Exam 7: Inventory

Use the following information for questions: Berenger Industries had the following activity with one of its inventory items during the current period: Units Unit Cost Beginning inventory 30 \ 8.00 Purchase October 5 80 10.50 Sale October 11 (40) Purchase October 17 60 12.00 Sale October 26 (70) -Using a perpetual inventory system and the moving average cost flow assumption, the cost of goods sold for the October 11 sale was closest to:

One way to estimate the cost of goods sold is to multiply the sales revenue for the period by the inventory turnover ratio.

If prices were rising and a Canadian company wanted to report a smaller amount of profit for tax purposes, they should use the moving average cost flow assumption.

Jordan Company has a normal markup of 40%.Its cost-to-sales ratio is:

Use the following information for questions: A company had the following inventory activity during May: Units Unit Cost Total Cost Unit Price Beginning inventory 100 \ 20.00 \ 2,000 Purchase: May 3 900 \ 21.00 18,900 Sale: May 5 (900) \ 30.00 Purchase: May 15 1,000 \ 21.00 21,000 Sale: (900) \ 30.00 -If the company uses a perpetual system and the FIFO cost flow assumption, what is the gross margin on the May 5 sale closest to?

Under the direct method, the unrealized losses that result from the application of the LCM rule are often hidden in the:

The inventory turnover ratio is calculated as cost of goods sold divided by total inventory.

Blarney Ltd.had a fire at its warehouse and was trying to determine the cost of the inventory lost.For the year to date sales had been $525,000, opening inventory was $25,000, purchases to date were $198,000, the cost-to-sales ratio is normally 60%.Inventory not damaged in the fire was $18,000.What was the cost of the inventory damaged in the fire?

If inventory is valued using a __________________system, then no profit is recognized when an inventory item is sold.

Periodic inventory systems provide more relevant and timely information to managers for decision making purposes than perpetual inventory systems do.

The holding loss incurred from applying the LCM rule to inventory is:

Use the following information for questions: A company had the following inventory activity during January: Units Unit Cost Total Cost Beginning inventory 800 \ 10.00 \ 8,000 Purchase: January 5 1,400 11.00 15,400 Sale: January 8 (1,500) Purchase: January 13 900 10.50 9,450 Sales: January 24 (900) -If the company is using a perpetual system and the moving average costing assumption, what is the ending inventory closest to?

Which of the following cost flow assumptions would be most appropriate for costing an inventory of liquids stored in tanks?

Perpetual inventory systems are incapable of identifying inventory shrinkage.

The market in which a company sells its products is referred to as:

The acronym used to refer to ending inventory under the FIFO method is:

Which of the following statements about the moving average cost assumption is true?

Which cost flow assumption will produce the same results under both the periodic and perpetual inventory systems?

Use the following information for questions: Berenger Industries had the following activity with one of its inventory items during the current period: Units Unit Cost Beginning inventory 30 \ 8.00 Purchase October 5 80 10.50 Sale October 11 (40) Purchase October 17 60 12.00 Sale October 26 (70) -Using a perpetual inventory system and the FIFO cost flow assumption, the cost of goods sold was:

Use the following information to answer questions Handel Inc.values its inventory on an LCM basis.The following data came from the 2011 inventory, which consisted of two items: Item \# 130 Item \# 140 Original cost \ 12,000 \ 15,000 Selling price 15,000 26,000 Estimated selling costs 5,000 10,000 Replacement cost 13,000 15,000 Normal profit margin 1,500 1,000 -The appropriate carrying value for the entire inventory when applying the LCM rule using net realizable value on an item-by-item basis would be: