Question 1

Which one of the following would cause a decrease in the cost ratio as used in the retail inventory method?

Accepted Answer

A)  Higher retail prices 
B)  Lower net markups 
C)  More employee discounts given 
D)  Higher freight-in charges 
A)  Higher retail prices 
B)  Lower net markups 
C)  More employee discounts given 
D)  Higher freight-in charges

Question 2

On June 19,2014,a fire destroyed the entire uninsured merchandise inventory of the Shelf Merchandising Company.The following data are available:   What is the approximate inventory loss as a result of the fire?

Accepted Answer

A)  $19,200 
B)  $27,200 
C)  $34,000 
D)  $58,000 
A)  $19,200 
B)  $27,200 
C)  $34,000 
D)  $58,000

Question 3

An example of an inventory accounting policy that should be disclosed is the

Accepted Answer

A)  effect of inventory profits caused by inflation. 
B)  classification of inventory into raw materials,work in process,and finished goods. 
C)  identification of major suppliers. 
D)  method used for inventory costing. 
A)  effect of inventory profits caused by inflation. 
B)  classification of inventory into raw materials,work in process,and finished goods. 
C)  identification of major suppliers. 
D)  method used for inventory costing.

Question 4

Which of the following would NOT be included in the cost of work in process inventory?

Accepted Answer

A)  Cost of electricity to operate factory equipment 
B)  Maintenance costs of factory equipment 
C)  Depreciation on office equipment in the sales manager's office 
D)  Depreciation on factory equipment 
A)  Cost of electricity to operate factory equipment 
B)  Maintenance costs of factory equipment 
C)  Depreciation on office equipment in the sales manager's office 
D)  Depreciation on factory equipment

Question 5

Highlight Manufacturing Company uses a perpetual inventory system for its raw materials.The inventory records reflect a raw materials balance of $478,500 at December 31.A physical inventory taken on that date revealed raw materials of $475,750.How will the $2,750 difference affect raw materials inventory and cost of goods sold,assuming it is attributed to normal shrinkage? Raw Materials Cost of Goods Sold

Accepted Answer

A)  Increase Decrease 
B)  Decrease No effect 
C)  Decrease Increase 
D)  No effect Increase 
A)  Increase Decrease 
B)  Decrease No effect 
C)  Decrease Increase 
D)  No effect Increase

Question 6

When the current year's ending inventory amount is overstated,the

Accepted Answer

A)  current year's cost of goods sold is overstated. 
B)  current year's total assets are understated. 
C)  current year's net income is overstated. 
D)  next year's income is overstated. 
A)  current year's cost of goods sold is overstated. 
B)  current year's total assets are understated. 
C)  current year's net income is overstated. 
D)  next year's income is overstated.

Question 7

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 FIFO cost of goods sold is

Accepted Answer

A)  $330. 
B)  $300. 
C)  $430. 
D)  $250. 
A)  $330. 
B)  $300. 
C)  $430. 
D)  $250.

Question 8

A markup of 25 percent on cost is equivalent to what markup on selling price? (rounded)

Accepted Answer

A)  15 percent 
B)  20 percent 
C)  25 percent 
D)  33 percent 
A)  15 percent 
B)  20 percent 
C)  25 percent 
D)  33 percent

Question 9

The Cleft Music Company was formed on December 1,2013.The following information is available from Cleft's inventory records:
   The company uses a periodic inventory system,and a physical inventory on November 30,2014,shows 9,600 units on hand.Prepare schedules to compute the ending inventory at November 30,2014,under each of the following inventory methods:

Accepted Answer

(1)
 @#IMG-DLM& (2)
Computation of inventory under

Question 10

The balance in Locksome Company's accounts payable account at December 31,2014,was $1,100,000 before considering the following information:   What amount should Locksome report as accounts payable in its December 31,2014,balance sheet?

Accepted Answer

A)  $1,120,000 
B)  $1,115,000 
C)  $1,085,000 
D)  $1,065,000 
A)  $1,120,000 
B)  $1,115,000 
C)  $1,085,000 
D)  $1,065,000

Question 11

Under generally accepted accounting principles,the lower-of-cost-or-market procedure for assigning a value to inventory can be assigned to

Accepted Answer

A)  total inventory. 
B)  groups of similar inventory items. 
C)  individual inventory items. 
D)  all of these. 
A)  total inventory. 
B)  groups of similar inventory items. 
C)  individual inventory items. 
D)  all of these.

Question 12

Which inventory costing method would NOT be appropriate for a manufacturer using a perpetual inventory system?

Accepted Answer

A)  First-in,first-out 
B)  Last-in,first-out 
C)  Average cost 
D)  Dollar-value LIFO 
A)  First-in,first-out 
B)  Last-in,first-out 
C)  Average cost 
D)  Dollar-value LIFO

Question 13

Which statement is true about the gross profit method?

Accepted Answer

A)  It may not be used to estimate inventories for annual statements. 
B)  It may not be used to estimate inventories for interim statements. 
C)  It may not be used by insurers of inventory. 
D)  It may not be used for internal estimates of inventory. 
A)  It may not be used to estimate inventories for annual statements. 
B)  It may not be used to estimate inventories for interim statements. 
C)  It may not be used by insurers of inventory. 
D)  It may not be used for internal estimates of inventory.

Question 14

Asteroid Sales Corp.was organized on January 1,2013.On December 31,2014,the company lost most of its inventory in a warehouse fire just before the year-end count of inventory was to take place.Data from the records disclosed the following:
   On January 1,2014,Asteroid's pricing policy was changed so that the gross profit rate would be 3 percentage points higher than the one earned in 2013.
Salvaged undamaged merchandise was marked to sell at $24,000,while damaged merchandise marked to sell at $16,000 had an estimated net realizable value of $3,600.
Determine the company's inventory loss due to the fire that occurred on December 31,2014.

Accepted Answer

The answer of Asteroid Sales Corp.was organized on January 1,2013.On...

Question 15

Tenure Company's accounting records indicated the following information:   A physical inventory taken on December 31,2014,revealed actual ending inventory at cost was $1,150,000.Tenure's gross profit on sales has regularly been about 25 percent in recent years.The company believes some inventory may have been stolen during the year.What is the estimated amount of missing inventory at December 31,2014?

Accepted Answer

A)  $50,000 
B)  $200,000 
C)  $350,000 
D)  $450,000 
A)  $50,000 
B)  $200,000 
C)  $350,000 
D)  $450,000

Question 16

The Narrows Company makes the following entry in its accounting records:   This entry would be made when

Accepted Answer

A)  merchandise is sold and the periodic inventory method is used. 
B)  merchandise is sold and the perpetual inventory method is used. 
C)  merchandise is returned and the perpetual inventory method is used. 
D)  merchandise is returned and the periodic inventory method is used. 
A)  merchandise is sold and the periodic inventory method is used. 
B)  merchandise is sold and the perpetual inventory method is used. 
C)  merchandise is returned and the perpetual inventory method is used. 
D)  merchandise is returned and the periodic inventory method is used.

Question 17

Digipro Inc.is a wholesaler of photography equipment.The activity for the VTC cameras during July is shown below:
  
-Following are the account balances from Browne Company's income statement:   Given this information,the cost of merchandise available for sale during 2014 is

Accepted Answer

A)  $65,000. 
B)  $59,000. 
C)  $69,000. 
D)  $61,000. 
A)  $65,000. 
B)  $59,000. 
C)  $69,000. 
D)  $61,000.

Question 18

Which of the inventory cost flow assumptions provides the best measure of earnings,where "best" means most appropriate for predicting future earnings,when prices have been declining?

Accepted Answer

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

Question 19

The Blazers Company began its operations in early 2014.The company carries five different types of inventory which are listed below along with other relevant data.The company values its inventory at the lower of cost or market.At December 31,2014,Blazers has exactly one unit of each item in ending inventory.

Accepted Answer

(1)
 @#IMG-DLM& (2)
Loss = 13*
* (12 + 1

Question 20

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 a moving average perpetual inventory system,the ending inventory of the 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.

Which one of the following would cause a decrease in the cost ratio as used in the retail inventory method?

On June 19,2014,a fire destroyed the entire uninsured merchandise inventory of the Shelf Merchandising Company.The following data are available: What is the approximate inventory loss as a result of the fire?

An example of an inventory accounting policy that should be disclosed is the

Which of the following would NOT be included in the cost of work in process inventory?

When the current year's ending inventory amount is overstated,the

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 FIFO cost of goods sold is

A markup of 25 percent on cost is equivalent to what markup on selling price? (rounded)

The balance in Locksome Company's accounts payable account at December 31,2014,was $1,100,000 before considering the following information: What amount should Locksome report as accounts payable in its December 31,2014,balance sheet?

Under generally accepted accounting principles,the lower-of-cost-or-market procedure for assigning a value to inventory can be assigned to

Which inventory costing method would NOT be appropriate for a manufacturer using a perpetual inventory system?

Which statement is true about the gross profit method?

The Narrows Company makes the following entry in its accounting records: This entry would be made when

Digipro Inc.is a wholesaler of photography equipment.The activity for the VTC cameras during July is shown below: -Following are the account balances from Browne Company's income statement: Given this information,the cost of merchandise available for sale during 2014 is

Which of the inventory cost flow assumptions provides the best measure of earnings,where "best" means most appropriate for predicting future earnings,when prices have been declining?

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 a moving average perpetual inventory system,the ending inventory of the VTC cameras at July 31 is reported as

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 one of the following would cause a decrease in the cost ratio as used in the retail inventory method?

On June 19,2014,a fire destroyed the entire uninsured merchandise inventory of the Shelf Merchandising Company.The following data are available: What is the approximate inventory loss as a result of the fire?

An example of an inventory accounting policy that should be disclosed is the

Which of the following would NOT be included in the cost of work in process inventory?

When the current year's ending inventory amount is overstated,the

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 FIFO cost of goods sold is

A markup of 25 percent on cost is equivalent to what markup on selling price? (rounded)

The balance in Locksome Company's accounts payable account at December 31,2014,was $1,100,000 before considering the following information: What amount should Locksome report as accounts payable in its December 31,2014,balance sheet?

Under generally accepted accounting principles,the lower-of-cost-or-market procedure for assigning a value to inventory can be assigned to

Which inventory costing method would NOT be appropriate for a manufacturer using a perpetual inventory system?

Which statement is true about the gross profit method?

The Narrows Company makes the following entry in its accounting records: This entry would be made when

Digipro Inc.is a wholesaler of photography equipment.The activity for the VTC cameras during July is shown below: -Following are the account balances from Browne Company's income statement: Given this information,the cost of merchandise available for sale during 2014 is

Which of the inventory cost flow assumptions provides the best measure of earnings,where "best" means most appropriate for predicting future earnings,when prices have been declining?

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 a moving average perpetual inventory system,the ending inventory of the VTC cameras at July 31 is reported as

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