Exam 7: Inventory

According to IFRS, how should inventory be measured on the balance sheet?

Jordan Precision Welding had sales of $134,000 for the month of June.The company's gross profit was $36,000.The company had beginning inventory of $70,000, and a physical inventory count indicated that ending inventory was $66,000.What was the company's inventory turnover ratio for June closest too?

Hopewell Ltd.had 1,000 units of inventory on hand at the beginning of the year worth $4,000.During the year, they purchased 15,000 units at $4.25 and 10,000 units at $4.40.They sold 24,500 units during the year at an average price of $7.50 and pay taxes at 25%.If Hopewell uses average cost for inventory valuation, what was their gross profit for the year closest to?

Which one of the following inventory costing methods can lead to manipulation of reported income?

Which of the following accounting methods is permitted under IFRS when accounting for biological assets and agricultural produce?

A decrease in the inventory turnover ratio for a company from one year to the next could indicate all of the following except?

Which inventory system keeps an ongoing tally of purchases and sales of inventory with adjustments that reflect changes as they occur?

If Acker Company wanted to report the highest net income for July, which inventory cost flow assumption should they use?

After the financial statements were prepared for 2012, Wickham Ltd.discovered that an error had been made during the year-end inventory count and one room containing $40,000 worth of goods, at cost, had been missed.A review of the accounting records showed that all purchases had been recorded.The company's tax rate is 40%.If the error is not corrected, what would be the effect of this error on 2012 net income?

Which of the following companies would have a relatively small amount of inventory on their balance sheet?

A company that makes the following journal entry at the time of purchasing inventory is using which of the following inventory systems? Dr. Purchases $\quad \mathrm { xxx }$ Cr. Accounts Payable $\quad \mathrm { xxx }$

After the financial statements were prepared for 2012, Wickham Ltd.discovered that an error had been made during the year-end inventory count and one room containing $40,000 worth of goods, at cost, had been missed.A review of the accounting records showed that all purchases had been recorded.The company's tax rate is 40%.If the error is not corrected, what is the effect of this error on 2013 closing retained earnings?

A company that makes the following journal entry at the time of purchasing inventory is using which of the following inventory systems? Dr. Inventory $\quad \mathrm { xxx }$ Cr. Accounts Payable $\quad \mathrm { xxx }$

Which of the following businesses would most likely use the specific identification method to value inventory?

In Canada, during times in which prices are rising, entities that have a tax minimization objective would choose which of the following cost flow assumptions?

"FIFO, Average, IFRS, periodic, perpetual, I don't care which one you use! Just pick the one that allows me to keep the bank happy by providing good stable cash flow and gives me something I can show them for collateral against my loan," exclaimed your exasperated client.He operates a small manufacturing business, and you are helping him select accounting policies after his first year in operation. Required: Address you client's concerns, and recommend accounting policies for inventory that will help him meet his objectives.It is not necessary to define the terms he used.

A high inventory turnover indicates which of the following?

An analyst is comparing two companies; one uses the LIFO inventory cost flow assumption, and the other uses the FIFO inventory cost flow assumption.If prices are rising, how will the FIFO using company's gross margin and current ratio compared to the LIFO using company's, if all other factors are equal? FIFO FIFO Gross Margin Current ratio A. Higher Higher B. Higher Lower C. Lower Higher D. Lower Lower

If, at the end of a period, a company erroneously excluded some goods from its ending inventory and also erroneously did not record the purchase of these goods in its accounting records, these errors would cause:

Comeau is a distributor of sports equipment, specializing in ski equipment.During the preparation of the 2013 financial statements they discovered that the following errors had been made in accounting for inventory. For each of the following errors, indicate the effect on the 2013 financial statement element or ratio in the table below.Indicate whether the element or ratio would be overstated (O) (higher than it would have been had the error not occurred) or understated (U) or not affected (NA) by the error. Comeau uses a periodic inventory system and applies the lower of cost or market rule on an item-by-item basis.The initial ratios before considering the adjustments are shown in the table. Errors: A) Comeau sponsors a demonstration team that tours to different ski resorts on the weekends to promote the products.They carry some inventory with them in a van.The equipment in the van was not included in the inventory count. B) Each member of the demonstration team gets to select a full set of equipment for their personal use during the season and gets to keep it at the end of the season.The cost of this equipment was included in cost of goods sold. C) Inventory included some equipment from last year that they had been unable to sell.The equipment is still recorded at cost, although management does admit that it is probably worth less than that. D) For the equipment that is in their showroom the person that counted it recorded it at its suggested selling price because that was the amount indicated on the label describing the products. Net Cost of Total Current Inventory Debt-to- Income Sales Assets Ratio Turnover Equity 1.4:1 3.3 .55:1 A. B. C. D.