Question 1

An overstatement of the beginning inventory results in

Accepted Answer

A) no effect on the period's net income. 
B) an overstatement of net income. 
C) an understatement of net income. 
D) a need to adjust purchases. 
A) no effect on the period's net income. 
B) an overstatement of net income. 
C) an understatement of net income. 
D) a need to adjust purchases.

Question 2

An aircraft company would most likely have a

Accepted Answer

A) high inventory turnover. 
B) low profit margin. 
C) high volume. 
D) low inventory turnover. 
A) high inventory turnover. 
B) low profit margin. 
C) high volume. 
D) low inventory turnover.

Question 3

The LIFO inventory method assumes that the cost of the latest units purchased are

Accepted Answer

A) the last to be allocated to cost of goods sold. 
B) the first to be allocated to ending inventory. 
C) the first to be allocated to cost of goods sold. 
D) not allocated to cost of goods sold or ending inventory. 
A) the last to be allocated to cost of goods sold. 
B) the first to be allocated to ending inventory. 
C) the first to be allocated to cost of goods sold. 
D) not allocated to cost of goods sold or ending inventory.

Question 4

Goods that have been purchased FOB destination but are in transit, should be excluded from a physical count of goods by the buyer.

Accepted Answer

A) True 
 B)False

Question 5

Peach Pink Inc. has the following inventory data: $$\begin{array} { r l r r } 
\text { July } 1 & \text { Beginning inventory } & 40 \text { units at } \$ 20 & \$ 800 \
7 & \text { Purchases } & 140 \text { units at } \$ 21 & 2,940 \
22 & \text { Purchases } & 20 \text { units at } \$ 22 & { 440 }\&&& { \$ 4,180 }
\end{array}$$ A physical count of merchandise inventory on July 30 reveals that there are 50 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for July is

Accepted Answer

A) $3,110. 
B) $3,170. 
C) $3,010. 
D) $3,080. 
A) $3,110. 
B) $3,170. 
C) $3,010. 
D) $3,080.

Question 6

If a company has no beginning inventory and the unit price of inventory is increasing during a period, the cost of goods available for sale during the period will be the same under the LIFO and FIFO inventory methods.

Accepted Answer

A) True 
 B)False

Question 7

Whitman Corporation sells six different products. The following information is available on December 31: $$\begin{array} { | l | c | c | c | c | } 
\hline \text { Inventory Item } & \text { Units } & \text { Cost per unit } & \text { Market value per unit } & \text { Estimated Selling Price } \
\hline \text { Tin } & 60 & \$ 500 & \$ 505 & \$ 515 \
\hline \text { Titanium } & 20 & 5,000 & 4,950 & 5,100 \
\hline \text { Stainless Steel } & 80 & 2,000 & 1,910 & 1,985 \
\hline \text { Aluminum } & 80 & 350 & 285 & 290 \
\hline \text { Iron } & 40 & 400 & 410 & 425 \
\hline \text { Fiberglass } & 40 & 300 & 295 & 310 \
\hline
\end{array}$$ When applying the lower of cost or market rule to each item, what will Whitman's total ending inventory balance be?

Accepted Answer

A) $346,000 
B) $332,400 
C) $333,100 
D) $332,800 
A) $346,000 
B) $332,400 
C) $333,100 
D) $332,800

Question 8

Selection of an inventory costing method by management does not usually depend on

Accepted Answer

A) the fiscal year end. 
B) income statement effects. 
C) balance sheet effects. 
D) tax effects. 
A) the fiscal year end. 
B) income statement effects. 
C) balance sheet effects. 
D) tax effects.

Question 9

Ace Company is a retailer operating in an industry that experiences inflation (rising prices). Ace wants the most realistic net income. Which inventory costing method should Ace consider using?

Accepted Answer

A) Average because all inventory costs will then represent an average amount. 
B) Specific identification is the most realistic method because it involves the actual costs. 
C) LIFO because cost of goods sold represents the latest costs. 
D) FIFO because cost of goods sold represents the earliest costs. 
A) Average because all inventory costs will then represent an average amount. 
B) Specific identification is the most realistic method because it involves the actual costs. 
C) LIFO because cost of goods sold represents the latest costs. 
D) FIFO because cost of goods sold represents the earliest costs.

Question 10

The major IFRS requirements related to accounting for and reporting inventories are

Accepted Answer

A) the same as GAAP. 
B) the same as GAAP with a couple of exceptions. 
C) completely different fom GAAP. 
D) not comparable to GAAP. 
A) the same as GAAP. 
B) the same as GAAP with a couple of exceptions. 
C) completely different fom GAAP. 
D) not comparable to GAAP.

Question 11

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 12

GAAP defines market for lower-of-cost-or market essentially as

Accepted Answer

A) net realizable value. 
B) estimated selling price in the ordinary course of business. 
C) replacement cost. 
D) replacement cost less costs of disposal. 
A) net realizable value. 
B) estimated selling price in the ordinary course of business. 
C) replacement cost. 
D) replacement cost less costs of disposal.

Question 13

Inventory methods such as FIFO and LIFO deal more with flow of costs than with flow of goods.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is correct with respect to inventories?

Accepted Answer

A) The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold. 
B) It is generally good business management to sell the most recently acquired goods first. 
C) Under FIFO, the ending inventory is based on the latest units purchased. 
D) FIFO seldom coincides with the actual physical flow of inventory. 
A) The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold. 
B) It is generally good business management to sell the most recently acquired goods first. 
C) Under FIFO, the ending inventory is based on the latest units purchased. 
D) FIFO seldom coincides with the actual physical flow of inventory.

Question 15

The specific identification method of costing inventories is used when the

Accepted Answer

A) physical flow of units cannot be determined. 
B) company sells large quantities of relatively low cost homogeneous items. 
C) company sells large quantities of relatively low cost heterogeneous items. 
D) company sells a limited quantity of high-unit cost items. 
A) physical flow of units cannot be determined. 
B) company sells large quantities of relatively low cost homogeneous items. 
C) company sells large quantities of relatively low cost heterogeneous items. 
D) company sells a limited quantity of high-unit cost items.

Question 16

Use of the LIFO inventory valuation method enables a company to report paper or phantom profits.

Accepted Answer

A) True 
 B)False

Question 17

Barnett Company had the following records: $\begin{array}{lll}&2017&2016\
\text { Ending inventory } & \$ 32,650 & \$ 30,490 \
\text { Cost of qoods sold } & 306,300 & 313,600
\end{array}$ What is Barnett's inventory turnover for 2017? (rounded)

Accepted Answer

A) 9.4 times 
B) 9.7 times 
C) 9.9 times 
D) 10.0 times 
A) 9.4 times 
B) 9.7 times 
C) 9.9 times 
D) 10.0 times

Question 18

Independent internal verification of the physical inventory process occurs when

Accepted Answer

A) the employee is required to count all items twice for sake of verification. 
B) the items counted are compared to the inventory account balance. 
C) a second employee counts the inventory and compares the result to the count made by the first employee. 
D) all prenumbered inventory tags are accounted for. 
A) the employee is required to count all items twice for sake of verification. 
B) the items counted are compared to the inventory account balance. 
C) a second employee counts the inventory and compares the result to the count made by the first employee. 
D) all prenumbered inventory tags are accounted for.

Question 19

Use the following information regarding Black Company and Red Company to answer the question "Which of the following is Black Company's "cost of goods sold" for 2016 (to the closest dollar)?" $$\begin{array}{l}
\begin{array} { | l | c | c | c | } 
\hline & \text { Year } & \begin{array} { c } 
\text { Inventory } \
\text { Turnover }
\end{array} & \text { Ending Inventory } \
\hline \text { Black Company } & 2015 & & \$ 26,340 \
\hline & 2016 & 8.7 & \$ 29,890 \
\hline & 2017 & 8.4 & \$ 30,100 \
\hline\
\hline \text { Red Company } & 2015 & & \$ 25,860 \
\hline & 2016 & 6.8 & \$ 24,750 \
\hline & 2017 & 7.5 & \$ 22,530 \
\hline
\end{array}
\end{array}$$

Accepted Answer

A) $252,840 
B) $260,043 
C) $244,601 
D) $260,957 
A) $252,840 
B) $260,043 
C) $244,601 
D) $260,957

Question 20

Apple-A-Day Company has the following inventory data: $$\begin{array} { r l r r } 
\text { July } 1 & \text { Beginning inventory } & 40 \text { units at } \$ 20 & \$ 800 \
7 & \text { Purchases } & 140 \text { units at } \$ 21 & 2,940 \
22 & \text { Purchases } & 20 \text { units at } \$ 22 & { 440 }\&&& { \$ 4,180 }
\end{array}$$ A physical count of merchandise inventory on July 30 reveals that there are 50 units on hand. Using the LIFO inventory method, the amount allocated to cost of goods sold for July is

Accepted Answer

A) $3,170. 
B) $3,080. 
C) $3,110. 
D) $3,010. 
A) $3,170. 
B) $3,080. 
C) $3,110. 
D) $3,010.

An overstatement of the beginning inventory results in

An aircraft company would most likely have a

The LIFO inventory method assumes that the cost of the latest units purchased are

Goods that have been purchased FOB destination but are in transit, should be excluded from a physical count of goods by the buyer.

If a company has no beginning inventory and the unit price of inventory is increasing during a period, the cost of goods available for sale during the period will be the same under the LIFO and FIFO inventory methods.

Selection of an inventory costing method by management does not usually depend on

Ace Company is a retailer operating in an industry that experiences inflation (rising prices). Ace wants the most realistic net income. Which inventory costing method should Ace consider using?

The major IFRS requirements related to accounting for and reporting inventories are

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

GAAP defines market for lower-of-cost-or market essentially as

Inventory methods such as FIFO and LIFO deal more with flow of costs than with flow of goods.

Which of the following statements is correct with respect to inventories?

The specific identification method of costing inventories is used when the

Use of the LIFO inventory valuation method enables a company to report paper or phantom profits.

Barnett Company had the following records: 2017 2016 Ending inventory \ 32,650 \ 30,490 Cost of qoods sold 306,300 313,600 What is Barnett's inventory turnover for 2017? (rounded)

Independent internal verification of the physical inventory process occurs when

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters

Exam 5: Reporting and Analyzing Inventory

An overstatement of the beginning inventory results in

An aircraft company would most likely have a

The LIFO inventory method assumes that the cost of the latest units purchased are

Goods that have been purchased FOB destination but are in transit, should be excluded from a physical count of goods by the buyer.

If a company has no beginning inventory and the unit price of inventory is increasing during a period, the cost of goods available for sale during the period will be the same under the LIFO and FIFO inventory methods.

Selection of an inventory costing method by management does not usually depend on

Ace Company is a retailer operating in an industry that experiences inflation (rising prices). Ace wants the most realistic net income. Which inventory costing method should Ace consider using?

The major IFRS requirements related to accounting for and reporting inventories are

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

GAAP defines market for lower-of-cost-or market essentially as

Inventory methods such as FIFO and LIFO deal more with flow of costs than with flow of goods.

Which of the following statements is correct with respect to inventories?

The specific identification method of costing inventories is used when the

Use of the LIFO inventory valuation method enables a company to report paper or phantom profits.

Barnett Company had the following records: 2017 2016 Ending inventory \ 32,650 \ 30,490 Cost of qoods sold 306,300 313,600 What is Barnett's inventory turnover for 2017? (rounded)

Independent internal verification of the physical inventory process occurs when

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters