Question 1

The following lots of a particular commodity were available for sale during the year:  The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year.
What is the amount of cost of goods sold the year according to the FIFO method?

Accepted Answer

A)  $1,380 
B)  $1,375 
C)  $1,510 
D)  $1,250

Question 2

Use the following information to answer the following questions. The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1.
 Assuming that the company uses the perpetual inventory system, determine the gross profit for the sale of May 23 using the FIFO inventory cost method.

Accepted Answer

A)  $78 
B)  $90 
C)  $102 
D)  $180

Question 3

If a company mistakenly counts more items during a physical inventory than actually exist, how will the error affect their bottom line?

Accepted Answer

A)  No change to net income. 
B)  Net income will be overstated 
C)  Net income will be understated. 
D)  Only gross profit will be affected.

Question 4

The units of Manganese Plus available for sale during the year were as follows:
  There are 15 units of the product in the physical inventory at November 30. The periodic inventory system is used. Determine the inventory cost by (a) FIFO, (b) LIFO, and (c) average cost methods.

Accepted Answer

The answer of The units of Manganese Plus available for...

Question 5

For the year ended December 31, 2011 Depot Max's cost of merchandise sold was $54,350. Inventory at the beginning of the year was $6,540. Ending inventory was $7,250. Compute Depot Max's inventory turnover for the year.

Accepted Answer

A)  8.3 
B)  7.5 
C)  7.9 
D)  47

Question 6

Addison, Inc. uses a perpetual inventory system. The following is information about one inventory item for the month of September:  If Addison uses LIFO, the cost of the ending merchandise inventory on September 30 is

Accepted Answer

A)  $800 
B)  $650 
C)  $750 
D)  $700

Question 7

Using the lower of cost or market, what should the total inventory value be for the following items:

Accepted Answer

The answer of Using the lower of cost or market,...

Question 8

Which of the following measures the relationship between cost of merchandise sold and the amount of inventory carried during the period?

Accepted Answer

A)  inventory turnover 
B)  number of days' sales in inventory 
C)  retail method of inventory costing 
D)  gross profit method of inventory costing

Question 9

During August, the first month of the fiscal year, sales totaled $875,000 and the cost of merchandise available for sale totaled $700,000. Estimate the cost of the merchandise inventory as of August 31, based on an estimated gross profit rate of 45%.

Accepted Answer

The answer of During August, the first month of the...

Question 10

Use the following information to answer the following questions. The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1.
 Assuming that the company uses the perpetual inventory system, determine the cost of merchandise sold for the sale of May 20 using the FIFO inventory cost method.

Accepted Answer

A)  $250 
B)  $180 
C)  $196 
D)  $204

Question 11

The following lots of a particular commodity were available for sale during the year:  The firm uses the periodic system and there are 25 units of the commodity on hand at the end of the year.
What is the amount of the inventory at the end of the year using the FIFO method?

Accepted Answer

A)  $1,645 
B)  $1,525 
C)  $1,730 
D)  $3,535

Question 12

Based upon the following data estimate the cost of ending merchandise inventory:

Accepted Answer

The answer of Based upon the following data estimate the...

Question 13

A company will most likely use an estimated method of determining inventory when

Accepted Answer

A)  the company decides not to do a physical inventory. 
B)  a natural disaster has destroyed most of their inventory. 
C)  the company has not kept up with their inventory records. 
D)  the company is preparing annual financial statements.

Question 14

A physical inventory should be taken at the end of every month.

Accepted Answer

A) True 
 B)False

Question 15

The units of an item available for sale during the year were as follows:
  There are 19 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the ending inventory cost using LIFO.

Accepted Answer

The answer of The units of an item available for...

Question 16

Three identical units of Item Steele Plate are purchased during March, as shown below.
  Assume that one unit is sold on March 23 for $1,025. Determine the gross profit for March and ending inventory on March 31 using (a) FIFO, (b) LIFO, and (c) average cost methods.

Accepted Answer

The answer of Three identical units of Item Steele Plate...

Question 17

The use of the lower-of-cost-or-market method of inventory valuation increases net income for the period in which the inventory replacement price declined.

Accepted Answer

A) True 
 B)False

Question 18

Beginning inventory, purchases, and sales for Product - Weld TM are as follows:
  Assuming a perpetual inventory system and the last-in, first-out method, determine (a) the cost of the merchandise sold for the September 30 sale and (b) the inventory on September 30.

Accepted Answer

The answer of Beginning inventory, purchases, and sales for Product...

Question 19

Kristin's Boutiques has identified the following items for possible inclusion in its December 31, 2010 inventory. Which of the following would not be included in the year end inventory?

Accepted Answer

A)  Merchandise purchased FOB shipping point was picked up by the freight company but had still not arrived at Kristin's Boutique as of December 31, 2010. 
B)  Kristin has in its warehouse merchandise on consignment from Abby Co. 
C)  Kristin has sent merchandise to various retailers on a consignment basis. 
D)  Kristin has merchandise on hand which has been returned by customers because of wrong size.

Question 20

A purchase order establishes an initial record of the receipt of the inventory.

Accepted Answer

A) True 
 B)False

Exam 6: Inventories

The following lots of a particular commodity were available for sale during the year: The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year. What is the amount of cost of goods sold the year according to the FIFO method?

If a company mistakenly counts more items during a physical inventory than actually exist, how will the error affect their bottom line?

The units of Manganese Plus available for sale during the year were as follows: There are 15 units of the product in the physical inventory at November 30. The periodic inventory system is used. Determine the inventory cost by (a) FIFO, (b) LIFO, and (c) average cost methods.

For the year ended December 31, 2011 Depot Max's cost of merchandise sold was $54,350. Inventory at the beginning of the year was $6,540. Ending inventory was $7,250. Compute Depot Max's inventory turnover for the year.

Addison, Inc. uses a perpetual inventory system. The following is information about one inventory item for the month of September: If Addison uses LIFO, the cost of the ending merchandise inventory on September 30 is

Using the lower of cost or market, what should the total inventory value be for the following items:

Which of the following measures the relationship between cost of merchandise sold and the amount of inventory carried during the period?

During August, the first month of the fiscal year, sales totaled $875,000 and the cost of merchandise available for sale totaled $700,000. Estimate the cost of the merchandise inventory as of August 31, based on an estimated gross profit rate of 45%.

The following lots of a particular commodity were available for sale during the year: The firm uses the periodic system and there are 25 units of the commodity on hand at the end of the year. What is the amount of the inventory at the end of the year using the FIFO method?

Based upon the following data estimate the cost of ending merchandise inventory:

A company will most likely use an estimated method of determining inventory when

A physical inventory should be taken at the end of every month.

The units of an item available for sale during the year were as follows: There are 19 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the ending inventory cost using LIFO.

Three identical units of Item Steele Plate are purchased during March, as shown below. Assume that one unit is sold on March 23 for $1,025. Determine the gross profit for March and ending inventory on March 31 using (a) FIFO, (b) LIFO, and (c) average cost methods.

The use of the lower-of-cost-or-market method of inventory valuation increases net income for the period in which the inventory replacement price declined.

Beginning inventory, purchases, and sales for Product - Weld TM are as follows: Assuming a perpetual inventory system and the last-in, first-out method, determine (a) the cost of the merchandise sold for the September 30 sale and (b) the inventory on September 30.

Kristin's Boutiques has identified the following items for possible inclusion in its December 31, 2010 inventory. Which of the following would not be included in the year end inventory?

A purchase order establishes an initial record of the receipt of the inventory.