Question 1

In a period of falling prices,the use of which of the following inventory cost flow methods would typically result in the highest cost of goods sold?

Accepted Answer

A)  Weighted average cost 
B)  Specific identification 
C)  LIFO 
D)  FIFO 
A)  Weighted average cost 
B)  Specific identification 
C)  LIFO 
D)  FIFO

Question 2

The average cost method is applicable to which of the following inventory systems? Periodic Perpetual

Accepted Answer

A)  Yes Yes 
B)  Yes No 
C)  No Yes 
D)  No No 
A)  Yes Yes 
B)  Yes No 
C)  No Yes 
D)  No No

Question 3

On June 17,it was discovered that a material amount of inventory had been stolen.A physical count discloses that $55,000 of merchandise was on hand as of June 17.The following additional data is available from the accounting records:
   Records indicate that the company's gross profit has averaged 40 percent of selling prices.
Required:
Estimate the amount of loss due to theft.

Accepted Answer

The answer of On June 17,it was discovered that a...

Question 4

Digipro Inc.is a wholesaler of photography equipment.The activity for the VTC cameras during July is shown below:
  
-See information for Digipro Inc.above.If Digipro Inc.uses the average cost method to account for inventory,the ending inventory of VTC cameras at July 31 is reported as

Accepted Answer

A)  $153,400. 
B)  $156,912. 
C)  $158,736. 
D)  $159,464. 
A)  $153,400. 
B)  $156,912. 
C)  $158,736. 
D)  $159,464.

Question 5

Latone Company began operations in 2014.During the first two years of operations,Latone made undiscovered errors in taking its year-end inventories that understated 2014 ending inventory by $40,000 and overstated 2015 ending inventory by $50,000.The combined effect of these errors on reported income is 2014 2015 2016

Accepted Answer

A)  understated $40,000 overstated $50,000 not affected 
B)  understated $40,000 overstated $10,000 not affected 
C)  understated $40,000 overstated $90,000 understated $50,000 
D)  overstated $40,000 understated $50,000 overstated $10,000 
A)  understated $40,000 overstated $50,000 not affected 
B)  understated $40,000 overstated $10,000 not affected 
C)  understated $40,000 overstated $90,000 understated $50,000 
D)  overstated $40,000 understated $50,000 overstated $10,000

Question 6

Comet Company prepares monthly income statements.A physical inventory is taken only at year-end;hence,month-end inventories must be estimated.All sales are made on account.The rate of markup on cost is 50 percent.The following information relates to the month of May:   The estimated cost of the May 31 inventory is

Accepted Answer

A)  $24,000. 
B)  $28,000. 
C)  $38,000. 
D)  $44,000. 
A)  $24,000. 
B)  $28,000. 
C)  $38,000. 
D)  $44,000.

Question 7

The balance in Wellstocked Company's accounts payable account on December 31,2014,was $1,225,000 before the following information was considered:   What amount should Wellstocked report as accounts payable in its December 31,2014,balance sheet?

Accepted Answer

A)  $1,330,000 
B)  $1,285,000 
C)  $1,270,000 
D)  $1,225,000 
A)  $1,330,000 
B)  $1,285,000 
C)  $1,270,000 
D)  $1,225,000

Question 8

Stellar Inc.carries Product A in inventory on December 31 at its unit cost of $22.50.Because of a sharp decline in demand for the product,the selling price is reduced to $24.00 per unit.Stellar's normal profit margin on Product A is $4.80,disposal costs are $3.00 per unit,and the replacement cost is $15.90.Under the rule of lower of cost or market,Stellar's December 31 inventory of Product A should be valued at a unit cost of

Accepted Answer

A)  $15.90. 
B)  $16.20. 
C)  $21.00. 
D)  $22.50. 
A)  $15.90. 
B)  $16.20. 
C)  $21.00. 
D)  $22.50.

Question 9

If goods shipped FOB destination are in transit at the end of the year,they should be included in the inventory balance of the

Accepted Answer

A)  seller. 
B)  common carrier. 
C)  buyer. 
D)  bank. 
A)  seller. 
B)  common carrier. 
C)  buyer. 
D)  bank.

Question 10

Marie's Sporting Goods had the following inventory records for one line of skis for the month of January:   Assuming the periodic LIFO inventory method is used,what is the cost of Marie's ending inventory?

Accepted Answer

A)  $4,124 
B)  $4,268 
C)  $4,376 
D)  $4,100 
A)  $4,124 
B)  $4,268 
C)  $4,376 
D)  $4,100

Question 11

The term LIFO reserve refers to

Accepted Answer

A)  a cost flow assumption for valuing inventory. 
B)  the difference between the ending inventory amount under LIFO and the ending inventory amount under another inventory cost flow assumption. 
C)  inventory pools used in the dollar-value LIFO method. 
D)  a special fund set aside to cover LIFO liquidations. 
A)  a cost flow assumption for valuing inventory. 
B)  the difference between the ending inventory amount under LIFO and the ending inventory amount under another inventory cost flow assumption. 
C)  inventory pools used in the dollar-value LIFO method. 
D)  a special fund set aside to cover LIFO liquidations.

Question 12

A company using a periodic inventory system neglected to record a purchase of merchandise on account at year-end.This merchandise was omitted from the year-end physical count.How will these errors affect inventory at year-end and cost of goods sold for the year? Cost of
Inventory Goods Sold

Accepted Answer

A)  No effect Understate 
B)  Understate No effect 
C)  Understate Understate 
D)  No effect Overstate 
A)  No effect Understate 
B)  Understate No effect 
C)  Understate Understate 
D)  No effect Overstate

Question 13

The following information appears in Molsone Company's records for the year ended December 31:   On December 31,a physical inventory revealed that the ending inventory was only $210,000.Molsones gross profit on net sales has remained constant at 30 percent in recent years.Molsone suspects that some inventory may have been pilfered by one of the company's employees.At December 31,what is the estimated cost of missing inventory?

Accepted Answer

A)  $75,000 
B)  $82,500 
C)  $210,000 
D)  $292,500 
A)  $75,000 
B)  $82,500 
C)  $210,000 
D)  $292,500

Question 14

If the replacement cost of a unit of inventory has declined below original cost,but the replacement cost exceeds net realizable value,the amount to be used for purposes of inventory valuation is

Accepted Answer

A)  net realizable value. 
B)  original cost. 
C)  market value. 
D)  net realizable value less a normal profit margin. 
A)  net realizable value. 
B)  original cost. 
C)  market value. 
D)  net realizable value less a normal profit margin.

Question 15

Goods on consignment should be included in the inventory of

Accepted Answer

A)  the consignor but not the consignee. 
B)  the consignee but not the consignor. 
C)  both the consignor and the consignee. 
D)  neither the consignor nor the consignee. 
A)  the consignor but not the consignee. 
B)  the consignee but not the consignor. 
C)  both the consignor and the consignee. 
D)  neither the consignor nor the consignee.

Question 16

The Kidde Corporation uses the lower-of-cost-or-market method to value inventory.Data regarding the items in work-in-process inventory are presented below.
  
-See information regarding the Kidde Corporation above.The inventory valuation for highlighters using the lower-of-cost-or-market method is

Accepted Answer

A)  $25,600. 
B)  $29,200. 
C)  $31,800. 
D)  $30,000. 
A)  $25,600. 
B)  $29,200. 
C)  $31,800. 
D)  $30,000.

Question 17

Which of the following would NOT be reported as inventory?

Accepted Answer

A)  Land acquired for resale by a real estate firm 
B)  Stocks and bonds held for resale by a brokerage firm 
C)  Partially completed goods held by a manufacturing company 
D)  Machinery acquired by a manufacturing company for use in the production process 
A)  Land acquired for resale by a real estate firm 
B)  Stocks and bonds held for resale by a brokerage firm 
C)  Partially completed goods held by a manufacturing company 
D)  Machinery acquired by a manufacturing company for use in the production process

Question 18

From the following information,determine the amount of ending inventory.

Accepted Answer

A)  $23,000 
B)  $32,000 
C)  $33,000 
D)  $22,000 
A)  $23,000 
B)  $32,000 
C)  $33,000 
D)  $22,000

Question 19

The use of the gross profit method assumes

Accepted Answer

A)  the amount of gross profit is the same as in prior years. 
B)  sales and cost of goods sold have not changed from previous years. 
C)  inventory values have not increased from previous years. 
D)  the relationship between selling price and cost of goods sold is similar to prior years. 
A)  the amount of gross profit is the same as in prior years. 
B)  sales and cost of goods sold have not changed from previous years. 
C)  inventory values have not increased from previous years. 
D)  the relationship between selling price and cost of goods sold is similar to prior years.

Question 20

The following information was taken from Andson Company's accounting records:   There was no work-in-process inventory at the beginning or end of the year.Andson's cost of goods sold is

Accepted Answer

A)  $497,500. 
B)  $487,500. 
C)  $482,500. 
D)  $475,000. 
A)  $497,500. 
B)  $487,500. 
C)  $482,500. 
D)  $475,000.

In a period of falling prices,the use of which of the following inventory cost flow methods would typically result in the highest cost of goods sold?

The average cost method is applicable to which of the following inventory systems? Periodic Perpetual

Digipro Inc.is a wholesaler of photography equipment.The activity for the VTC cameras during July is shown below: -See information for Digipro Inc.above.If Digipro Inc.uses the average cost method to account for inventory,the ending inventory of VTC cameras at July 31 is reported as

The balance in Wellstocked Company's accounts payable account on December 31,2014,was $1,225,000 before the following information was considered: What amount should Wellstocked report as accounts payable in its December 31,2014,balance sheet?

If goods shipped FOB destination are in transit at the end of the year,they should be included in the inventory balance of the

Marie's Sporting Goods had the following inventory records for one line of skis for the month of January: Assuming the periodic LIFO inventory method is used,what is the cost of Marie's ending inventory?

The term LIFO reserve refers to

A company using a periodic inventory system neglected to record a purchase of merchandise on account at year-end.This merchandise was omitted from the year-end physical count.How will these errors affect inventory at year-end and cost of goods sold for the year? Cost of Inventory Goods Sold

If the replacement cost of a unit of inventory has declined below original cost,but the replacement cost exceeds net realizable value,the amount to be used for purposes of inventory valuation is

Goods on consignment should be included in the inventory of

The Kidde Corporation uses the lower-of-cost-or-market method to value inventory.Data regarding the items in work-in-process inventory are presented below. -See information regarding the Kidde Corporation above.The inventory valuation for highlighters using the lower-of-cost-or-market method is

Which of the following would NOT be reported as inventory?

From the following information,determine the amount of ending inventory.

The use of the gross profit method assumes

The following information was taken from Andson Company's accounting records: There was no work-in-process inventory at the beginning or end of the year.Andson's 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

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Exam 9: Inventory and Cost of Goods Sold

In a period of falling prices,the use of which of the following inventory cost flow methods would typically result in the highest cost of goods sold?

The average cost method is applicable to which of the following inventory systems? Periodic Perpetual

Digipro Inc.is a wholesaler of photography equipment.The activity for the VTC cameras during July is shown below: -See information for Digipro Inc.above.If Digipro Inc.uses the average cost method to account for inventory,the ending inventory of VTC cameras at July 31 is reported as

The balance in Wellstocked Company's accounts payable account on December 31,2014,was $1,225,000 before the following information was considered: What amount should Wellstocked report as accounts payable in its December 31,2014,balance sheet?

If goods shipped FOB destination are in transit at the end of the year,they should be included in the inventory balance of the

Marie's Sporting Goods had the following inventory records for one line of skis for the month of January: Assuming the periodic LIFO inventory method is used,what is the cost of Marie's ending inventory?

The term LIFO reserve refers to

A company using a periodic inventory system neglected to record a purchase of merchandise on account at year-end.This merchandise was omitted from the year-end physical count.How will these errors affect inventory at year-end and cost of goods sold for the year? Cost of Inventory Goods Sold

If the replacement cost of a unit of inventory has declined below original cost,but the replacement cost exceeds net realizable value,the amount to be used for purposes of inventory valuation is

Goods on consignment should be included in the inventory of

The Kidde Corporation uses the lower-of-cost-or-market method to value inventory.Data regarding the items in work-in-process inventory are presented below. -See information regarding the Kidde Corporation above.The inventory valuation for highlighters using the lower-of-cost-or-market method is

Which of the following would NOT be reported as inventory?

From the following information,determine the amount of ending inventory.

The use of the gross profit method assumes

The following information was taken from Andson Company's accounting records: There was no work-in-process inventory at the beginning or end of the year.Andson's 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