Question 1

Which of the following will occur when inventory costs are decreasing?

Accepted Answer

A) FIFO will result in a lower net income but a higher ending inventory then will LIFO. 
B) FIFO will result in a higher net income but a lower ending inventory then will LIFO. 
C) FIFO will result in a lower net income and a lower ending inventory then will LIFO. 
D) FIFO will result in a higher net income and a higher ending inventory then will LIFO. 
A) FIFO will result in a lower net income but a higher ending inventory then will LIFO. 
B) FIFO will result in a higher net income but a lower ending inventory then will LIFO. 
C) FIFO will result in a lower net income and a lower ending inventory then will LIFO. 
D) FIFO will result in a higher net income and a higher ending inventory then will LIFO.

Question 2

Given the following information for Maynor Company in 2014,calculate the company's ending inventory and cost of goods sold using the following inventory costing methods,assuming the company uses a perpetual inventory system:
a)Weighted Average
b)FIFO
c)LIFO

Accepted Answer

The answer of Given the following information for Maynor Company...

Question 3

Use the information above to answer the following question.If the company uses the weighted average inventory costing method,what is the cost of its ending inventory?

Accepted Answer

A) $4,200. 
B) $2,700. 
C) $1,400. 
D) $1,365. 
A) $4,200. 
B) $2,700. 
C) $1,400. 
D) $1,365.

Question 4

On July 1,B.Darin Company sold merchandise costing $4,500 to S.Dee Company for $6,000,terms 2/10,n/30.Both companies use a perpetual inventory system.What is the journal entry that S.Dee Company will make on July 1?

Accepted Answer

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

Question 5

Which one of the following statements regarding inventory is not true?

Accepted Answer

A) An increase in inventory levels is always a sign of inefficiency in inventory management. 
B) The measurement of inventory affects both the balance sheet and the income statement within an accounting period. 
C) The ending inventory of one accounting period becomes the beginning inventory of the next accounting period. 
D) The cost of merchandise can vary over time and may be affected by weather,politics,and technological innovation. 
A) An increase in inventory levels is always a sign of inefficiency in inventory management. 
B) The measurement of inventory affects both the balance sheet and the income statement within an accounting period. 
C) The ending inventory of one accounting period becomes the beginning inventory of the next accounting period. 
D) The cost of merchandise can vary over time and may be affected by weather,politics,and technological innovation.

Question 6

Use the information above to answer the following question.What is the amount of the gross profit?

Accepted Answer

A) $720,000 
B) $150,000 
C) $200,000 
D) $72,000 
A) $720,000 
B) $150,000 
C) $200,000 
D) $72,000

Question 7

An understatement of the beginning inventory balance causes:

Accepted Answer

A) Cost of goods sold to be understated and net income to be understated. 
B) Cost of goods sold to be understated and net income to be overstated. 
C) Cost of goods sold to be overstated and net income to be understated. 
D) Cost of goods sold to be overstated and net income to be correct. 
A) Cost of goods sold to be understated and net income to be understated. 
B) Cost of goods sold to be understated and net income to be overstated. 
C) Cost of goods sold to be overstated and net income to be understated. 
D) Cost of goods sold to be overstated and net income to be correct.

Question 8

Fill in the blanks below with the words "higher" and "lower" to indicate which inventory costing method causes the value to be higher and which causes it to be lower.Assume that the cost of merchandise is decreasing.

Accepted Answer

The answer of Fill in the blanks below with the...

Question 9

When a company uses a perpetual inventory system,purchase returns will be recorded by:

Accepted Answer

A) debiting inventory. 
B) debiting purchase returns. 
C) crediting accounts payable. 
D) crediting inventory. 
A) debiting inventory. 
B) debiting purchase returns. 
C) crediting accounts payable. 
D) crediting inventory.

Question 10

Carrying insufficient quantities of inventory on hand:

Accepted Answer

A) would not affect the company's profitability. 
B) may result in lost sales. 
C) has little effect on customer satisfaction. 
D) will increase the costs of carrying inventory. 
A) would not affect the company's profitability. 
B) may result in lost sales. 
C) has little effect on customer satisfaction. 
D) will increase the costs of carrying inventory.

Question 11

Which of the following would be in the raw materials inventory of a company making cheese?

Accepted Answer

A) Milk and cream used to make the cheese. 
B) Cheese that has been made but is curing before being ready to sell. 
C) Cured cheese that is waiting to be shipped to retailers. 
D) Partially processed cheese. 
A) Milk and cream used to make the cheese. 
B) Cheese that has been made but is curing before being ready to sell. 
C) Cured cheese that is waiting to be shipped to retailers. 
D) Partially processed cheese.

Question 12

Your company has 500 units in inventory that had been purchased for $12 each and that would currently cost $15 to replace.Your supplier has just announced the cost of these goods is rising to $16.50.

Accepted Answer

A) Your company should make no adjustments to the inventory account. 
B) Your company should adjust the inventory account using the lower of the recent market values,which is $15. 
C) Your company should adjust the inventory account using the cost,which is $12.00. 
D) Your company should adjust the inventory account using the average of the recent market values,which is $14.50. 
A) Your company should make no adjustments to the inventory account. 
B) Your company should adjust the inventory account using the lower of the recent market values,which is $15. 
C) Your company should adjust the inventory account using the cost,which is $12.00. 
D) Your company should adjust the inventory account using the average of the recent market values,which is $14.50.

Question 13

The net sales of a company is $300,000.The cost of goods available for sale is $280,000 and the gross profit percentage is 35%.What is the amount of ending inventory?

Accepted Answer

A) $105,000 
B) $195,000 
C) $85,000 
D) $70,000 
A) $105,000 
B) $195,000 
C) $85,000 
D) $70,000

Question 14

An understatement of beginning inventory causes net income to be understated.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements regarding inventory measures is

Accepted Answer

A) If the inventory turnover ratio increases,the days to sell measure decreases. 
B) The days to sell measure can help managers make ordering decisions for inventory. 
C) A higher inventory turnover ratio indicates that inventory is moving more quickly from purchase to sale. 
D) It is rare for a company with a lower gross profit percentage to have a faster inventory turnover. 
A) If the inventory turnover ratio increases,the days to sell measure decreases. 
B) The days to sell measure can help managers make ordering decisions for inventory. 
C) A higher inventory turnover ratio indicates that inventory is moving more quickly from purchase to sale. 
D) It is rare for a company with a lower gross profit percentage to have a faster inventory turnover.

Question 16

Use the information above to answer the following question.If the company uses the FIFO method,what is the cost of its ending inventory?

Accepted Answer

A) $24 
B) $42 
C) $58 
D) $76 
A) $24 
B) $42 
C) $58 
D) $76

Question 17

Which of the following would be in the finished goods inventory of a company making cheese?

Accepted Answer

A) Milk and cream used to make the cheese. 
B) Cheese that has been made but is curing before being ready to sell. 
C) Cured cheese that is waiting to be shipped to retailers. 
D) Cured cheese that has been sold to retailers. 
A) Milk and cream used to make the cheese. 
B) Cheese that has been made but is curing before being ready to sell. 
C) Cured cheese that is waiting to be shipped to retailers. 
D) Cured cheese that has been sold to retailers.

Question 18

An adjustment to ending inventory under the lower of cost or market (LCM)rule would be least likely to be recorded by a company that sells:

Accepted Answer

A) a household staple like laundry detergent. 
B) a fad product like bathing suits. 
C) seasonal items like snow blowers. 
D) high-tech goods like Personal Digital Assistants. 
A) a household staple like laundry detergent. 
B) a fad product like bathing suits. 
C) seasonal items like snow blowers. 
D) high-tech goods like Personal Digital Assistants.

Question 19

Generally accepted accounting principles (GAAP)require that the inventory be reported at:

Accepted Answer

A) market value. 
B) historical cost. 
C) lower of cost or market. 
D) retail value. 
A) market value. 
B) historical cost. 
C) lower of cost or market. 
D) retail value.

Question 20

The inventory costing method that smoothes out changes in costs is

Accepted Answer

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

Which of the following will occur when inventory costs are decreasing?

Given the following information for Maynor Company in 2014,calculate the company's ending inventory and cost of goods sold using the following inventory costing methods,assuming the company uses a perpetual inventory system: a)Weighted Average b)FIFO c)LIFO

Use the information above to answer the following question.If the company uses the weighted average inventory costing method,what is the cost of its ending inventory?

On July 1,B.Darin Company sold merchandise costing $4,500 to S.Dee Company for $6,000,terms 2/10,n/30.Both companies use a perpetual inventory system.What is the journal entry that S.Dee Company will make on July 1?

Which one of the following statements regarding inventory is not true?

Use the information above to answer the following question.What is the amount of the gross profit?

An understatement of the beginning inventory balance causes:

Fill in the blanks below with the words "higher" and "lower" to indicate which inventory costing method causes the value to be higher and which causes it to be lower.Assume that the cost of merchandise is decreasing.

When a company uses a perpetual inventory system,purchase returns will be recorded by:

Carrying insufficient quantities of inventory on hand:

Which of the following would be in the raw materials inventory of a company making cheese?

Your company has 500 units in inventory that had been purchased for $12 each and that would currently cost $15 to replace.Your supplier has just announced the cost of these goods is rising to $16.50.

The net sales of a company is $300,000.The cost of goods available for sale is $280,000 and the gross profit percentage is 35%.What is the amount of ending inventory?

An understatement of beginning inventory causes net income to be understated.

Which of the following statements regarding inventory measures is

Use the information above to answer the following question.If the company uses the FIFO method,what is the cost of its ending inventory?

Which of the following would be in the finished goods inventory of a company making cheese?

An adjustment to ending inventory under the lower of cost or market (LCM)rule would be least likely to be recorded by a company that sells:

Generally accepted accounting principles (GAAP)require that the inventory be reported at:

The inventory costing method that smoothes out changes in costs is

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control, Cash, and Merchandise Sales

Receivables, Bad Debt Expense, and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Stockholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

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Exam 7: Inventories and Cost of Goods Sold

Which of the following will occur when inventory costs are decreasing?

Given the following information for Maynor Company in 2014,calculate the company's ending inventory and cost of goods sold using the following inventory costing methods,assuming the company uses a perpetual inventory system: a)Weighted Average b)FIFO c)LIFO

Use the information above to answer the following question.If the company uses the weighted average inventory costing method,what is the cost of its ending inventory?

On July 1,B.Darin Company sold merchandise costing $4,500 to S.Dee Company for $6,000,terms 2/10,n/30.Both companies use a perpetual inventory system.What is the journal entry that S.Dee Company will make on July 1?

Which one of the following statements regarding inventory is not true?

Use the information above to answer the following question.What is the amount of the gross profit?

An understatement of the beginning inventory balance causes:

Fill in the blanks below with the words "higher" and "lower" to indicate which inventory costing method causes the value to be higher and which causes it to be lower.Assume that the cost of merchandise is decreasing.

When a company uses a perpetual inventory system,purchase returns will be recorded by:

Carrying insufficient quantities of inventory on hand:

Which of the following would be in the raw materials inventory of a company making cheese?

Your company has 500 units in inventory that had been purchased for $12 each and that would currently cost $15 to replace.Your supplier has just announced the cost of these goods is rising to $16.50.

The net sales of a company is $300,000.The cost of goods available for sale is $280,000 and the gross profit percentage is 35%.What is the amount of ending inventory?

An understatement of beginning inventory causes net income to be understated.

Which of the following statements regarding inventory measures is

Use the information above to answer the following question.If the company uses the FIFO method,what is the cost of its ending inventory?

Which of the following would be in the finished goods inventory of a company making cheese?

An adjustment to ending inventory under the lower of cost or market (LCM)rule would be least likely to be recorded by a company that sells:

Generally accepted accounting principles (GAAP)require that the inventory be reported at:

The inventory costing method that smoothes out changes in costs is

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control, Cash, and Merchandise Sales

Receivables, Bad Debt Expense, and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Stockholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters