Question 1

What are the advantages of using dollar-value LIFO

Accepted Answer

The advantages are to the use of dollar-

Question 2

The Henry Store has the following data for inventory: $$\begin{array} { | l | r | r | } 
\hline & \text { Cost } & \text { Retail } \
\hline \text { Inventory, January 1 } & \$ 300,000 & \$ 450,000 \
\hline \text { Purchases for January } & 340,000 & 480,000 \
\hline \text { Sales for January } & & 440,000 \
\hline
\end{array}$$
 The store uses the dollar-value LIFO retail method. The price index for the year is 1.08. The price index that pertains to the beginning inventory is 1.00. Round all ratios to four decimal places. What is the cost of the ending inventory at January 31? (Round any percentages to two decimal places, X.XX%, and your final answer to the nearest dollar.)

Accepted Answer

A)  $300,000 
B)  $302,833 
C)  $453,704 
D)  $490,000 
A)  $300,000 
B)  $302,833 
C)  $453,704 
D)  $490,000

Question 3

Sikich Company has the following data available: $$\begin{array} { l c c c } 
\text { Transaction } & \text { Units Purchased } & \text { Unit Cost } & \text { Units Sold } \
\text { Beginning Inventory } & 650 & \$ 18 & \
\text { Oct. 1 Purchase } & 325 & 31 & \
\text { Oct. 10 Sale } & & & 425 \
\text { Oct. 14 Purchase } & 450 & 33 & \
\text { Oct. 20 Sale } & & & 600 \
\text { Oct. 22 Purchase } & 400 & 37 & \
\text { Oct. 29 Sale } & & & 525
\end{array}$$ 
If Sikich Company uses a perpetual FIFO inventory system, the cost of goods sold for the month is ________.

Accepted Answer

A)  $57,350 
B)  $9,075 
C)  $41,250 
D)  $10,175 
A)  $57,350 
B)  $9,075 
C)  $41,250 
D)  $10,175

Question 4

Which inventory costing method most closely approximates current cost for each of the following line items on the financial statements?

Accepted Answer

A)  $$\begin{array} { | c | c | } 
\hline \text { Ending Inventory } & \text { Cost of Goods Sold } \
\hline \text { FIFO } & \text { FIFO } \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | c | } 
\hline \text { Ending Inventory } & \text { Cost of Goods Sold } \
\hline \text { LIFO } & \text { LIFO } \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | c | } 
\hline \text { Ending Inventory } & \text { Cost of Goods Sold } \
\hline \text { FIFO } & \text { LIFO } \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | c | } 
\hline \text { Ending Inventory } & \text { Cost of Goods Sold } \
\hline \text { LIFO } & \text { FIFO } \
\hline
\end{array}$$ 
A)  $$\begin{array} { | c | c | } 
\hline \text { Ending Inventory } & \text { Cost of Goods Sold } \
\hline \text { FIFO } & \text { FIFO } \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | c | } 
\hline \text { Ending Inventory } & \text { Cost of Goods Sold } \
\hline \text { LIFO } & \text { LIFO } \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | c | } 
\hline \text { Ending Inventory } & \text { Cost of Goods Sold } \
\hline \text { FIFO } & \text { LIFO } \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | c | } 
\hline \text { Ending Inventory } & \text { Cost of Goods Sold } \
\hline \text { LIFO } & \text { FIFO } \
\hline
\end{array}$$

Question 5

Inventory disclosures require information about any inventory financing arrangements.

Accepted Answer

A) True 
 B)False

Question 6

Freight-out costs are included as part of inventory costs.

Accepted Answer

A) True 
 B)False

Question 7

The inventory allocation method that assigns the most recent costs to ending inventory and the oldest costs to cost of goods sold is the ________.

Accepted Answer

A)  specific identification method 
B)  LIFO method 
C)  moving-average method 
D)  FIFO method 
A)  specific identification method 
B)  LIFO method 
C)  moving-average method 
D)  FIFO method

Question 8

When costs are increasing, and inventory levels are stable, a company will report ________.

Accepted Answer

A)  lower cost of goods sold under LIFO than FIFO 
B)  lower inventory under FIFO than LIFO 
C)  higher net income under LIFO than FIFO 
D)  lower net income under LIFO than FIFO 
A)  lower cost of goods sold under LIFO than FIFO 
B)  lower inventory under FIFO than LIFO 
C)  higher net income under LIFO than FIFO 
D)  lower net income under LIFO than FIFO

Question 9

1. What is the LIFO conformity rule?
2. Why is LIFO used by so many companies?
3. What is the disadvantage of LIFO?

Accepted Answer

1. The LIFO conformity rule requires tha

Question 10

The following information is available for the past year for a retail store: $$\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 121,000 \
\hline \text { Sales Returns } & \$ 1,000 \
\hline \text { Markups } & \$ 11,000 \
\hline \text { Markup cancellations } & \$ 1,000 \
\hline \text { Markdowns } & \$ 9,000 \
\hline \text { Purchases (at cost) } & \$ 40,000 \
\hline \text { Purchases (at retail) } & \$ 90,000 \
\hline \text { Beginning inventory (at cost) } & \$ 32,000 \
\hline \text { Beginning inventory (at retail) } & \$ 42,000 \
\hline
\end{array}$$ 
What is the cost-to-retail ratio to estimate the cost of ending inventory using the conventional retail method? (Round cost-to-retail ratios to four decimal places.)

Accepted Answer

A)  50.7% 
B)  76.19% 
C)  54.55% 
D)  59.02% 
A)  50.7% 
B)  76.19% 
C)  54.55% 
D)  59.02%

Question 11

Michael Jones Company has adopted the dollar-value LIFO method in 2018. At December 31, 2018, the ending inventory at dollar-value LIFO is $103,000, with a price index of 1.00. At December 31, 2019, the ending inventory using FIFO is $125,000. The price index is 1.3 in 2019. Round all dollar amounts to the nearest dollar. What is the ending inventory using dollar-value LIFO at December 31, 2019?

Accepted Answer

A)  $103,000 
B)  $199,154 
C)  $96,154 
D)  $125,000 
A)  $103,000 
B)  $199,154 
C)  $96,154 
D)  $125,000

Question 12

At December 31, the Selig Company has ending inventory with a historical cost of $634,000. Assume the company uses the FIFO perpetual inventory system. The net realizable value is $612,000. The normal profit on this inventory is $50,000. Before any adjustments at the end of the period, the cost of goods sold account has a balance of $900,000. Following U.S. GAAP, which journal entry is required on December 31 to adjust the ending balance of inventory if the direct method is used?

Accepted Answer

A)  Debit Cost of Goods Sold for $28,000 and credit Inventory for $28,000. 
B)  Debit Inventory for $28,000 and credit Cost of Goods Sold for $28,000. 
C)  Debit Cost of Goods Sold for $22,000 and credit Inventory for $22,000. 
D)  Debit Inventory for $22,000 and credit Cost of Goods Sold for $22,000. 
A)  Debit Cost of Goods Sold for $28,000 and credit Inventory for $28,000. 
B)  Debit Inventory for $28,000 and credit Cost of Goods Sold for $28,000. 
C)  Debit Cost of Goods Sold for $22,000 and credit Inventory for $22,000. 
D)  Debit Inventory for $22,000 and credit Cost of Goods Sold for $22,000.

Question 13

The flow of a manufacturer's product costs through the inventory accounts is ________.

Accepted Answer

A)  Work-in-Process Inventory, Cost of Goods Sold, and Finished Goods Inventory 
B)  Raw Materials Inventory, Cost of Goods Sold, and Finished Goods Inventory 
C)  Raw Materials Inventory, Finished Goods Inventory, and Work-in-Process Inventory 
D)  Raw Materials Inventory, Work-in-Process Inventory, and Finished Goods Inventory 
A)  Work-in-Process Inventory, Cost of Goods Sold, and Finished Goods Inventory 
B)  Raw Materials Inventory, Cost of Goods Sold, and Finished Goods Inventory 
C)  Raw Materials Inventory, Finished Goods Inventory, and Work-in-Process Inventory 
D)  Raw Materials Inventory, Work-in-Process Inventory, and Finished Goods Inventory

Question 14

Farm Tools Inc. (FTI) uses the LIFO retail inventory method for inventory costing. It has beginning inventory at a cost of $20,000 with a retail value of $50,000. During the year, FTI purchased inventory with a cost basis of $120,000 and a retail basis of $200,000. It had net markups of $6,000 and net markdowns of $12,000. FTI has net sales of $150,000. What is the cost of FTI's ending inventory using the LIFO retail inventory method? (Use two decimal places for percentages. Round final answer to nearest dollar.)

Accepted Answer

$47,218
 \[\begin{array} { | l | r | r |

Question 15

Assume inventory costs are increasing over time and inventory levels are stable. Which inventory method results in a higher net income and a higher ending inventory?

Accepted Answer

A)  FIFO 
B)  average cost 
C)  LIFO 
D)  conventional retail 
A)  FIFO 
B)  average cost 
C)  LIFO 
D)  conventional retail

Question 16

Destiny Industries reports beginning inventory of $254,000, purchases of $559,000, and ending inventory of $198,000. What is the cost of goods sold?

Accepted Answer

A)  $813,000 
B)  $503,000 
C)  $615,000 
D)  $1,011,000 
A)  $813,000 
B)  $503,000 
C)  $615,000 
D)  $1,011,000

Question 17

Sampe Company has the following data available: $$\begin{array} { | l | c | c | c | } 
\hline \text { Transaction } & \text { Units Purchased } & \text { Unit Cost } & \text { Units Sold } \
\hline \text { Beginning Inventory } & 400 & \$ 10 & \
\hline \text { March 1 Purchase } & 200 & \$ 13 & \
\hline \text { April 25 Sale } & & & 350 \
\hline \text {June 10 Purchase } & 300 & \$ 14 & \
\hline \text { July 20 Sale } & & & 250 \
\hline \text { October 30 Purchase } & 350 & \$ 18 & \
\hline \text { December 15 Sale } & & & 400 \
\hline
\end{array}$$
 If Sampe Company uses a perpetual FIFO inventory system, the cost of goods sold for the year is ________.

Accepted Answer

A)  $13,950 
B)  $12,350 
C)  $12,600 
D)  $10,000 
A)  $13,950 
B)  $12,350 
C)  $12,600 
D)  $10,000

Question 18

Donaldson Corporation uses a periodic inventory system. On January 1, inventory is $253,000. On April 5, Donaldson sells inventory with a selling price of $75,000 on account. The cost of the inventory sold is $50,000. The journal entry (entries) to record the sale is (are) ________.

Accepted Answer

A)  debit Cash and credit Sales Revenue 
B)  debit Accounts Receivable and credit Sales Revenue; debit Cost of Goods Sold and credit Inventory 
C)  debit Cash and Cost of Goods Sold and credit Sales Revenue and Inventory 
D)  debit Accounts Receivable and credit Sales Revenue 
A)  debit Cash and credit Sales Revenue 
B)  debit Accounts Receivable and credit Sales Revenue; debit Cost of Goods Sold and credit Inventory 
C)  debit Cash and Cost of Goods Sold and credit Sales Revenue and Inventory 
D)  debit Accounts Receivable and credit Sales Revenue

Question 19

When following U.S. GAAP, which of the following statements is not correct regarding inventory write-downs using the lower-of-cost-or-market rule?

Accepted Answer

A)  If the write-down is significant, the direct method is preferred because the loss is disclosed separately from the cost of goods sold. 
B)  Firms can use one of two methods to write down inventory to market: the direct method or the indirect method. 
C)  The direct method writes off a loss to the inventory account and records that loss in the cost of goods sold on the income statement. 
D)  The indirect method reports the loss as a separate line item on the income statement within income from continuing operations. 
A)  If the write-down is significant, the direct method is preferred because the loss is disclosed separately from the cost of goods sold. 
B)  Firms can use one of two methods to write down inventory to market: the direct method or the indirect method. 
C)  The direct method writes off a loss to the inventory account and records that loss in the cost of goods sold on the income statement. 
D)  The indirect method reports the loss as a separate line item on the income statement within income from continuing operations.

Question 20

Meyer Co. has the following information available: $$\begin{array} { | l | r | } 
\hline \text { Cost of inventory } & \$ 56,000 \
\hline \text { Freight-in } & 6,000 \
\hline \text { Freight-out } & 2,500 \
\hline \text { Packaging costs } & 550 \
\hline \text { Handling costs } & 700 \
\hline
\end{array}$$ 
What amount of inventory should the company report on the balance sheet?

Accepted Answer

A)  $65,750 
B)  $63,250 
C)  $59,750 
D)  $57,250 
A)  $65,750 
B)  $63,250 
C)  $59,750 
D)  $57,250

What are the advantages of using dollar-value LIFO

Which inventory costing method most closely approximates current cost for each of the following line items on the financial statements?

Inventory disclosures require information about any inventory financing arrangements.

Freight-out costs are included as part of inventory costs.

The inventory allocation method that assigns the most recent costs to ending inventory and the oldest costs to cost of goods sold is the ________.

When costs are increasing, and inventory levels are stable, a company will report ________.

1. What is the LIFO conformity rule? 2. Why is LIFO used by so many companies? 3. What is the disadvantage of LIFO?

The flow of a manufacturer's product costs through the inventory accounts is ________.

Assume inventory costs are increasing over time and inventory levels are stable. Which inventory method results in a higher net income and a higher ending inventory?

Destiny Industries reports beginning inventory of $254,000, purchases of $559,000, and ending inventory of $198,000. What is the cost of goods sold?

Donaldson Corporation uses a periodic inventory system. On January 1, inventory is $253,000. On April 5, Donaldson sells inventory with a selling price of $75,000 on account. The cost of the inventory sold is $50,000. The journal entry (entries) to record the sale is (are) ________.

When following U.S. GAAP, which of the following statements is not correct regarding inventory write-downs using the lower-of-cost-or-market rule?

Meyer Co. has the following information available: Cost of inventory \ 56,000 Freight-in 6,000 Freight-out 2,500 Packaging costs 550 Handling costs 700 What amount of inventory should the company report on the balance sheet?

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

Extenssion: Ol Revenue Recognition Previous Standard

Short-Term Operating Assets: Cash and Receivables

Long-Term Operating Assets: Acquisition, Cost Allocation

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Leases

Extension: Ol Accounting for Leases Current Standard

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

The Statement of Cash Flows

Filters

Exam 10: Short-Term Operating Assets: Inventory

What are the advantages of using dollar-value LIFO

Which inventory costing method most closely approximates current cost for each of the following line items on the financial statements?

Inventory disclosures require information about any inventory financing arrangements.

Freight-out costs are included as part of inventory costs.

The inventory allocation method that assigns the most recent costs to ending inventory and the oldest costs to cost of goods sold is the ________.

When costs are increasing, and inventory levels are stable, a company will report ________.

1. What is the LIFO conformity rule? 2. Why is LIFO used by so many companies? 3. What is the disadvantage of LIFO?

The flow of a manufacturer's product costs through the inventory accounts is ________.

Assume inventory costs are increasing over time and inventory levels are stable. Which inventory method results in a higher net income and a higher ending inventory?

Destiny Industries reports beginning inventory of $254,000, purchases of $559,000, and ending inventory of $198,000. What is the cost of goods sold?

Donaldson Corporation uses a periodic inventory system. On January 1, inventory is $253,000. On April 5, Donaldson sells inventory with a selling price of $75,000 on account. The cost of the inventory sold is $50,000. The journal entry (entries) to record the sale is (are) ________.

When following U.S. GAAP, which of the following statements is not correct regarding inventory write-downs using the lower-of-cost-or-market rule?

Meyer Co. has the following information available: Cost of inventory \ 56,000 Freight-in 6,000 Freight-out 2,500 Packaging costs 550 Handling costs 700 What amount of inventory should the company report on the balance sheet?

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

Extenssion: Ol Revenue Recognition Previous Standard

Short-Term Operating Assets: Cash and Receivables

Long-Term Operating Assets: Acquisition, Cost Allocation

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Leases

Extension: Ol Accounting for Leases Current Standard

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

The Statement of Cash Flows

Filters