Question 1

An auto manufacturer would classify vehicles in various stages of production as

Accepted Answer

A)  finished goods. 
B)  merchandise inventory. 
C)  raw materials. 
D)  work in process. 
A)  finished goods. 
B)  merchandise inventory. 
C)  raw materials. 
D)  work in process.

Question 2

In all cases when average-costing is used, the cost of goods sold would be the same whether a perpetual or periodic system is used.

Accepted Answer

A) True 
 B)False

Question 3

Ted's Used Cars uses the specific identification method of costing inventory. During March, Ted purchased three cars for $8,000, $10,000, and $13,000, respectively. During March, two cars are sold for $11,000 each. Ted determines that at March 31, the $13,000 car is still on hand. What is Ted's gross profit for March?

Accepted Answer

A)  $3,000. 
B)  $4,000. 
C)  $1,000. 
D)  $9,000. 
A)  $3,000. 
B)  $4,000. 
C)  $1,000. 
D)  $9,000.

Question 4

The following information was available from the inventory records of Queen Company for July:   What is Queen's cost of goods available for sale?

Accepted Answer

A)  £38,500. 
B)  £142,400. 
C)  £377,400. 
D)  cannot be determined. 
A)  £38,500. 
B)  £142,400. 
C)  £377,400. 
D)  cannot be determined.

Question 5

Clarke Company uses the periodic inventory method and had the following inventory information available:   A physical count of inventory on December 31 revealed that there were 350 units on hand.
Instructions
Answer the following independent questions and show computations supporting your answers.
1. Assume that the company uses the FIFO method. The value of the ending inventory at December 31 is $__________.
2. Assume that the company uses the Average-Cost method. The value of the ending inventory on December 31 is $__________.
3. Assume that the company uses the LIFO method. The value of the ending inventory on December 31 is $__________.

Accepted Answer

The answer of Clarke Company uses the periodic inventory method...

Question 6

Hoyt Company's inventory records show the following data for the month of September:   A physical inventory on September 30 shows 200 units on hand. Calculate the value of the ending inventory and cost of goods sold if the company uses weighted average inventory costing and a periodic inventory system. Round cost per unit to 2 decimal places and ending inventory and cost of goods sold to the nearest dollar.

Accepted Answer

Weighted average cost per unit:
Cost of

Question 7

Accounting for inventories is important because inventories affect the ______________ section of the statement of financial position and the ______________ section on the income statement.

Accepted Answer

Accounting for inventories is important

Question 8

Errors occasionally occur when physically counting inventory items on hand. Identify the financial statement effects of an overstatement of the ending inventory in the current period. If the error is not corrected, how does it affect the financial statements for the following year?

Accepted Answer

The overstatement of ending inventory wi

Question 9

Graham Company uses a periodic inventory system. Details for the inventory account for the month of January, 2014 are as follows:   An end of the month (1/31/14) inventory showed that 120 units were on hand. If the company uses FIFO, what is the value of the ending inventory?

Accepted Answer

A)  $520 
B)  $600 
C)  $656 
D)  $1,424 
A)  $520 
B)  $600 
C)  $656 
D)  $1,424

Question 10

The following information is available for Witten Company:   Instructions
Compute each of the following:
(a) Inventory turnover.
(b) Days in inventory.

Accepted Answer

The answer of The following information is available for Witten...

Question 11

Swiss-Mart Company's beginning inventory balance and purchase and sales transactions for the month of June were as follows:   Assuming that Swiss-Mart keeps perpetual inventory records, the inventory at June 30 on a FIFO basis is

Accepted Answer

A)  CHF3,000. 
B)  CHF3,300. 
C)  CHF5,250. 
D)  CHF5,750. 
A)  CHF3,000. 
B)  CHF3,300. 
C)  CHF5,250. 
D)  CHF5,750.

Question 12

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. What value should Paulson, Inc., have for the computers at the end of the year?

Accepted Answer

A)  ₤2,000. 
B)  ₤2,800. 
C)  ₤4,800. 
D)  ₤6,600. 
A)  ₤2,000. 
B)  ₤2,800. 
C)  ₤4,800. 
D)  ₤6,600.

Question 13

Specific identification

Accepted Answer

A)  must be used under IFRS if it would result in the most conservative net income. 
B)  cannot be used under GAAP. 
C)  cannot be used under IFRS. 
D)  must be used under IFRS if the inventory items are not interchangeable. 
A)  must be used under IFRS if it would result in the most conservative net income. 
B)  cannot be used under GAAP. 
C)  cannot be used under IFRS. 
D)  must be used under IFRS if the inventory items are not interchangeable.

Question 14

Bordeaux Corp., a French subsidiary of a US company, sells one product and uses a perpetual inventory system. The beginning the inventory consisted of 20 units that cost €2,000 per unit. During the current month, the company purchased: 120 units at €2,100 each. Sales during the month totaled 90 units for €4,350 each. What is the cost of goods sold using the LIFO cost flow assumption?

Accepted Answer

A)  €180,000. 
B)  €187,000. 
C)  €189,000. 
D)  €191,500. 
A)  €180,000. 
B)  €187,000. 
C)  €189,000. 
D)  €191,500.

Question 15

One reason a company using a perpetual inventory system must make a physical count of goods is to determine the amount of inventory on hand as of the statement of financial position date.

Accepted Answer

A) True 
 B)False

Question 16

If an error understates the beginning inventory, net income will also be understated.

Accepted Answer

A) True 
 B)False

Question 17

The accountant at Paige Company is figuring out the difference in income taxes the company will pay depending on the choice of either FIFO or average-cost as an inventory costing method. The tax rate is 30% and the FIFO method will result in income before taxes of $18,200. The average-cost method will result in income before taxes of $16,450. What is the difference in tax that would be paid between the two methods?

Accepted Answer

A)  $1,750. 
B)  $750. 
C)  $525. 
D)  Cannot be determined from the information provided. 
A)  $1,750. 
B)  $750. 
C)  $525. 
D)  Cannot be determined from the information provided.

Question 18

The accounting concept of prudence dictates that the accounting principle used should be the one least likely to overstate assets and income.

Accepted Answer

A) True 
 B)False

Question 19

Taj Mahal Inc. uses the periodic inventory system and FIFO costing. For the year ending December 31, 2014, the company's cost of goods sold was Rs20,670,000. Had the LIFO cost flow assumption been used, cost of goods sold would have been Rs21,244,000. Assuming a 25% tax rate, what would be the tax savings if Taj Mahal were allowed to use LIFO?

Accepted Answer

A)  Rs0. 
B)  Rs143,500. 
C)  Rs574,000. 
D)  cannot be determined from the information given. 
A)  Rs0. 
B)  Rs143,500. 
C)  Rs574,000. 
D)  cannot be determined from the information given.

Question 20

The selection of an appropriate inventory cost flow assumption for an individual company is made by

Accepted Answer

A)  the external auditors. 
B)  the IASB. 
C)  the internal auditors. 
D)  company management. 
A)  the external auditors. 
B)  the IASB. 
C)  the internal auditors. 
D)  company management.

An auto manufacturer would classify vehicles in various stages of production as

In all cases when average-costing is used, the cost of goods sold would be the same whether a perpetual or periodic system is used.

The following information was available from the inventory records of Queen Company for July: What is Queen's cost of goods available for sale?

Accounting for inventories is important because inventories affect the section of the statement of financial position and the section on the income statement.

Errors occasionally occur when physically counting inventory items on hand. Identify the financial statement effects of an overstatement of the ending inventory in the current period. If the error is not corrected, how does it affect the financial statements for the following year?

Graham Company uses a periodic inventory system. Details for the inventory account for the month of January, 2014 are as follows: An end of the month (1/31/14) inventory showed that 120 units were on hand. If the company uses FIFO, what is the value of the ending inventory?

The following information is available for Witten Company: Instructions Compute each of the following: (a) Inventory turnover. (b) Days in inventory.

Swiss-Mart Company's beginning inventory balance and purchase and sales transactions for the month of June were as follows: Assuming that Swiss-Mart keeps perpetual inventory records, the inventory at June 30 on a FIFO basis is

Specific identification

One reason a company using a perpetual inventory system must make a physical count of goods is to determine the amount of inventory on hand as of the statement of financial position date.

If an error understates the beginning inventory, net income will also be understated.

The accounting concept of prudence dictates that the accounting principle used should be the one least likely to overstate assets and income.

The selection of an appropriate inventory cost flow assumption for an individual company is made by

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Share Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Accounting and Financial Reporting for Contingent Liabilities and Leases

Filters

Exam 6: Inventories

An auto manufacturer would classify vehicles in various stages of production as

In all cases when average-costing is used, the cost of goods sold would be the same whether a perpetual or periodic system is used.

The following information was available from the inventory records of Queen Company for July: What is Queen's cost of goods available for sale?

Accounting for inventories is important because inventories affect the ______________ section of the statement of financial position and the ______________ section on the income statement.

Errors occasionally occur when physically counting inventory items on hand. Identify the financial statement effects of an overstatement of the ending inventory in the current period. If the error is not corrected, how does it affect the financial statements for the following year?

Graham Company uses a periodic inventory system. Details for the inventory account for the month of January, 2014 are as follows: An end of the month (1/31/14) inventory showed that 120 units were on hand. If the company uses FIFO, what is the value of the ending inventory?

The following information is available for Witten Company: Instructions Compute each of the following: (a) Inventory turnover. (b) Days in inventory.

Swiss-Mart Company's beginning inventory balance and purchase and sales transactions for the month of June were as follows: Assuming that Swiss-Mart keeps perpetual inventory records, the inventory at June 30 on a FIFO basis is

Specific identification

One reason a company using a perpetual inventory system must make a physical count of goods is to determine the amount of inventory on hand as of the statement of financial position date.

If an error understates the beginning inventory, net income will also be understated.

The accounting concept of prudence dictates that the accounting principle used should be the one least likely to overstate assets and income.

The selection of an appropriate inventory cost flow assumption for an individual company is made by

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Share Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Accounting and Financial Reporting for Contingent Liabilities and Leases

Filters

Accounting for inventories is important because inventories affect the section of the statement of financial position and the section on the income statement.