Exam 6: Inventories

If the unit price of inventory is increasing during a period, a company using the LIFO inventory method will show less gross profit for the period, than if it had used the FIFO inventory method.

Which of the following items will increase inventoriable costs for the buyer of goods?

A company just starting business made the following four inventory purchases in June: A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. The inventory method which results in the highest gross profit for June is

The gross profit method is based on the assumption that the rate of gross profit remains constant from one year to the next.

Two companies report the same cost of goods available for sale but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using

The ______________ method tracks the actual physical flow of each unit of inventory available for sale; however, management may be able to manipulate ______________ by using this method.

Netta Shutters has the following inventory information. A physical count of merchandise inventory on November 30 reveals that there are 90 units on hand. Assume a periodic inventory system is used. Ending inventory under FIFO is

Moroni Industries has the following inventory information. Assuming that a periodic inventory system is used, what is the amount allocated to ending inventory on a FIFO basis?

The inventory of Columbo Company was destroyed by fire on April 1. From an examination of the accounting records, the following data for the first three months of the year are obtained: Sales Revenue \ 185,000 Sales Returns and Allowances 5,000 Purchases 110,000 Freight-In 3,500 Purchase Returns and Allowances 4,000 Instructions Determine the merchandise lost by fire, assuming a beginning inventory of $50,000 and a gross profit rate of 40% on net sales.

Waegelein Company identifies the following items for possible inclusion in the physical inventory. Indicate whether each item should be included or excluded from the inventory taking. 1. Goods shipped on consignment by Waegelein to another company. 2. Goods in transit from a supplier shipped FOB destination. 3. Goods shipped via common carrier to a customer with terms FOB shipping point. 4. Goods held on consignment from another company.

Of the following companies, which one would not likely employ the specific identification method for inventory costing?

Finished goods are a classification of inventory for a manufacturer that are completed and ready for sale.

In a period of increasing prices, which inventory flow assumption will result in the lowest amount of income tax expense?

Inventories are estimated

Under the lower-of-cost-or-net realizable value basis, net realizable value is the net amount that a company expects to receive from the sale of inventory.

Errors occasionally occur when physically counting inventory items on hand. Identify the financial statement effects of an overstatement of the ending inventory in the current period. If the error is not corrected, how does it affect the financial statements for the following year?

GAAP defines net realizable value for lower-of-cost-or net realizable value essentially as

If the unit cost of inventory has continuously increased, the ______________, first-out inventory valuation method will result in a higher valued ending inventory than if the ______________, first-out method had been used.

Overstating ending inventory will overstate all of the following except

Inventories affect