Question 1

In accounting for inventory, the assumed flow of costs must match the physical flow of goods.

Accepted Answer

A) True 
 B)False

Question 2

At May 1, 2017, Heineken Company had beginning inventory consisting of 300 units with a unit cost of $7. During May, the company purchased inventory as follows:
600 units at $7
900 units at $8
The company sold 1,500 units during the month for $12 per unit. Heineken uses the average cost method. Heineken's gross profit for the month of May is

Accepted Answer

A) $6,750 
B) $11,250 
C) $13,500 
D) $18,000 
A) $6,750 
B) $11,250 
C) $13,500 
D) $18,000

Question 3

Snug-As-A-Bug Blankets has the following inventory data: $$\begin{array} { r l c } 
\text { July } 1 & \text { Beginning inventory } & 30 \text { units at } \$ 60 \
5 & \text { Purchases } & 180 \text { units at } \$ 56 \
14 & \text { Sale } & 120 \text { units } \
21 & \text { Purchases } & 90 \text { units at } \$ 58 \
30 & \text { Sale } & 84 \text { units }
\end{array}$$ Assuming that a perpetual inventory system is used, what is the cost of goods sold on a LIFO basis for July?

Accepted Answer

A) $11,604 
B) $11,544 
C) $11,592 
D) $11,832 
A) $11,604 
B) $11,544 
C) $11,592 
D) $11,832

Question 4

Goods in transit shipped FOB shipping point should be included in the buyer's ending inventory.

Accepted Answer

A) True 
 B)False

Question 5

In a perpetual inventory system,

Accepted Answer

A) LIFO cost of goods sold will be the same as in a periodic inventory system. 
B) average costs are based entirely on unit cost simple averages. 
C) a new average is computed under the average cost method after each sale. 
D) FIFO cost of goods sold will be the same as in a periodic inventory system. 
A) LIFO cost of goods sold will be the same as in a periodic inventory system. 
B) average costs are based entirely on unit cost simple averages. 
C) a new average is computed under the average cost method after each sale. 
D) FIFO cost of goods sold will be the same as in a periodic inventory system.

Question 6

Dole Industries had the following inventory transactions occur during 2017: $\begin{array}{lllll}&&\text { Units } & \text { Cost/unit } \
\text { Feb. 1.2017 } & \text { Purchase } & 90 & \$ 90 \
\text { Mar. 14.2017 } & \text { Purchase } & 155 & \$ 94 \
\text { Mav 1.2017 } & \text { Purchase } & 110 & \$ 98
\end{array}$ The company sold 255 units at $126 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) $24,410 
B) $23,650 
C) $8,480 
D) $7,720 
A) $24,410 
B) $23,650 
C) $8,480 
D) $7,720

Question 7

The following information was available for Bowyer Company at December 31, 2017: beginning inventory $90,000; ending inventory $70,000; cost of goods sold $800,000; and sales $1,100,000. Bowyer's days in inventory in 2017 was

Accepted Answer

A) 26.4 days. 
B) 36.5 days. 
C) 32.0 days. 
D) 41.0 days. 
A) 26.4 days. 
B) 36.5 days. 
C) 32.0 days. 
D) 41.0 days.

Question 8

Bonkers Bananas 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 ending inventory for July is

Accepted Answer

A) $1,100. 
B) $1,010. 
C) $1,070. 
D) $1,000. 
A) $1,100. 
B) $1,010. 
C) $1,070. 
D) $1,000.

Question 9

Dobler Company uses a periodic inventory system. Details for the inventory account for the month of January 2017 are as follows: $\begin{array}{llrr}&\text { Units }&\text { Per unit price }&\text { Total }\
\text { Balance, } 1 / 1 / 2017 & 300 & \$ 5.00 & \$ 1.500 \
\text { Purchase, } 1 / 15 / 2017 & 150 & 5.30 & 795 \
\text { Purchase, } 1 / 28 / 2017 & 150 & 5.50 & 825
\end{array}$ An end of the month (1/31/2017) inventory showed that 240 units were on hand. If the company uses LIFO, what is the value of the ending inventory?

Accepted Answer

A) $1,264 
B) $1,200 
C) $1,302 
D) $1,920 
A) $1,264 
B) $1,200 
C) $1,302 
D) $1,920

Question 10

The factor which determines whether or not goods should be included in a physical count of inventory is

Accepted Answer

A) physical possession. 
B) legal title. 
C) management's judgment. 
D) whether or not the purchase price has been paid. 
A) physical possession. 
B) legal title. 
C) management's judgment. 
D) whether or not the purchase price has been paid.

Question 11

Sassy Saxophones has the following inventory data: $$\begin{array} { r l l } 
\text { July } 1 & \text { Beginning inventory } & 50 \text { units at } \$ 120 \
5 & \text { Purchases } & 300 \text { units at } \$ 112 \
14 & \text { Sale } & 200 \text { units } \
21 & \text { Purchases } & 150 \text { units at } \$ 115 \
30 & \text { Sale } & 140 \text { units }
\end{array}$$ Assuming that a periodic inventory system is used, what is the amount allocated to ending inventory on a LIFO basis?

Accepted Answer

A) $18,320 
B) $18,370 
C) $38,480 
D) $38,530 
A) $18,320 
B) $18,370 
C) $38,480 
D) $38,530

Question 12

When the market value of inventory is lower than its cost, the inventory is written down to its market value.

Accepted Answer

A) True 
 B)False

Question 13

An assumption about cost flow is used

Accepted Answer

A) because it is required by the income tax regulation. 
B) even when there is no change in the purchase price of inventory. 
C) only when the flow of goods cannot be determined. 
D) because prices usually change, and tracking which units have been sold is difficult. 
A) because it is required by the income tax regulation. 
B) even when there is no change in the purchase price of inventory. 
C) only when the flow of goods cannot be determined. 
D) because prices usually change, and tracking which units have been sold is difficult.

Question 14

Reeves Company is taking a physical inventory on March 31, the last day of its fiscal year. Which of the following must be included in this inventory count?

Accepted Answer

A) Goods in transit to Reeves, FOB destination 
B) Goods that Reeves is holding on consignment for Parker Company 
C) Goods in transit that Reeves has sold to Smith Company, FOB shipping point 
D) Goods that Reeves is holding in inventory on March 31 for which the related Accounts Payable is 15 days past due 
A) Goods in transit to Reeves, FOB destination 
B) Goods that Reeves is holding on consignment for Parker Company 
C) Goods in transit that Reeves has sold to Smith Company, FOB shipping point 
D) Goods that Reeves is holding in inventory on March 31 for which the related Accounts Payable is 15 days past due

Question 15

At May 1, 2017, Heineken Company had beginning inventory consisting of 300 units with a unit cost of $7. During May, the company purchased inventory as follows:
600 units at $7
900 units at $8
The company sold 1,500 units during the month for $12 per unit. Heineken uses the average cost method. The value of Heineken's inventory at May 31, 2017 is

Accepted Answer

A) $2,100 
B) $2,250 
C) $2,400 
D) $13,500 
A) $2,100 
B) $2,250 
C) $2,400 
D) $13,500

Question 16

The expense recognition principle requires that the cost of goods sold be matched against the ending merchandise inventory in order to determine income.

Accepted Answer

A) True 
 B)False

Question 17

If a company changes its inventory valuation method, the effect of the change on net income should be disclosed in the financial statements.

Accepted Answer

A) True 
 B)False

Question 18

The LIFO reserve is

Accepted Answer

A) the difference between the value of the inventory under LIFO and the value under FIFO. 
B) an amount used to adjust inventory to the lower of cost or market. 
C) the difference between the value of the inventory under LIFO and the value under average cost. 
D) the amount used to adjust inventory to historical cost. 
A) the difference between the value of the inventory under LIFO and the value under FIFO. 
B) an amount used to adjust inventory to the lower of cost or market. 
C) the difference between the value of the inventory under LIFO and the value under average cost. 
D) the amount used to adjust inventory to historical cost.

Question 19

Classic Floors has the following inventory data: $$\begin{array} { r l c } 
\text { July } 1 & \text { Beginning inventory } & 30 \text { units at } \$ 6.00 \
5 & \text { Purchases } & 120 \text { units at } \$ 6.60 \
14 & \text { Sale } & 80 \text { units } \
21 & \text { Purchases } & 60 \text { units at } \$ 7.20 \
30 & \text { Sale } & 56 \text { units }
\end{array}$$ Assuming that a perpetual inventory system is used, what is the cost of goods sold on a LIFO basis for July?

Accepted Answer

A) $931.20 
B) $472.80 
C) $1,404.00 
D) $696.00 
A) $931.20 
B) $472.80 
C) $1,404.00 
D) $696.00

Question 20

A company just began business and made the following four inventory purchases in June: $\begin{array}{lrlr}
\text { June } & 1 & 150 \text { units } & \$ 990 \
\text { June } & 10 & 200 \text { units } & 1,344 \
\text { June } & 15 & 200 \text { units } & 1,368 \
\text { June } & 28 & 150 \text { units } & 1,062\&&&\$4,764
\end{array}$ A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand. Using the average-cost method, the amount allocated to the ending inventory on June 30 is

Accepted Answer

A) $1,361. 
B) $1,416. 
C) $1,320. 
D) $1,344. 
A) $1,361. 
B) $1,416. 
C) $1,320. 
D) $1,344.

In accounting for inventory, the assumed flow of costs must match the physical flow of goods.

Goods in transit shipped FOB shipping point should be included in the buyer's ending inventory.

In a perpetual inventory system,

The following information was available for Bowyer Company at December 31, 2017: beginning inventory $90,000; ending inventory $70,000; cost of goods sold $800,000; and sales $1,100,000. Bowyer's days in inventory in 2017 was

The factor which determines whether or not goods should be included in a physical count of inventory is

When the market value of inventory is lower than its cost, the inventory is written down to its market value.

An assumption about cost flow is used

Reeves Company is taking a physical inventory on March 31, the last day of its fiscal year. Which of the following must be included in this inventory count?

The expense recognition principle requires that the cost of goods sold be matched against the ending merchandise inventory in order to determine income.

If a company changes its inventory valuation method, the effect of the change on net income should be disclosed in the financial statements.

The LIFO reserve is

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

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Exam 5: Reporting and Analyzing Inventory

In accounting for inventory, the assumed flow of costs must match the physical flow of goods.

Goods in transit shipped FOB shipping point should be included in the buyer's ending inventory.

In a perpetual inventory system,

The following information was available for Bowyer Company at December 31, 2017: beginning inventory $90,000; ending inventory $70,000; cost of goods sold $800,000; and sales $1,100,000. Bowyer's days in inventory in 2017 was

The factor which determines whether or not goods should be included in a physical count of inventory is

When the market value of inventory is lower than its cost, the inventory is written down to its market value.

An assumption about cost flow is used

Reeves Company is taking a physical inventory on March 31, the last day of its fiscal year. Which of the following must be included in this inventory count?

The expense recognition principle requires that the cost of goods sold be matched against the ending merchandise inventory in order to determine income.

If a company changes its inventory valuation method, the effect of the change on net income should be disclosed in the financial statements.

The LIFO reserve is

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