Question 1

In the year of an overstatement of ending inventory,cost of goods sold will be understated and net income will be overstated.

Accepted Answer

A) True 
 B)False

Question 2

Generally,inventory inspection costs are reported as operating expenses on the income statement.

Accepted Answer

A) True 
 B)False

Question 3

On March 15,2019,Ryan Company purchased $10,000 of merchandise on credit subject to terms of 2/10,n/30.Ryan Company records its purchases using the gross amount. Which of the following journal entries is correct when Ryan Company pays for these goods on March 20,2019?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 4

An understatement of the ending inventory in Year 1,if not corrected,will cause which of the following?

Accepted Answer

A) The year 1 net income to be understated and Year 2 net income to be overstated. 
B) The year 1 net income to be overstated and Year 2 net income to be overstated. 
C) The year 1 net income to be overstated and Year 2 net income will be correct. 
D) The year 1 net income to be overstated and Year 2 net income to be understated. 
A) The year 1 net income to be understated and Year 2 net income to be overstated. 
B) The year 1 net income to be overstated and Year 2 net income to be overstated. 
C) The year 1 net income to be overstated and Year 2 net income will be correct. 
D) The year 1 net income to be overstated and Year 2 net income to be understated.

Question 5

Direct material costs are a component of the cost of the work in process inventory.

Accepted Answer

A) True 
 B)False

Question 6

Hollander Company hired some students to help count inventory during their semester break.Unfortunately,the students added incorrectly and the 2019 ending inventory was overstated by $5,000.What would be the effect of this error in ending inventory?

Accepted Answer

A) 2019 net income would be overstated. 
B) 2019 net income would be understated. 
C) 2019 ending retained earnings would be understated. 
D) 2019 cost of goods sold would be overstated. 
A) 2019 net income would be overstated. 
B) 2019 net income would be understated. 
C) 2019 ending retained earnings would be understated. 
D) 2019 cost of goods sold would be overstated.

Question 7

RJ Corporation has provided the following information about one of its inventory items:   During the year,RJ sold 3,000 units.
-
What was ending inventory using the LIFO cost flow assumption?

Accepted Answer

A) $640,000. 
B) $840,000. 
C) $770,000. 
D) $880,000. 
A) $640,000. 
B) $840,000. 
C) $770,000. 
D) $880,000.

Question 8

Given a particular set of facts and assumptions,the following pairs of amounts were computed using FIFO and LIFO.For each pair of amounts,indicate which amount resulted from applying FIFO,and which amount resulted from applying LIFO.

Accepted Answer

A.1.FIFO 2.LIFO
B.1.

Question 9

The following income statement is complete except for a few missing titles (bold lines on the left),and amounts (dotted lines on the right).
Prepare a complete income statement using the format and amounts provided.Fill in all items that are missing titles and amounts (ignore income taxes).

Accepted Answer

The answer of The following income statement is complete except...

Question 10

Seattle,Co.began the year with 480 units of one of its most popular products.During the year Seattle purchased 1,000 units and sold 1,100 units for $750 each.What is the pre-tax effect of Seattle's LIFO liquidation?

Accepted Answer

A) $57,600 
B) $7,200 
C) $14,400 
D) $17,400 
A) $57,600 
B) $7,200 
C) $14,400 
D) $17,400

Question 11

Coulter Company uses the LIFO inventory method.The following data were available for the month of January,2019:
   Compute the following:
1.Beginning inventory
2.Ending inventory
3.Cost of goods available for sale
4.Cost of goods sold
5.Gross profit

Accepted Answer

1.200 × $5.00 = $1,000.
2.(200

Question 12

QV-TV,Inc.provided the following items in its notes to the financial statements for the year-end 2019: Cost of goods sold was $22 billion under FIFO costing and the inventory value under FIFO costing was $2.1 billion.The LIFO Reserve for year-end 2018 was $0.6 billion and at year-end 2019 it had increased to $0.8 billion.
- How much is the 2019 LIFO cost of goods sold?

Accepted Answer

A) $22.2 billion. 
B) $19.8 billion. 
C) $22.8 billion. 
D) $19.2 billion. 
A) $22.2 billion. 
B) $19.8 billion. 
C) $22.8 billion. 
D) $19.2 billion.

Question 13

Which of the following statements is correct when inventory unit costs are decreasing?

Accepted Answer

A) LIFO will result in lower net income and a higher inventory valuation than will FIFO. 
B) LIFO will result in higher net income and a higher inventory valuation than will FIFO. 
C) FIFO will result in higher net income and a higher inventory valuation than will LIFO. 
D) FIFO will result in higher net income and a lower inventory valuation than will LIFO. 
A) LIFO will result in lower net income and a higher inventory valuation than will FIFO. 
B) LIFO will result in higher net income and a higher inventory valuation than will FIFO. 
C) FIFO will result in higher net income and a higher inventory valuation than will LIFO. 
D) FIFO will result in higher net income and a lower inventory valuation than will LIFO.

Question 14

The FIFO inventory method will result in the lowest net income in comparison with the LIFO method when costs are decreasing.

Accepted Answer

A) True 
 B)False

Question 15

The LIFO inventory method will result in the lowest gross profit in comparison with the FIFO method when unit costs are decreasing.

Accepted Answer

A) True 
 B)False

Question 16

An overstatement of the 2018 ending inventory results in an overstatement of stockholders' equity as of the end of 2019.

Accepted Answer

A) True 
 B)False

Question 17

Lauer Corporation provided the following information about one of its laptop computers:   During the year,Lauer sold 750 laptop computers.
-
What was cost of goods sold using the FIFO cost flow assumption?

Accepted Answer

A) $725,000. 
B) $740,000. 
C) $735,000. 
D) $720,000. 
A) $725,000. 
B) $740,000. 
C) $735,000. 
D) $720,000.

Question 18

Quest Inc.provided the following disclosure note to the financial statements in its annual report:
Inventories are stated at the lower of cost or market.The cost of inventories has been determined using last in first out (LIFO)method.Cost of goods sold under LIFO costing were $22.2 billion for 2019 and ending inventory under LIFO was $1.3 billion.Inventory in 2018 under LIFO costing was $1.2 billion.The LIFO Reserve account carried a credit balance of $0.8 billion in 2019 and $0.6 billion in 2018.
Compute the following:

Accepted Answer

1.$1.8 billion, ($1.2 billion LIFO inven

Question 19

Rio Company uses the FIFO inventory costing method and has a perpetual inventory system.All purchases and sales were cash transactions.The records reflected the following for January,2019:
   Determine the following:
A.2019 cost of goods available for sale
B.2019 cost of goods sold
C.2019 ending inventory
D.The journal entries for January 6 and 10.

Accepted Answer

A.$100 + $240 + $130 = $470 (4

Question 20

Which of the following statements is correct when inventory unit costs are decreasing?

Accepted Answer

A) Inventory turnover will be the greatest when the average cost inventory method is used. 
B) FIFO's gross profit will be the highest among the inventory costing methods. 
C) Inventory turnover will be the largest when the LIFO inventory method is used. 
D) Use of the LIFO method will result in lower cash flows due to a decreased cost of goods sold. 
A) Inventory turnover will be the greatest when the average cost inventory method is used. 
B) FIFO's gross profit will be the highest among the inventory costing methods. 
C) Inventory turnover will be the largest when the LIFO inventory method is used. 
D) Use of the LIFO method will result in lower cash flows due to a decreased cost of goods sold.

In the year of an overstatement of ending inventory,cost of goods sold will be understated and net income will be overstated.

Generally,inventory inspection costs are reported as operating expenses on the income statement.

On March 15,2019,Ryan Company purchased $10,000 of merchandise on credit subject to terms of 2/10,n/30.Ryan Company records its purchases using the gross amount. Which of the following journal entries is correct when Ryan Company pays for these goods on March 20,2019?

An understatement of the ending inventory in Year 1,if not corrected,will cause which of the following?

Direct material costs are a component of the cost of the work in process inventory.

Hollander Company hired some students to help count inventory during their semester break.Unfortunately,the students added incorrectly and the 2019 ending inventory was overstated by $5,000.What would be the effect of this error in ending inventory?

RJ Corporation has provided the following information about one of its inventory items: During the year,RJ sold 3,000 units. - What was ending inventory using the LIFO cost flow assumption?

Given a particular set of facts and assumptions,the following pairs of amounts were computed using FIFO and LIFO.For each pair of amounts,indicate which amount resulted from applying FIFO,and which amount resulted from applying LIFO.

The following income statement is complete except for a few missing titles (bold lines on the left),and amounts (dotted lines on the right). Prepare a complete income statement using the format and amounts provided.Fill in all items that are missing titles and amounts (ignore income taxes).

Seattle,Co.began the year with 480 units of one of its most popular products.During the year Seattle purchased 1,000 units and sold 1,100 units for $750 each.What is the pre-tax effect of Seattle's LIFO liquidation?

Coulter Company uses the LIFO inventory method.The following data were available for the month of January,2019: Compute the following: 1.Beginning inventory 2.Ending inventory 3.Cost of goods available for sale 4.Cost of goods sold 5.Gross profit

Which of the following statements is correct when inventory unit costs are decreasing?

The FIFO inventory method will result in the lowest net income in comparison with the LIFO method when costs are decreasing.

The LIFO inventory method will result in the lowest gross profit in comparison with the FIFO method when unit costs are decreasing.

An overstatement of the 2018 ending inventory results in an overstatement of stockholders' equity as of the end of 2019.

Lauer Corporation provided the following information about one of its laptop computers: During the year,Lauer sold 750 laptop computers. - What was cost of goods sold using the FIFO cost flow assumption?

Which of the following statements is correct when inventory unit costs are decreasing?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue,receivables,and Cash

Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

Filters

Exam 7: Reporting and Interpreting Cost of Goods Sold and Inventory

In the year of an overstatement of ending inventory,cost of goods sold will be understated and net income will be overstated.

Generally,inventory inspection costs are reported as operating expenses on the income statement.

On March 15,2019,Ryan Company purchased $10,000 of merchandise on credit subject to terms of 2/10,n/30.Ryan Company records its purchases using the gross amount. Which of the following journal entries is correct when Ryan Company pays for these goods on March 20,2019?

An understatement of the ending inventory in Year 1,if not corrected,will cause which of the following?

Direct material costs are a component of the cost of the work in process inventory.

Hollander Company hired some students to help count inventory during their semester break.Unfortunately,the students added incorrectly and the 2019 ending inventory was overstated by $5,000.What would be the effect of this error in ending inventory?

RJ Corporation has provided the following information about one of its inventory items: During the year,RJ sold 3,000 units. - What was ending inventory using the LIFO cost flow assumption?

Given a particular set of facts and assumptions,the following pairs of amounts were computed using FIFO and LIFO.For each pair of amounts,indicate which amount resulted from applying FIFO,and which amount resulted from applying LIFO.

The following income statement is complete except for a few missing titles (bold lines on the left),and amounts (dotted lines on the right). Prepare a complete income statement using the format and amounts provided.Fill in all items that are missing titles and amounts (ignore income taxes).

Seattle,Co.began the year with 480 units of one of its most popular products.During the year Seattle purchased 1,000 units and sold 1,100 units for $750 each.What is the pre-tax effect of Seattle's LIFO liquidation?

Coulter Company uses the LIFO inventory method.The following data were available for the month of January,2019: Compute the following: 1.Beginning inventory 2.Ending inventory 3.Cost of goods available for sale 4.Cost of goods sold 5.Gross profit

Which of the following statements is correct when inventory unit costs are decreasing?

The FIFO inventory method will result in the lowest net income in comparison with the LIFO method when costs are decreasing.

The LIFO inventory method will result in the lowest gross profit in comparison with the FIFO method when unit costs are decreasing.

An overstatement of the 2018 ending inventory results in an overstatement of stockholders' equity as of the end of 2019.

Lauer Corporation provided the following information about one of its laptop computers: During the year,Lauer sold 750 laptop computers. - What was cost of goods sold using the FIFO cost flow assumption?

Which of the following statements is correct when inventory unit costs are decreasing?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue,receivables,and Cash

Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

Filters