factory overhead,finished goods 
B)  Raw materials,goods in process,finished goods 
C)  Raw materials,direct labor,factory overhead,finished goods 
D)  Raw materials,direct labor,factory overhead 
A)  Raw materials,goods in process,factory overhead,finished goods 
B)  Raw materials,goods in process,finished goods 
C)  Raw materials,direct labor,factory overhead,finished goods 
D)  Raw materials,direct labor,factory overhead

Question 2

At the close of its fiscal year on March 31,2014,Villager Industries,Inc.was in the process of relocating its plant.This resulted in some confusion relating to the inventory cutoff,as indicated by the following:
   Assuming that the company does not maintain a perpetual inventory system and that the books for the fiscal year have been closed,provide the necessary correcting entries.(Ignore income taxes. )

Accepted Answer

The answer of At the close of its fiscal year...

Question 3

A company sells four products: I,II,III,and IV.The company values all inventories using the lower-of-cost-or-market procedure.The company has consistently experienced a profit margin of 20 percent of sales and expects this rate to hold for the future.Additional information,shown below,is available for the most recent year as of December 31.
  
-See information regarding the four products above.Using the lower-of-cost-or-market procedure,what is the reported inventory value at December 31 for one unit of Product III?

Accepted Answer

A)  $50 
B)  $60 
C)  $70 
D)  $80 
A)  $50 
B)  $60 
C)  $70 
D)  $80

Question 4

In a period of rising prices,the inventory cost allocation method that tends to result in the lowest reported net income is

Accepted Answer

A)  LIFO. 
B)  FIFO. 
C)  moving average. 
D)  weighted average. 
A)  LIFO. 
B)  FIFO. 
C)  moving average. 
D)  weighted average.

Question 5

The following data relate to the first three years of operation for the Clarke Company:
   Compute the ending inventory under LIFO for each year.(Ignore income taxes. )

Accepted Answer

The answer of The following data relate to the first...

Question 6

What is the maximum amount at which inventory can be valued when the goods have experienced a permanent decline in value?

Accepted Answer

A)  Net realizable value reduced by a normal profit margin 
B)  Sales price 
C)  Historical cost 
D)  Net realizable value 
A)  Net realizable value reduced by a normal profit margin 
B)  Sales price 
C)  Historical cost 
D)  Net realizable value

Question 7

Purchases and sales during a recent period for Lantern,Inc.were:
   Beginning inventory was 100 units at $1 each.
-See information for Lantern,Inc.above.Given this information,what is the cost per unit available for sale during the year when using the average cost method (rounded to the nearest cent)?

Accepted Answer

A)  $2.61 
B)  $3.31 
C)  $3.10 
D)  $3.53 
A)  $2.61 
B)  $3.31 
C)  $3.10 
D)  $3.53

Question 8

Which of the following is NOT true of the perpetual inventory method?

Accepted Answer

A)  Purchases are recorded as debits to the inventory account. 
B)  The entry to record a sale includes a debit to Cost of Goods Sold and a credit to Inventory. 
C)  After a physical inventory count,Inventory is credited for any missing inventory. 
D)  Purchase returns are recorded by debiting Accounts Payable and crediting Purchase Returns and Allowances. 
A)  Purchases are recorded as debits to the inventory account. 
B)  The entry to record a sale includes a debit to Cost of Goods Sold and a credit to Inventory. 
C)  After a physical inventory count,Inventory is credited for any missing inventory. 
D)  Purchase returns are recorded by debiting Accounts Payable and crediting Purchase Returns and Allowances.

Question 9

The following information is available for Prudhoe Company:   Cost of goods sold was

Accepted Answer

A)  $325,000. 
B)  $305,000. 
C)  $275,000. 
D)  $255,000. 
A)  $325,000. 
B)  $305,000. 
C)  $275,000. 
D)  $255,000.

Question 10

The gross profit method of inventory valuation is NOT valid when

Accepted Answer

A)  there is substantial increase in the quantity of inventory during the year. 
B)  there is substantial increase in the cost of inventory during the year. 
C)  the gross margin percentage changes significantly during the year. 
D)  all ending inventory is destroyed by fire before it can be counted. 
A)  there is substantial increase in the quantity of inventory during the year. 
B)  there is substantial increase in the cost of inventory during the year. 
C)  the gross margin percentage changes significantly during the year. 
D)  all ending inventory is destroyed by fire before it can be counted.

Question 11

Alana's Clothing Store sells jeans.During January 2014,its inventory records for one brand of designer jeans were as follows:
  
-See information for Alana's Clothing Store above.Using this information,the cost of goods sold using the average cost method is

Accepted Answer

A)  $378. 
B)  $358. 
C)  $265. 
D)  $236. 
A)  $378. 
B)  $358. 
C)  $265. 
D)  $236.

Question 12

On October 31,a flood at Comfort Company's only warehouse caused severe damage to its entire inventory.Based on recent history,Comfort has a gross profit of 40 percent of net sales.The following information is available from Comfort's records for the ten months ended October 31:   A physical inventory disclosed usable damaged goods which Comfort estimates can be sold for $70,000.Using the gross profit method,the estimated cost of goods sold for the ten months ended October 31 should be

Accepted Answer

A)  $680,000. 
B)  $1,080,000 
C)  $3,120,000. 
D)  $3,640,000. 
A)  $680,000. 
B)  $1,080,000 
C)  $3,120,000. 
D)  $3,640,000.

Question 13

A company sells four products: I,II,III,and IV.The company values all inventories using the lower-of-cost-or-market procedure.The company has consistently experienced a profit margin of 20 percent of sales and expects this rate to hold for the future.Additional information,shown below,is available for the most recent year as of December 31.
  
-See information regarding the four products above.Using the lower-of-cost-or-market procedure,what is the reported inventory value at December 31 for one unit of Product I?

Accepted Answer

A)  $90 
B)  $80 
C)  $70 
D)  $60 
A)  $90 
B)  $80 
C)  $70 
D)  $60

Question 14

Which inventory pricing method best approximates specific identification in most manufacturing situations?

Accepted Answer

A)  Activity-based costing 
B)  FIFO 
C)  Average cost 
D)  LIFO 
A)  Activity-based costing 
B)  FIFO 
C)  Average cost 
D)  LIFO

Question 15

The gross profit method of estimating inventory would NOT be useful when

Accepted Answer

A)  a periodic system is in use and inventories are required for interim statements. 
B)  there is a significant change in the mix of products being sold. 
C)  inventories have been destroyed or lost by fire,theft,or other casualty,and the specific data required for inventory valuation are not available. 
D)  the relationship between gross profit and sales remains stable over time. 
A)  a periodic system is in use and inventories are required for interim statements. 
B)  there is a significant change in the mix of products being sold. 
C)  inventories have been destroyed or lost by fire,theft,or other casualty,and the specific data required for inventory valuation are not available. 
D)  the relationship between gross profit and sales remains stable over time.

Question 16

The following information is available for Fordham Corp.for its most recent year:   The gross margin is 40 percent of net sales.What is the cost of goods available for sale?

Accepted Answer

A)  $1,680,000 
B)  $1,920,000 
C)  $2,400,000 
D)  $2,440,000 
A)  $1,680,000 
B)  $1,920,000 
C)  $2,400,000 
D)  $2,440,000

Question 17

If ending inventory on December 31,2014,is overstated by $40,000,what is the effect on net income for 2015?

Accepted Answer

A)  Net income is overstated by $40,000. 
B)  Net income is understated by $40,000. 
C)  Net income is overstated by $80,000. 
D)  The answer cannot be determined from the information given. 
A)  Net income is overstated by $40,000. 
B)  Net income is understated by $40,000. 
C)  Net income is overstated by $80,000. 
D)  The answer cannot be determined from the information given.

Question 18

When would the replacement cost of inventory be used as the market value under the lower-of-cost-or-market method?

Accepted Answer

A)  Always 
B)  When replacement cost is above net realizable value 
C)  When replacement cost is below net realizable value and above net realizable value less normal profit margin 
D)  When replacement cost is below net realizable value less normal profit margin 
A)  Always 
B)  When replacement cost is above net realizable value 
C)  When replacement cost is below net realizable value and above net realizable value less normal profit margin 
D)  When replacement cost is below net realizable value less normal profit margin

Question 19

Alana's Clothing Store sells jeans.During January 2014,its inventory records for one brand of designer jeans were as follows:
  
-See information for Alana's Clothing Store above.Using this information,periodic LIFO cost of goods sold is

Accepted Answer

A)  $360. 
B)  $300. 
C)  $330. 
D)  $430. 
A)  $360. 
B)  $300. 
C)  $330. 
D)  $430.

Question 20

A company sells four products: I,II,III,and IV.The company values all inventories using the lower-of-cost-or-market procedure.The company has consistently experienced a profit margin of 20 percent of sales and expects this rate to hold for the future.Additional information,shown below,is available for the most recent year as of December 31.
  
-See information regarding the four products above.Using the lower-of-cost-or-market procedure,what is the reported inventory value at December 31 for one unit of Product IV?

Accepted Answer

A)  $60 
B)  $80 
C)  $90 
D)  $70 
A)  $60 
B)  $80 
C)  $90 
D)  $70

Which of the following describes the flow of product costs through the inventory accounts of a manufacturer?

In a period of rising prices,the inventory cost allocation method that tends to result in the lowest reported net income is

The following data relate to the first three years of operation for the Clarke Company: Compute the ending inventory under LIFO for each year.(Ignore income taxes. )

What is the maximum amount at which inventory can be valued when the goods have experienced a permanent decline in value?

Purchases and sales during a recent period for Lantern,Inc.were: Beginning inventory was 100 units at $1 each. -See information for Lantern,Inc.above.Given this information,what is the cost per unit available for sale during the year when using the average cost method (rounded to the nearest cent)?

Which of the following is NOT true of the perpetual inventory method?

The following information is available for Prudhoe Company: Cost of goods sold was

The gross profit method of inventory valuation is NOT valid when

Alana's Clothing Store sells jeans.During January 2014,its inventory records for one brand of designer jeans were as follows: -See information for Alana's Clothing Store above.Using this information,the cost of goods sold using the average cost method is

Which inventory pricing method best approximates specific identification in most manufacturing situations?

The gross profit method of estimating inventory would NOT be useful when

The following information is available for Fordham Corp.for its most recent year: The gross margin is 40 percent of net sales.What is the cost of goods available for sale?

If ending inventory on December 31,2014,is overstated by $40,000,what is the effect on net income for 2015?

When would the replacement cost of inventory be used as the market value under the lower-of-cost-or-market method?

Alana's Clothing Store sells jeans.During January 2014,its inventory records for one brand of designer jeans were as follows: -See information for Alana's Clothing Store above.Using this information,periodic LIFO cost of goods sold is

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, pensions, Other Compissues

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters

Exam 9: Inventory and Cost of Goods Sold

Which of the following describes the flow of product costs through the inventory accounts of a manufacturer?

In a period of rising prices,the inventory cost allocation method that tends to result in the lowest reported net income is

The following data relate to the first three years of operation for the Clarke Company: Compute the ending inventory under LIFO for each year.(Ignore income taxes. )

What is the maximum amount at which inventory can be valued when the goods have experienced a permanent decline in value?

Purchases and sales during a recent period for Lantern,Inc.were: Beginning inventory was 100 units at $1 each. -See information for Lantern,Inc.above.Given this information,what is the cost per unit available for sale during the year when using the average cost method (rounded to the nearest cent)?

Which of the following is NOT true of the perpetual inventory method?

The following information is available for Prudhoe Company: Cost of goods sold was

The gross profit method of inventory valuation is NOT valid when

Alana's Clothing Store sells jeans.During January 2014,its inventory records for one brand of designer jeans were as follows: -See information for Alana's Clothing Store above.Using this information,the cost of goods sold using the average cost method is

Which inventory pricing method best approximates specific identification in most manufacturing situations?

The gross profit method of estimating inventory would NOT be useful when

The following information is available for Fordham Corp.for its most recent year: The gross margin is 40 percent of net sales.What is the cost of goods available for sale?

If ending inventory on December 31,2014,is overstated by $40,000,what is the effect on net income for 2015?

When would the replacement cost of inventory be used as the market value under the lower-of-cost-or-market method?

Alana's Clothing Store sells jeans.During January 2014,its inventory records for one brand of designer jeans were as follows: -See information for Alana's Clothing Store above.Using this information,periodic LIFO cost of goods sold is

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, pensions, Other Compissues

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters