Question 1

FIFO is the inventory costing method that follows the physical flow of the goods.

Accepted Answer

A) True 
 B)False

Question 2

Beginning inventory, purchases, and sales for an inventory item are as follows:   Assuming a perpetual inventory system and the last-in, first-out method, determine a) the cost of the merchandise sold for the September 30 sale and b) the inventory on September 30.

Accepted Answer

The answer of Beginning inventory, purchases, and sales for an...

Question 3

What is the amount of the inventory at the end of the year rounded to nearest dollar using the average cost method?

Accepted Answer

A)  $1,685 
B)  $1,575 
C)  $1,805 
D)  $3,705 
A)  $1,685 
B)  $1,575 
C)  $1,805 
D)  $3,705

Question 4

Stevens Company started the year with an inventory cost of $145,000. During the month of January, Stevens purchased inventory that cost $53,000. January sales totaled $140,000. Estimated gross profit is 35%. The estimated ending inventory as of January 31 is

Accepted Answer

A)  $58,000 
B)  $91,000 
C)  $107,000 
D)  $69,300 
A)  $58,000 
B)  $91,000 
C)  $107,000 
D)  $69,300

Question 5

If a company values inventory at the lower of cost or market, which of the following is the value of merchandise inventory on the balance sheet? Apply the lower-of-cost-or-market method to inventory as a whole. $$\begin{array} { | l | l | l | l | } 
\hline \text { Item } & \text { Inventory Quantity } & \text { Unit Cost Price } & \text { Unit Market Price } \
\hline \text { Product C } & 420 & \$ 6 & \$ 5 \
\hline \text { Product D } & 370 & 12 & 14 \
\hline
\end{array}$$

Accepted Answer

A)  $6,960 
B)  $7,700 
C)  $6,540 
D)  $7,280 
A)  $6,960 
B)  $7,700 
C)  $6,540 
D)  $7,280

Question 6

Damaged merchandise that can be sold only at prices below cost should be valued at

Accepted Answer

A)  net realizable value 
B)  LIFO 
C)  FIFO 
D)  average cost 
A)  net realizable value 
B)  LIFO 
C)  FIFO 
D)  average cost

Question 7

On the basis of the following data, estimate the cost of the merchandise inventory at March 31 by the retail method.

Accepted Answer

The answer of On the basis of the following data,...

Question 8

Inventory errors, if not discovered, will self-correct within two years.

Accepted Answer

A) True 
 B)False

Question 9

Use of the retail inventory method requires taking a physical count of inventory.

Accepted Answer

A) True 
 B)False

Question 10

During a period of consistently rising prices, the method of inventory that will result in reporting the greatest cost of merchandise sold is

Accepted Answer

A)  FIFO 
B)  LIFO 
C)  average cost 
D)  weighted average 
A)  FIFO 
B)  LIFO 
C)  average cost 
D)  weighted average

Question 11

Excess inventory results in all of the following except

Accepted Answer

A)  tied-up funds that could be used to improve operations 
B)  lost sales 
C)  increased storage expense 
D)  increased risk of loss due to damage 
A)  tied-up funds that could be used to improve operations 
B)  lost sales 
C)  increased storage expense 
D)  increased risk of loss due to damage

Question 12

Which of the following is not an example for safeguarding inventory?

Accepted Answer

A)  Storing inventory in restricted areas. 
B)  Physical devices such as two-way mirrors, cameras, and alarms. 
C)  Matching receiving documents, purchase orders, and vendor's invoice. 
D)  Returning inventory that is defective or broken. 
A)  Storing inventory in restricted areas. 
B)  Physical devices such as two-way mirrors, cameras, and alarms. 
C)  Matching receiving documents, purchase orders, and vendor's invoice. 
D)  Returning inventory that is defective or broken.

Question 13

Which of the following companies would be more likely to use the specific identification inventory costing method?

Accepted Answer

A)  Gordon's Jewelers 
B)  Lowe's 
C)  Best Buy 
D)  Walmart 
A)  Gordon's Jewelers 
B)  Lowe's 
C)  Best Buy 
D)  Walmart

Question 14

Complete the chart, indicating whether LIFO or FIFO would give the highest and lowest amounts for each item, assuming a period of increasing costs.

Accepted Answer

@#IMG-DLM& Highest Amount
Lowest Amount

Question 15

In the retail inventory method, the cost to retail ratio is equal to the cost of merchandise sold divided by the retail price of the merchandise sold.

Accepted Answer

A) True 
 B)False

Question 16

The value of ending inventory using FIFO is

Accepted Answer

A)  $1,250 
B)  $1,350 
C)  $1,375 
D)  $1,150 
A)  $1,250 
B)  $1,350 
C)  $1,375 
D)  $1,150

Question 17

Match each description to the appropriate inventory system a or b).
-Under this system, only revenue is recorded when sales are made.

Accepted Answer

A) Perpetual 
B) Periodic 
A) Perpetual 
B) Periodic

Question 18

For the year ended December 31, Depot Max's cost of merchandise sold was $56,900. Inventory at the beginning of the year was $6,540. Ending inventory was $7,250. Depot Max's number of days' sales in inventory is closest to

Accepted Answer

A)  42 
B)  46 
C)  8 
D)  44 
A)  42 
B)  46 
C)  8 
D)  44

Question 19

Addison, Inc. uses a perpetual inventory system. The following is information about one inventory item for the month of September: $$\begin{array} { r l l } 
\text { Sep. } 1 & \text { Inventory } & 20 \text { units at } \$ 20 \
4 & \text { Sold } & 10 \text { units } \
10 & \text { Purchased } & 30 \text { units at } \$ 25 \
17 & \text { Sold } & 20 \text { units } \
30 & \text { Purchased } & 10 \text { units at } \$ 30
\end{array}$$
-If Addison uses LIFO, the cost of the ending merchandise inventory on September 30 is

Accepted Answer

A)  $800 
B)  $650 
C)  $750 
D)  $700 
A)  $800 
B)  $650 
C)  $750 
D)  $700

Question 20

A consignor who has goods out on consignment with an agent should include the goods in ending inventory even though they are not in the possession of the consignor.

Accepted Answer

A) True 
 B)False

Exam 6: Inventories

FIFO is the inventory costing method that follows the physical flow of the goods.

Beginning inventory, purchases, and sales for an inventory item are as follows: Assuming a perpetual inventory system and the last-in, first-out method, determine a) the cost of the merchandise sold for the September 30 sale and b) the inventory on September 30.

What is the amount of the inventory at the end of the year rounded to nearest dollar using the average cost method?

Stevens Company started the year with an inventory cost of $145,000. During the month of January, Stevens purchased inventory that cost $53,000. January sales totaled $140,000. Estimated gross profit is 35%. The estimated ending inventory as of January 31 is

Damaged merchandise that can be sold only at prices below cost should be valued at

On the basis of the following data, estimate the cost of the merchandise inventory at March 31 by the retail method.

Inventory errors, if not discovered, will self-correct within two years.

Use of the retail inventory method requires taking a physical count of inventory.

During a period of consistently rising prices, the method of inventory that will result in reporting the greatest cost of merchandise sold is

Excess inventory results in all of the following except

Which of the following is not an example for safeguarding inventory?

Which of the following companies would be more likely to use the specific identification inventory costing method?

Complete the chart, indicating whether LIFO or FIFO would give the highest and lowest amounts for each item, assuming a period of increasing costs.

In the retail inventory method, the cost to retail ratio is equal to the cost of merchandise sold divided by the retail price of the merchandise sold.

The value of ending inventory using FIFO is

Match each description to the appropriate inventory system a or b). -Under this system, only revenue is recorded when sales are made.

For the year ended December 31, Depot Max's cost of merchandise sold was $56,900. Inventory at the beginning of the year was $6,540. Ending inventory was $7,250. Depot Max's number of days' sales in inventory is closest to

A consignor who has goods out on consignment with an agent should include the goods in ending inventory even though they are not in the possession of the consignor.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

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