Exam 6: Inventories
Exam 1: Accounting in Action276 Questions
Exam 2: The Recording Process223 Questions
Exam 3: Adjusting the Accounts303 Questions
Exam 4: Completing the Accounting Cycle262 Questions
Exam 5: Accounting for Merchandising Operations244 Questions
Exam 6: Inventories257 Questions
Exam 7: Fraud, Internal Control, and Cash238 Questions
Exam 8: Accounting for Receivables269 Questions
Exam 9: Plant Assets, Natural Resources, and Intangible Assets339 Questions
Exam 10: Liabilities317 Questions
Exam 12: Investments227 Questions
Exam 13: Statement of Cash Flows213 Questions
Exam 14: Financial Statement Analysis231 Questions
Exam 15: Accounting and Financial Reporting for Contingent Liabilities and Leases281 Questions
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In a period of rising prices, the inventory reported in Leary Company's statement of financial position is close to the current cost of the inventory. Maris Company's inventory is below its current cost. Identify the inventory cost flow method being used by each company. Which company has probably been reporting the higher gross profit?
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(Essay)
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Correct Answer:
Leary Company is using the FIFO method of inventory costing and Maris Company is using the average-cost method. Under FIFO the latest goods purchased remain in inventory. Thus the inventory on the statement of financial position should be close to current costs. This is usually not true of the average-cost method. Leary Company will have the higher gross profit because cost of goods sold will include a higher proportion of goods purchased at earlier (lower) costs.
The major difference between IFRS and GAAP in accounting for inventories is that
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(Multiple Choice)
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Correct Answer:
C
Paulson, Inc. has 8 computers which have been part of the inventory for over two years. Each computer cost ₤600 and originally retailed for ₤825. At the statement date, each computer has a net realizable value of ₤350. How much loss should Paulson, Inc., record for the year?
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(Multiple Choice)
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Correct Answer:
B
Instructions
(a) Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO and (2) LIFO.
(b) Compute the cost of the ending inventory and the cost of goods sold using the average-cost method.
(Essay)
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Keiko Company took a physical inventory at December 31, 2013 and determined that ¥3,530,000 of goods were on hand. In addition, the company had goods consigned with Chang Company that had a cost of ¥700,000. On December 29, Keiko sold and shipped F.o.b. shipping point ¥600,000 worth of inventory. These goods arrived at the buyer's place of business on January 4, 2014. What amount should Keiko report as inventory on its December 31, 2013 statement of financial position?
(Multiple Choice)
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Brocken Co. has the following data related to an item of inventory:
The value assigned to cost of goods sold if Brocken uses average-cost is

(Multiple Choice)
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Colletti Company recorded the following data:
The weighted average unit cost of the inventory at January 31 is:

(Multiple Choice)
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Compute the lower-of-cost-or-net realizable value valuation for Aber Company's total inventory based on the following: 

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Shandy Shutters has the following inventory information.
A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand. Assume a periodic inventory system is used. Cost of goods sold under the average-cost method is

(Multiple Choice)
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The cost of goods purchased during a period plus the beginning inventory is the amount of goods ________________ during the period.
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Bosio Corporation's computation of cost of goods sold is:
The average days to sell inventory for Bosio is

(Multiple Choice)
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Zimmer Company uses the perpetual inventory system and the LIFO method. The following information is available for the month of May:
Instructions
Prepare a schedule to show cost of goods sold and the value of the ending inventory for the month of May.

(Essay)
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The specific identification method of inventory costing is appropriate for costly, easily distinguishable items such as cars, pianos, and antigues.
(True/False)
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Shandy Shutters has the following inventory information.
A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand. Assume a periodic inventory system is used. Ending inventory under LIFO is

(Multiple Choice)
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Vestle Company uses the periodic inventory system. For January 2014, the beginning inventory consisted of 24,000 units that cost CHF12 each. During the month, the company made two purchases: 10,000 units at CHF13 each and 40,000 units at CHF13.50 each. Vestle sold 43,000 units during the month for CHF19.50 per unit. Using the average-cost method, what is the amount of cost of goods sold for the month of January 2014 (round per unit amount to two decimal places)?
(Multiple Choice)
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The controller of Scheller Company is applying the lower-of-cost-or-net realizable value basis of valuing its ending inventory. The following information is available:
Instructions
Compute the value of the ending inventory by applying the lower-of-cost-or-net realizable value basis.

(Essay)
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IFRS requires that the cost flow assumption be consistent with the physical movement of the goods.
(True/False)
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If the unit price of inventory is increasing during a period, a company using the average-cost inventory method will show less gross profit for the period, than if it had used the FIFO inventory method.
(True/False)
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Disclosures about inventory should include each of the following except the
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