Question 1

Which of the following statements regarding inventory calculations is true?

Accepted Answer

A) Beginning inventory + net purchases - ending inventory = cost of goods sold. 
B) Goods available for sale + ending inventory = cost of goods sold. 
C) Beginning inventory + net purchases - ending inventory = goods available for sale. 
D) Goods available for sale + cost of goods sold = ending inventory. 
A) Beginning inventory + net purchases - ending inventory = cost of goods sold. 
B) Goods available for sale + ending inventory = cost of goods sold. 
C) Beginning inventory + net purchases - ending inventory = goods available for sale. 
D) Goods available for sale + cost of goods sold = ending inventory.

Question 2

In a period of falling prices,the inventory costing method that will cause the company to have the lowest cost of goods sold is

Accepted Answer

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

Question 3

Maxell Company uses the periodic FIFO method to assign costs to inventory and cost of goods sold.Given the following information,what would be reported as the cost of goods sold (COGS)and ending inventory balances for the period?

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 4

In applying the lower of cost or market rule to report inventory,"market" is defined as the current selling price.

Accepted Answer

A) True 
 B)False

Question 5

Generally,which inventory costing method approximates most closely the current cost for each of the following?
A.Option A
B.Option B
C.Option C
D.Option D

Accepted Answer

@#IMG-DLM& A.
Option

Question 6

Use the information above to answer the following question.Which of the following statements is true?

Accepted Answer

A) The sales revenue is $1,500. 
B) The gross profit is $1,500. 
C) The cost of goods sold is $1,500. 
D) The net income is $1,500. 
A) The sales revenue is $1,500. 
B) The gross profit is $1,500. 
C) The cost of goods sold is $1,500. 
D) The net income is $1,500.

Question 7

The choice of an inventory costing method usually has no impact on gross profit or cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 8

Inventory levels increase by 10% at your company during the fourth quarter.Based on this increase,which of the following statements is true?

Accepted Answer

A) This is always good news because inventories are an asset to the company. 
B) This could be good news if the company is ordering more goods because sales appear to be rising. 
C) This could be bad news if the company is ordering more goods because unit costs are falling. 
D) This is always bad news because higher inventories mean higher costs. 
A) This is always good news because inventories are an asset to the company. 
B) This could be good news if the company is ordering more goods because sales appear to be rising. 
C) This could be bad news if the company is ordering more goods because unit costs are falling. 
D) This is always bad news because higher inventories mean higher costs.

Question 9

Given the following information for Maynor Company in 2014,calculate the company's ending inventory,cost of goods sold,and gross profit,using the following inventory costing methods,assuming the company uses a periodic inventory system:
a)Weighted Average.
b)FIFO.
c)LIFO.
d)Specific Identification.(The ending inventory consisted of 15 @ $66;10 @ $70;and 5 @ $76. )

Accepted Answer

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

Question 10

A one-time error in the application of the lower of cost or market (LCM)rule in the current period distorts financial results for the current accounting period

Accepted Answer

A) only. 
B) and the period before. 
C) and the period after. 
D) and all periods after. 
A) only. 
B) and the period before. 
C) and the period after. 
D) and all periods after.

Question 11

Use the information above to answer the following question.What is the journal entry to be recorded by E.Flynn Company on November 15?

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 12

The assignment of costs to cost of goods sold and to inventory using the weighted average method usually yields different results depending on whether a perpetual or a periodic system is used.

Accepted Answer

A) True 
 B)False

Question 13

An understatement of the ending inventory balance will cause:

Accepted Answer

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

Question 14

When the replacement cost of inventory drops below the cost recorded in the financial records,applying the lower of cost or market (LCM)rule causes:

Accepted Answer

A) a decrease in cost of goods sold. 
B) no change in net income,other things being equal. 
C) a reduction in the book value of total assets. 
D) an increase in net income. 
A) a decrease in cost of goods sold. 
B) no change in net income,other things being equal. 
C) a reduction in the book value of total assets. 
D) an increase in net income.

Question 15

Given the following information for Maynor Company in 2014,calculate the company's ending inventory,cost of goods sold,and gross profit,using the following inventory costing methods,assuming the company uses a periodic inventory system:
a)Weighted Average.
b)FIFO.
c)LIFO.
d)Specific Identification.(The ending inventory consisted of 15 @ $66;10 @ $70;and 5 @ $76. )

Accepted Answer

a)Weighted Average:
Average Cost $5,220/

Question 16

The inventory costing method that results in the lowest taxable income in a period of inflation is the FIFO method.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) Inventory may include materials used in producing goods for sale. 
B) Companies that are manufacturers list their finished goods,work-in-process and raw materials inventory separately. 
C) Inventory is classified as a long-term asset on the balance sheet. 
D) Merchandisers buy inventory in finished form ready for resale. 
A) Inventory may include materials used in producing goods for sale. 
B) Companies that are manufacturers list their finished goods,work-in-process and raw materials inventory separately. 
C) Inventory is classified as a long-term asset on the balance sheet. 
D) Merchandisers buy inventory in finished form ready for resale.

Question 18

Use the information above to answer the following question.If the company uses the LIFO 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 19

A company had been selling its product for $20 per unit,but recently lowered the selling price to $15 per unit.The company's current inventory consists of 200 units purchased at $16 per unit.The replacement cost of this merchandise is currently $13 per unit.At what amount should the company's inventory be reported on the balance sheet under the lower of cost or market rule?

Accepted Answer

A) $2,600 
B) $3,200 
C) $3,000 
D) $4,000 
A) $2,600 
B) $3,200 
C) $3,000 
D) $4,000

Question 20

In each accounting period,a manager can select the inventory costing method that yields the highest net income.

Accepted Answer

A) True 
 B)False

Which of the following statements regarding inventory calculations is true?

In a period of falling prices,the inventory costing method that will cause the company to have the lowest cost of goods sold is

Maxell Company uses the periodic FIFO method to assign costs to inventory and cost of goods sold.Given the following information,what would be reported as the cost of goods sold (COGS)and ending inventory balances for the period?

In applying the lower of cost or market rule to report inventory,"market" is defined as the current selling price.

Generally,which inventory costing method approximates most closely the current cost for each of the following? A.Option A B.Option B C.Option C D.Option D

Use the information above to answer the following question.Which of the following statements is true?

The choice of an inventory costing method usually has no impact on gross profit or cost of goods sold.

Inventory levels increase by 10% at your company during the fourth quarter.Based on this increase,which of the following statements is true?

A one-time error in the application of the lower of cost or market (LCM)rule in the current period distorts financial results for the current accounting period

Use the information above to answer the following question.What is the journal entry to be recorded by E.Flynn Company on November 15?

The assignment of costs to cost of goods sold and to inventory using the weighted average method usually yields different results depending on whether a perpetual or a periodic system is used.

An understatement of the ending inventory balance will cause:

When the replacement cost of inventory drops below the cost recorded in the financial records,applying the lower of cost or market (LCM)rule causes:

The inventory costing method that results in the lowest taxable income in a period of inflation is the FIFO method.

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

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

In each accounting period,a manager can select the inventory costing method that yields the highest net income.

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

Exam 7: Inventories and Cost of Goods Sold

Which of the following statements regarding inventory calculations is true?

In a period of falling prices,the inventory costing method that will cause the company to have the lowest cost of goods sold is

Maxell Company uses the periodic FIFO method to assign costs to inventory and cost of goods sold.Given the following information,what would be reported as the cost of goods sold (COGS)and ending inventory balances for the period?

In applying the lower of cost or market rule to report inventory,"market" is defined as the current selling price.

Generally,which inventory costing method approximates most closely the current cost for each of the following? A.Option A B.Option B C.Option C D.Option D

Use the information above to answer the following question.Which of the following statements is true?

The choice of an inventory costing method usually has no impact on gross profit or cost of goods sold.

Inventory levels increase by 10% at your company during the fourth quarter.Based on this increase,which of the following statements is true?

A one-time error in the application of the lower of cost or market (LCM)rule in the current period distorts financial results for the current accounting period

Use the information above to answer the following question.What is the journal entry to be recorded by E.Flynn Company on November 15?

The assignment of costs to cost of goods sold and to inventory using the weighted average method usually yields different results depending on whether a perpetual or a periodic system is used.

An understatement of the ending inventory balance will cause:

When the replacement cost of inventory drops below the cost recorded in the financial records,applying the lower of cost or market (LCM)rule causes:

The inventory costing method that results in the lowest taxable income in a period of inflation is the FIFO method.

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

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

In each accounting period,a manager can select the inventory costing method that yields the highest net income.

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