Question 1

The assignment of costs to the cost of goods sold and to ending inventory using FIFO is the same for both the perpetual and periodic inventory systems.

Accepted Answer

A) True 
 B)False

Question 2

Regardless of the inventory costing system used,cost of goods available for sale must be allocated at the end of the period between

Accepted Answer

A) beginning inventory and net purchases during the period. 
B) ending inventory and beginning inventory. 
C) net purchases during the period and ending inventory. 
D) ending inventory and cost of goods sold. 
E) beginning inventory and cost of goods sold.

Question 3

In applying the lower of cost or market method to LIFO inventory valuation,market is defined as:

Accepted Answer

A) Historical cost. 
B) Current replacement cost. 
C) Current sales price. 
D) FIFO. 
E) LIFO.

Question 4

Marquis Company uses a weighted-average perpetual inventory system and has the following purchases and sales:  What is the amount of the cost of goods sold for this sale? (Round average cost per unit to 2 decimal places.)

Accepted Answer

A) $148.00 
B) $150.50 
C) $158.40 
D) $210.00 
E) $330.00

Question 5

Physical counts of inventory:

Accepted Answer

A) Are not necessary under the perpetual system. 
B) Are necessary to adjust the Inventory account to the actual inventory available. 
C) Must be taken at least once a month. 
D) Requires the use of hand-held portable computers. 
E) Are not necessary under the cost-to benefit constraint.

Question 6

Identify the items that are included in merchandise inventory.(In your answer address the special situations of goods in transit,consigned goods,and damaged goods.)

Accepted Answer

The answer of Identify the items that are included in...

Question 7

Lucia Company reported cost of goods sold for Year 1 and Year 2 as follows: Lucia Company made two errors: 1)ending inventory at the end of Year 1 was understated by $15,000 and 2)ending inventory at the end of Year 2 was overstated by $6,000.Given this information,the correct cost of goods sold figure for Year 2 would be:

Accepted Answer

A) $291,000 
B) $276,000 
C) $264,000 
D) $285,000 
E) $249,000

Question 8

According to IRS guidelines,companies may use FIFO for financial reporting and LIFO for tax reporting.

Accepted Answer

A) True 
 B)False

Question 9

The lower of cost or market rule for inventory valuation is always applied to individual units separately rather than to major categories of inventory or to the entire inventory.

Accepted Answer

A) True 
 B)False

Question 10

A company uses the retail inventory method and has the following information available concerning its most recent accounting period:
  1.Use the retail inventory method to estimate the company's year-end inventory at cost.
2.A year-end physical count at retail prices yields a total inventory of $404,800.Prepare a calculation showing the company's loss from shrinkage at cost and at retail.

Accepted Answer

The answer of A company uses the retail inventory method...

Question 11

When units are purchased at different costs over time,determining the cost per unit assigned to inventory items is simple.

Accepted Answer

A) True 
 B)False

Question 12

An understatement of ending inventory will cause an understatement of assets and equity on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 13

Interim financial statements:

Accepted Answer

A) Are required by the Congress. 
B) Are necessary to achieve full disclosure about a business's operations. 
C) Are statements prepared for periods of less than one year. 
D) Require the use of the perpetual method for inventories. 
E) Cannot be prepared if the company follows the conservatism principle.

Question 14

Lower of cost or market:

Accepted Answer

A) Is applied to each individual item,major categories of items,or the whole inventory. 
B) Is only applicable to companies using FIFO. 
C) Records only an increase in inventory value. 
D) Is only applicable to companies using LIFO. 
E) Reports all inventory items at full cost.

Question 15

Monarch Company uses a weighted-average perpetual inventory system,and has the following purchases and sales: 
-What is the value of cost of goods sold?

Accepted Answer

A) $278. 
B) $272. 
C) $126. 
D) $398. 
E) $120.

Question 16

Discuss the important accounting features of a periodic inventory system including accounts and procedures used.

Accepted Answer

The answer of Discuss the important accounting features of a...

Question 17

An advantage of the weighted average inventory method is that it tends to smooth out erratic changes in costs.

Accepted Answer

A) True 
 B)False

Question 18

The ________ method of assigning costs to inventory and cost of goods sold exactly matches the costs of particular items with the revenues they generate and would be used when items can be easily traced to the purchase invoice cost.

Accepted Answer

The answer of The ________ method of assigning costs to...

Question 19

When purchase costs regularly rise,the ________ method of inventory valuation yields the highest gross profit and net income.

Accepted Answer

The answer of When purchase costs regularly rise,the ________ method...

Question 20

Regardless of what inventory method or system is used,cost of goods available for sale must be allocated between ________ and ________.

Accepted Answer

The answer of Regardless of what inventory method or system...

Exam 5: Inventories and Cost of Sales

The assignment of costs to the cost of goods sold and to ending inventory using FIFO is the same for both the perpetual and periodic inventory systems.

Regardless of the inventory costing system used,cost of goods available for sale must be allocated at the end of the period between

In applying the lower of cost or market method to LIFO inventory valuation,market is defined as:

Marquis Company uses a weighted-average perpetual inventory system and has the following purchases and sales: What is the amount of the cost of goods sold for this sale? (Round average cost per unit to 2 decimal places.)

Physical counts of inventory:

Identify the items that are included in merchandise inventory.(In your answer address the special situations of goods in transit,consigned goods,and damaged goods.)

According to IRS guidelines,companies may use FIFO for financial reporting and LIFO for tax reporting.

The lower of cost or market rule for inventory valuation is always applied to individual units separately rather than to major categories of inventory or to the entire inventory.

When units are purchased at different costs over time,determining the cost per unit assigned to inventory items is simple.

An understatement of ending inventory will cause an understatement of assets and equity on the balance sheet.

Interim financial statements:

Lower of cost or market:

Monarch Company uses a weighted-average perpetual inventory system,and has the following purchases and sales: -What is the value of cost of goods sold?

Discuss the important accounting features of a periodic inventory system including accounts and procedures used.

An advantage of the weighted average inventory method is that it tends to smooth out erratic changes in costs.

The ________ method of assigning costs to inventory and cost of goods sold exactly matches the costs of particular items with the revenues they generate and would be used when items can be easily traced to the purchase invoice cost.

When purchase costs regularly rise,the ________ method of inventory valuation yields the highest gross profit and net income.

Regardless of what inventory method or system is used,cost of goods available for sale must be allocated between and .