Question 1

Accounting principles require that inventory be reported at the market value (cost)of replacing inventory when market value is lower than cost.

Accepted Answer

A) True 
 B)False

Question 2

Strods Company reported the following purchases and sales of its only product.Strods uses a perpetual inventory system.Determine the cost assigned to ending inventory using LIFO.

Accepted Answer

A) $5,440 
B) $2,460 
C) $2,590 
D) $2,980 
E) $2,860 
A) $5,440 
B) $2,460 
C) $2,590 
D) $2,980 
E) $2,860

Question 3

Merchandise inventory includes:

Accepted Answer

A) All goods owned by a company and held for sale. 
B) All goods in transit. 
C) All goods on consignment. 
D) Only damaged goods. 
E) Only non-damaged goods. 
A) All goods owned by a company and held for sale. 
B) All goods in transit. 
C) All goods on consignment. 
D) Only damaged goods. 
E) Only non-damaged goods.

Question 4

The inventory valuation method that tends to smooth out erratic changes in costs is:

Accepted Answer

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

Question 5

Goods on consignment are goods shipped by their owner,called the consignor,to another party called the consignee.The consignee sells goods for the owner.

Accepted Answer

A) True 
 B)False

Question 6

LIFO assumes that inventory costs flow in the order incurred.

Accepted Answer

A) True 
 B)False

Question 7

Avanti purchases inventory from overseas and incurs the following costs: the merchandise cost is $50,000,credit terms 2/10,n/30 that apply only to the $50,000; FOB shipping point freight charges are $1,500; insurance during transit is $500; and import duties are $1,000.Avanti paid within the discount period and incurred additional costs of $1,200 for advertising and $5,000 for sales commissions.Compute the cost that should be assigned to the inventory.

Accepted Answer

A) $50,000 
B) $53,000 
C) $52,000 
D) $51,500 
E) $53,200 
A) $50,000 
B) $53,000 
C) $52,000 
D) $51,500 
E) $53,200

Question 8

A company uses the periodic inventory system and had the following activity during the current monthly period.   Using the weighted-average inventory method,the company's ending inventory would be:

Accepted Answer

A) $2,000 
B) $2,200 
C) $2,250 
D) $2,400 
E) $4,400 
A) $2,000 
B) $2,200 
C) $2,250 
D) $2,400 
E) $4,400

Question 9

A company normally sells its product for $20 per unit.However,the selling price has fallen to $15 per unit.This company's current inventory consists of 200 units purchased at $16 per unit.Replacement cost has now fallen to $13 per unit.What is the amount of the lower cost of market adjustment the company must make as a result of this decline in value?

Accepted Answer

A) $1,000. 
B) $1,400. 
C) $400. 
D) $600. 
E) $800. 
A) $1,000. 
B) $1,400. 
C) $400. 
D) $600. 
E) $800.

Question 10

Hasham purchases inventory from overseas and incurs the following costs: the merchandise cost is $80,000,credit terms 1/10,n/30,applicable only to the $80,000; FOB shipping point freight charges are $2,500; insurance during transit is $300; and import duties are $1,500.Hasham paid within the discount period.Compute the cost that should be assigned to the inventory.

Accepted Answer

A) $83,500 
B) $79,200 
C) $81,700 
D) $84,300 
E) $81,000 
A) $83,500 
B) $79,200 
C) $81,700 
D) $84,300 
E) $81,000

Question 11

Use the following information for Shafer Company to compute inventory turnover for year 2.

Accepted Answer

A) 9.98 
B) 5.08 
C) 4.99 
D) 8.30 
E) 8.44 
A) 9.98 
B) 5.08 
C) 4.99 
D) 8.30 
E) 8.44

Question 12

Overstating beginning inventory will understate cost of goods sold and net income.

Accepted Answer

A) True 
 B)False

Question 13

What is the effect of an error in the ending inventory balance on the accounts reported in the income statement?

Accepted Answer

An inventory error causes misstatements

Question 14

The ________ is a measure of how quickly a merchandiser sells its merchandise inventory.

Accepted Answer

The answer of The ________ is a measure of how...

Question 15

A company had beginning inventory of 10 units at a cost of $20 each on March 1.On March 2,it purchased 10 units at $22 each.On March 6 it purchased 6 units at $25 each.On March 8,it sold 22 units for $54 each.Using the perpetual FIFO inventory method,what was the cost of the 22 units sold?

Accepted Answer

A) $470 
B) $490 
C) $450 
D) $570 
E) $520 
A) $470 
B) $490 
C) $450 
D) $570 
E) $520

Question 16

Calculate the ending inventory using FIFO for a company that uses a perpetual inventory system,using the information given below.

Accepted Answer

The answer of Calculate the ending inventory using FIFO for...

Question 17

An overstatement of ending inventory will cause an overstatement of assets and an understatement of equity on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 18

Starlight Company has inventory of 8 units at a cost of $200 each on October 1.On October 2,it purchased 20 units at $205 each.11 units are sold on October 4.Using the perpetual LIFO inventory method,what is the value of inventory after the October 4 sale?

Accepted Answer

A) $3,485. 
B) $3,445. 
C) $3,500. 
D) $3,472. 
E) $3,461. 
A) $3,485. 
B) $3,445. 
C) $3,500. 
D) $3,472. 
E) $3,461.

Question 19

On April 24 of the current year,The Memphis Pecan Company experienced a tornado that destroyed the company's entire inventory.At the beginning of April,the company reported beginning inventory of $226,750.Inventory purchased during April (until the date of the tornado)was $197,800.Sales for the month of April through April 24 were $642,500.Assuming the company's typical gross profit ratio is 50%,estimate the amount of inventory destroyed in the tornado.

Accepted Answer

A) $212,275 
B) $103,300 
C) $217,950 
D) $321,250 
E) $157,788 
A) $212,275 
B) $103,300 
C) $217,950 
D) $321,250 
E) $157,788

Question 20

Physical counts of inventory:

Accepted Answer

A) Are not necessary under the perpetual system. 
B) Are necessary to adjust the Inventory account to the actual inventory available. 
C) Must be taken at least once a month. 
D) Requires the use of hand-held portable computers. 
E) Are not necessary under the cost-to benefit constraint. 
A) Are not necessary under the perpetual system. 
B) Are necessary to adjust the Inventory account to the actual inventory available. 
C) Must be taken at least once a month. 
D) Requires the use of hand-held portable computers. 
E) Are not necessary under the cost-to benefit constraint.

Accounting principles require that inventory be reported at the market value (cost)of replacing inventory when market value is lower than cost.

Strods Company reported the following purchases and sales of its only product.Strods uses a perpetual inventory system.Determine the cost assigned to ending inventory using LIFO.

Merchandise inventory includes:

The inventory valuation method that tends to smooth out erratic changes in costs is:

Goods on consignment are goods shipped by their owner,called the consignor,to another party called the consignee.The consignee sells goods for the owner.

LIFO assumes that inventory costs flow in the order incurred.

A company uses the periodic inventory system and had the following activity during the current monthly period. Using the weighted-average inventory method,the company's ending inventory would be:

Use the following information for Shafer Company to compute inventory turnover for year 2.

Overstating beginning inventory will understate cost of goods sold and net income.

What is the effect of an error in the ending inventory balance on the accounts reported in the income statement?

The ________ is a measure of how quickly a merchandiser sells its merchandise inventory.

A company had beginning inventory of 10 units at a cost of $20 each on March 1.On March 2,it purchased 10 units at $22 each.On March 6 it purchased 6 units at $25 each.On March 8,it sold 22 units for $54 each.Using the perpetual FIFO inventory method,what was the cost of the 22 units sold?

Calculate the ending inventory using FIFO for a company that uses a perpetual inventory system,using the information given below.

An overstatement of ending inventory will cause an overstatement of assets and an understatement of equity on the balance sheet.

Starlight Company has inventory of 8 units at a cost of $200 each on October 1.On October 2,it purchased 20 units at $205 each.11 units are sold on October 4.Using the perpetual LIFO inventory method,what is the value of inventory after the October 4 sale?

Physical counts of inventory:

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters

Exam 5: Reporting and Analyzing Inventories

Accounting principles require that inventory be reported at the market value (cost)of replacing inventory when market value is lower than cost.

Strods Company reported the following purchases and sales of its only product.Strods uses a perpetual inventory system.Determine the cost assigned to ending inventory using LIFO.

Merchandise inventory includes:

The inventory valuation method that tends to smooth out erratic changes in costs is:

Goods on consignment are goods shipped by their owner,called the consignor,to another party called the consignee.The consignee sells goods for the owner.

LIFO assumes that inventory costs flow in the order incurred.

A company uses the periodic inventory system and had the following activity during the current monthly period. Using the weighted-average inventory method,the company's ending inventory would be:

Use the following information for Shafer Company to compute inventory turnover for year 2.

Overstating beginning inventory will understate cost of goods sold and net income.

What is the effect of an error in the ending inventory balance on the accounts reported in the income statement?

The ________ is a measure of how quickly a merchandiser sells its merchandise inventory.

A company had beginning inventory of 10 units at a cost of $20 each on March 1.On March 2,it purchased 10 units at $22 each.On March 6 it purchased 6 units at $25 each.On March 8,it sold 22 units for $54 each.Using the perpetual FIFO inventory method,what was the cost of the 22 units sold?

Calculate the ending inventory using FIFO for a company that uses a perpetual inventory system,using the information given below.

An overstatement of ending inventory will cause an overstatement of assets and an understatement of equity on the balance sheet.

Starlight Company has inventory of 8 units at a cost of $200 each on October 1.On October 2,it purchased 20 units at $205 each.11 units are sold on October 4.Using the perpetual LIFO inventory method,what is the value of inventory after the October 4 sale?

Physical counts of inventory:

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters