Question 1

In a period of rising prices, the costs allocated to ending inventory may be understated in the

Accepted Answer

A)  average-cost method. 
B)  FIFO method. 
C)  gross profit method. 
D)  LIFO method. 
A)  average-cost method. 
B)  FIFO method. 
C)  gross profit method. 
D)  LIFO method.

Question 2

For each of the independent events listed below, analyze the impact on the indicated items at the end of the current year by placing the appropriate code letter in the box under each item.
Code: O = item is overstated
U = item is understated
NA = item is not affected

Accepted Answer

The answer of For each of the independent events listed...

Question 3

Inventoriable costs include all of the following except the

Accepted Answer

A)  freight costs incurred when buying inventory. 
B)  costs of the purchasing and warehousing departments. 
C)  cost of the beginning inventory. 
D)  cost of goods purchased. 
A)  freight costs incurred when buying inventory. 
B)  costs of the purchasing and warehousing departments. 
C)  cost of the beginning inventory. 
D)  cost of goods purchased.

Question 4

Under the lower-of-cost-or-net realizable value basis in valuing inventory, net realizable value is the

Accepted Answer

A)  net amount a company expects to receive from the sale of inventory. 
B)  selling price. 
C)  historical cost plus 10%. 
D)  selling price less markup. 
A)  net amount a company expects to receive from the sale of inventory. 
B)  selling price. 
C)  historical cost plus 10%. 
D)  selling price less markup.

Question 5

The lower-of-cost-or-net realizable value (LCNRV) basis may be used with all of the following methods except

Accepted Answer

A)  average cost. 
B)  FIFO. 
C)  LIFO. 
D)  The LCM basis may be used with all of these. 
A)  average cost. 
B)  FIFO. 
C)  LIFO. 
D)  The LCM basis may be used with all of these.

Question 6

Eneri Company's inventory records show the following data:   A physical inventory on December 31 shows 4,000 units on hand. Eneri sells the units for $13 each. The company has an effective tax rate of 20%. Eneri uses the periodic inventory method. Under the LIFO method, cost of goods sold is

Accepted Answer

A)  $28,000. 
B)  $169,200. 
C)  $173,040. 
D)  $178,000. 
A)  $28,000. 
B)  $169,200. 
C)  $173,040. 
D)  $178,000.

Question 7

Inventory turnover is calculated as cost of goods sold divided by ending inventory.

Accepted Answer

A) True 
 B)False

Question 8

This information is available for Eaton's Photo Corporation for 2017 and 2018.   Instructions
Calculate inventory turnover, days in inventory, and gross profit rate for Eaton's Photo Corporation for 2017 and 2018. Comment on any trends.

Accepted Answer

@#IMG-DLM& The inventory turnover decreased by app

Question 9

If a company has no beginning inventory and the unit cost of inventory items does not change during the year, the value assigned to the ending inventory will be the same under LIFO and average cost flow assumptions.

Accepted Answer

A) True 
 B)False

Question 10

The term "FOB" denotes

Accepted Answer

A)  free on board. 
B)  freight on board. 
C)  free only (to) buyer. 
D)  freight charge on buyer. 
A)  free on board. 
B)  freight on board. 
C)  free only (to) buyer. 
D)  freight charge on buyer.

Question 11

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. Assuming that the specific identification method is used and that ending inventory consists of 20 units from each of the three purchases and 30 units from the November 1 inventory, cost of goods sold is

Accepted Answer

A)  $1,740. 
B)  $1,772. 
C)  $1,782. 
D)  $1,794. 
A)  $1,740. 
B)  $1,772. 
C)  $1,782. 
D)  $1,794.

Question 12

Romanoff Industries had the following inventory transactions occur during 2018:   The company sold 150 units at $70 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's gross profit using LIFO? (rounded to whole dollars)

Accepted Answer

A)  $3,318 
B)  $3,552 
C)  $6,948 
D)  $7,182 
A)  $3,318 
B)  $3,552 
C)  $6,948 
D)  $7,182

Question 13

Glenda Good and Danny Rock are department managers in the housewares and shoe departments, respectively, for Litwins, a large department store. Danny has observed Glenda taking inventory from her own department home, apparently without paying for it. He hesitates confronting Glenda because he is due to be promoted, and needs Glenda's recommendation. He also does not want to notify the company management directly, because he doesn't want an ethics investigation on his record, believing that it will give him a "goody-goody" image. This week, Glenda tried on several pairs of expensive running shoes in his department before finding a pair that suited her. She did not, however, buy them. That very pair was missing this morning.
Litwins recently replaced its old periodic inventory system with a perpetual inventory system using scanners and bar codes. In addition, the annual inventory is to be replaced by a monthly inventory conducted by an independent firm. On hearing the news of the changes, Danny relaxes. "The system will catch Glenda now," he says to himself.
Required:
1. Is Danny's attitude justified? Why or why not?
2. What, if any, action should Danny take now?

Accepted Answer

1. Danny's attitude is not justified. Th

Question 14

The managers of Constantine Company receive performance bonuses based on the net income of the firm. Which inventory costing method are they likely to favor in periods of declining prices?

Accepted Answer

A)  LIFO 
B)  Average Cost 
C)  FIFO 
D)  Physical inventory method 
A)  LIFO 
B)  Average Cost 
C)  FIFO 
D)  Physical inventory method

Question 15

Specific Identification can be used for inventory valuation under   IFRS:

Accepted Answer

The answer of Specific Identification can be used for inventory...

Question 16

In periods of inflation, phantom or paper profits may be reported as a result of using the

Accepted Answer

A)  perpetual inventory method. 
B)  FIFO costing assumption. 
C)  LIFO costing assumption. 
D)  periodic inventory method. 
A)  perpetual inventory method. 
B)  FIFO costing assumption. 
C)  LIFO costing assumption. 
D)  periodic inventory method.

Question 17

Alfalfa Company developed the following information about its inventories in applying the lower-of-cost-or-net realizable value (LCM) basis in valuing inventories:

Accepted Answer

A)  $343,000. 
B)  $347,000. 
C)  $358,000. 
D)  $362,000. 
A)  $343,000. 
B)  $347,000. 
C)  $358,000. 
D)  $362,000.

Question 18

Robert Tingle is studying for the next accounting mid-term examination. What should Robert know about (a) departing from the cost basis of accounting for inventories and (b) the meaning of "net realizable value" in the lower-of-cost-or-net realizable value method?

Accepted Answer

Robert should know the following:
(a) A

Question 19

The cost of goods available for sale is allocated between

Accepted Answer

A)  beginning inventory and ending inventory. 
B)  beginning inventory and cost of goods on hand. 
C)  ending inventory and cost of goods sold. 
D)  beginning inventory and cost of goods purchased. 
A)  beginning inventory and ending inventory. 
B)  beginning inventory and cost of goods on hand. 
C)  ending inventory and cost of goods sold. 
D)  beginning inventory and cost of goods purchased.

Question 20

If goods in transit are shipped FOB destination

Accepted Answer

A)  the seller has legal title to the goods until they are delivered. 
B)  the buyer has legal title to the goods until they are delivered. 
C)  the transportation company has legal title to the goods while the goods are in transit. 
D)  no one has legal title to the goods until they are delivered. 
A)  the seller has legal title to the goods until they are delivered. 
B)  the buyer has legal title to the goods until they are delivered. 
C)  the transportation company has legal title to the goods while the goods are in transit. 
D)  no one has legal title to the goods until they are delivered.

In a period of rising prices, the costs allocated to ending inventory may be understated in the

For each of the independent events listed below, analyze the impact on the indicated items at the end of the current year by placing the appropriate code letter in the box under each item. Code: O = item is overstated U = item is understated NA = item is not affected

Inventoriable costs include all of the following except the

Under the lower-of-cost-or-net realizable value basis in valuing inventory, net realizable value is the

The lower-of-cost-or-net realizable value (LCNRV) basis may be used with all of the following methods except

Eneri Company's inventory records show the following data: A physical inventory on December 31 shows 4,000 units on hand. Eneri sells the units for $13 each. The company has an effective tax rate of 20%. Eneri uses the periodic inventory method. Under the LIFO method, cost of goods sold is

Inventory turnover is calculated as cost of goods sold divided by ending inventory.

This information is available for Eaton's Photo Corporation for 2017 and 2018. Instructions Calculate inventory turnover, days in inventory, and gross profit rate for Eaton's Photo Corporation for 2017 and 2018. Comment on any trends.

If a company has no beginning inventory and the unit cost of inventory items does not change during the year, the value assigned to the ending inventory will be the same under LIFO and average cost flow assumptions.

The term "FOB" denotes

Romanoff Industries had the following inventory transactions occur during 2018: The company sold 150 units at $70 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's gross profit using LIFO? (rounded to whole dollars)

The managers of Constantine Company receive performance bonuses based on the net income of the firm. Which inventory costing method are they likely to favor in periods of declining prices?

Specific Identification can be used for inventory valuation under IFRS:

In periods of inflation, phantom or paper profits may be reported as a result of using the

Alfalfa Company developed the following information about its inventories in applying the lower-of-cost-or-net realizable value (LCM) basis in valuing inventories:

Robert Tingle is studying for the next accounting mid-term examination. What should Robert know about (a) departing from the cost basis of accounting for inventories and (b) the meaning of "net realizable value" in the lower-of-cost-or-net realizable value method?

The cost of goods available for sale is allocated between

If goods in transit are shipped FOB destination

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions

Statement of Cash Flows

Financial Statement Analysis

Specimen Financial Statements: Apple Inc

Specimen Financial Statements: Pepsico, Inc

Specimen Financial Statements: the Coca-Cola Company

Specimen Financial Statements: Amazoncom, Inc

Specimen Financial Statements: Wal-Mart Stores, Inc

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Exam 6: Inventories

In a period of rising prices, the costs allocated to ending inventory may be understated in the

For each of the independent events listed below, analyze the impact on the indicated items at the end of the current year by placing the appropriate code letter in the box under each item. Code: O = item is overstated U = item is understated NA = item is not affected

Inventoriable costs include all of the following except the

Under the lower-of-cost-or-net realizable value basis in valuing inventory, net realizable value is the

The lower-of-cost-or-net realizable value (LCNRV) basis may be used with all of the following methods except

Eneri Company's inventory records show the following data: A physical inventory on December 31 shows 4,000 units on hand. Eneri sells the units for $13 each. The company has an effective tax rate of 20%. Eneri uses the periodic inventory method. Under the LIFO method, cost of goods sold is

Inventory turnover is calculated as cost of goods sold divided by ending inventory.

This information is available for Eaton's Photo Corporation for 2017 and 2018. Instructions Calculate inventory turnover, days in inventory, and gross profit rate for Eaton's Photo Corporation for 2017 and 2018. Comment on any trends.

If a company has no beginning inventory and the unit cost of inventory items does not change during the year, the value assigned to the ending inventory will be the same under LIFO and average cost flow assumptions.

The term "FOB" denotes

Romanoff Industries had the following inventory transactions occur during 2018: The company sold 150 units at $70 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's gross profit using LIFO? (rounded to whole dollars)

The managers of Constantine Company receive performance bonuses based on the net income of the firm. Which inventory costing method are they likely to favor in periods of declining prices?

Specific Identification can be used for inventory valuation under IFRS:

In periods of inflation, phantom or paper profits may be reported as a result of using the

Alfalfa Company developed the following information about its inventories in applying the lower-of-cost-or-net realizable value (LCM) basis in valuing inventories:

Robert Tingle is studying for the next accounting mid-term examination. What should Robert know about (a) departing from the cost basis of accounting for inventories and (b) the meaning of "net realizable value" in the lower-of-cost-or-net realizable value method?

The cost of goods available for sale is allocated between

If goods in transit are shipped FOB destination

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions

Statement of Cash Flows

Financial Statement Analysis

Specimen Financial Statements: Apple Inc

Specimen Financial Statements: Pepsico, Inc

Specimen Financial Statements: the Coca-Cola Company

Specimen Financial Statements: Amazoncom, Inc

Specimen Financial Statements: Wal-Mart Stores, Inc

Filters