Exam 8: Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural Resources

For each of the following types of inventory, enter a letter to indicate the type of business in which the inventory is more likely to appear. Type of Business A. Retail B. Manufacturing Type of Inventory ____ 1. Raw materials. ____ 2. Merchandise. ____ 3. Finished goods. ____ 4. Work in progress.

The inventory turnover ratio measures the efficiency of inventory management.

On December 15, 20A, Toby Company accepted delivery of merchandise which it purchased on credit. As of December 31, 20A, the company had neither recorded the transaction nor included the merchandise in its inventory because the seller's invoice had not been received. The effect of this omission on its statement of financial position at December 31, 20A, (end of the accounting period) was which of the following?

When the average cost formula is applied in a periodic inventory system, a moving average cost per unit is calculated after each purchase.

Solve for the missing amounts:

If transportation costs are the responsibility of the buyer, they should be added to the cost of purchases for the period.

A change in the method of cost determination for inventory must be disclosed in the financial statements.

The lower of cost and net realizable value basis of valuing inventories ensures that inventories are

On March 10, Frazier Company received merchandise for resale from its normal supplier. The invoice price was $3,600 with terms of 2/10, n/30 for 100 units of Part #345. The invoice was paid on March 17. Freight costs were $120 and the company paid $108 of interest on a loan to buy the inventory. What is the unit cost that should be recorded for each of the 100 units of Part #345?

When a periodic inventory system is used, a sales transaction requires two journal entries, while under the perpetual system, a sales transaction requires only one journal entry.

An overstatement of the beginning inventory results in

How is the cost of goods sold calculated under the periodic method?

Maxell Company uses the periodic FIFO method to value inventory and had the followin transactions in the period. What are the cost of goods sold and ending inventory balances in dollars for the period?

Libby Company uses the periodic inventory system and applied FIFO inventory costing. At the end o the annual accounting period, December 31, 20D, the accounting records for the best selling item in inventory showed: Determine the following (show computations and round to the nearest dollar):

Goofy Company reported profit for 20A of $30,000, and in 20B $40,000 (both after income taxes at a 20% rate). It was discovered in 20C that the ending inventory for 20A was overstated by 8,000 (before any income tax effect). The correct profit (after income tax of 20%) should be: 20A $________ 20B $________

Joe Company sold merchandise with an invoice price of $1,000 to Gibbs, Inc., with terms of 2/10, n/30. Which of the following is the correct entry to record the purchase by Gibbs if the company uses the periodic inventory system and the gross method to record purchases?

The qualitative characteristic, reliability, is the primary consideration to a business considering changing its inventory costing method.

A large retail department store probably would use the specific identification inventory costing method for most of the items in its inventory.

If prices never changed, there would be no need for alternative inventory cost formulas.

Purchases discounts should be recorded as an addition to the cost of purchases in the calculation of cost of goods sold.