Question 1

The use of a Purchase Discounts Lost account implies that the recorded cost of a purchased inventory item is its

Accepted Answer

A)  invoice price. 
B)  invoice price plus the purchase discount lost. 
C)  invoice price less the purchase discount taken. 
D)  invoice price less the purchase discount allowable whether taken or not. 
A)  invoice price. 
B)  invoice price plus the purchase discount lost. 
C)  invoice price less the purchase discount taken. 
D)  invoice price less the purchase discount allowable whether taken or not.

Question 2

Perpetual LIFO and Periodic FIFO.
Matlock Corporation sells item A as part of its product line. Information as to balances on hand, purchases, and sales of item A are given in the following table for the first six months of 2014.   
Instructions

(a) Compute the ending inventory at June 30 under the perpetual LIFO inventory pricing method.
(b) Compute the cost of goods sold for the first six months under the periodic FIFO inventory pricing method.

Accepted Answer

The answer of Perpetual LIFO and Periodic FIFO.
Matlock Corporation sells...

Question 3

Who owns the goods, as well as the costs to include in inventory, are essentially accounted for the same under IFRS and U.S. GAAP.

Accepted Answer

A) True 
 B)False

Question 4

The following information is available for Naab Company for 2014:   The cost of goods sold is equal to 400% of selling expenses. What is the cost of goods available for sale?

Accepted Answer

A)  $ 920,000. 
B)  $1,150,000. 
C)  $1,135,000. 
D)  $1,180,000. 
A)  $ 920,000. 
B)  $1,150,000. 
C)  $1,135,000. 
D)  $1,180,000.

Question 5

Recording purchases at net amounts.
Flint Co. records purchase discounts lost and uses perpetual inventories. Prepare journal entries in general journal form for the following:(a) Purchased merchandise costing $2,500 with terms 2/10, n/30.(b) Payment was made thirty days after the purchase.

Accepted Answer

The answer of Recording purchases at net amounts.
Flint Co. records...

Question 6

Which of the following best describes the IFRS requirement for applying the same cost formula to all inventories?

Accepted Answer

A)  When they are purchased from different suppliers. 
B)  When they are purchased from the same geographic region. 
C)  When they are similar in nature or use. 
D)  When they sell for the same price. 
A)  When they are purchased from different suppliers. 
B)  When they are purchased from the same geographic region. 
C)  When they are similar in nature or use. 
D)  When they sell for the same price.

Question 7

Use the following information to answer questions 6-8.
Barton Company uses a periodic inventory system. On January 1, 2014, Barton Company had 1,200 units of inventory on hand at a cost of $8 per unit. During 2014, Barton made the following inventory purchases.   Assume Barton Company sold 2,300 units of inventory during 2014.
-If you assume that Barton follows IFRS and uses the FIFO method, what is the ending inventory and cost of goods sold, respectively?

Accepted Answer

A)  Ending inventory = $11,600; Cost of Goods Sold = $31,800 
B)  Ending inventory = $16,520; Cost of Goods Sold = $26,880 
C)  Ending inventory = $16,422; Cost of Goods Sold = $26,978 
D)  Ending inventory = $20,600; Cost of Goods Sold = $22,800 
A)  Ending inventory = $11,600; Cost of Goods Sold = $31,800 
B)  Ending inventory = $16,520; Cost of Goods Sold = $26,880 
C)  Ending inventory = $16,422; Cost of Goods Sold = $26,978 
D)  Ending inventory = $20,600; Cost of Goods Sold = $22,800

Question 8

If a company uses the periodic inventory system, what is the impact on net income of including goods in transit F.o.b. shipping point in purchases, but not ending inventory?

Accepted Answer

A)  Overstate net income. 
B)  Understate net income. 
C)  No effect on net income. 
D)  Not sufficient information to determine effect on net income. 
A)  Overstate net income. 
B)  Understate net income. 
C)  No effect on net income. 
D)  Not sufficient information to determine effect on net income.

Question 9

Checkers uses the periodic inventory system. For the current month, the beginning inventory consisted of 4,800 units that cost $12 each. During the month, the company made two purchases: 2,000 units at $13 each and 8,000 units at $13.50 each. Checkers also sold 8,600 units during the month. Using the average cost method, what is the amount of cost of goods sold for the month?

Accepted Answer

A)  $111,370. 
B)  $115,800. 
C)  $107,900. 
D)  $111,800. 
A)  $111,370. 
B)  $115,800. 
C)  $107,900. 
D)  $111,800.

Question 10

Goods on consignment are

Accepted Answer

A)  included in the consignee's inventory. 
B)  included in the consignor's inventory. 
C)  included in the consignee's revenue. 
D)  included in both the consignee's and the consignor's inventory. 
A)  included in the consignee's inventory. 
B)  included in the consignor's inventory. 
C)  included in the consignee's revenue. 
D)  included in both the consignee's and the consignor's inventory.

Question 11

Dollar-value LIFO.
Aber Company manufactures one product. On December 31, 2013, Aber adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO inventory method was $450,000. Inventory data are as follows:   
InstructionsCompute the inventory at December 31, 2014, 2015, and 2016, using the dollar-value LIFO method for each year.

Accepted Answer

The answer of Dollar-value LIFO.
Aber Company manufactures one product. On...

Question 12

Nichols Company had 500 units of "Dink" in its inventory at a cost of $5 each. It purchased, for $2,400, 300 more units of "Dink". Nichols then sold 600 units at a selling price of $10 each, resulting in a gross profit of $2,100. The cost flow assumption used by Nichols.

Accepted Answer

A)  is FIFO. 
B)  is LIFO. 
C)  is weighted average. 
D)  cannot be determined from the information given. 
A)  is FIFO. 
B)  is LIFO. 
C)  is weighted average. 
D)  cannot be determined from the information given.

Question 13

LIFO liquidations can occur frequently when using a specific-goods LIFO approach.

Accepted Answer

A) True 
 B)False

Question 14

In a period of rising prices, the inventory method which tends to give the highest reported net income is

Accepted Answer

A)  base stock. 
B)  first-in, first-out. 
C)  last-in, first-out. 
D)  weighted-average. 
A)  base stock. 
B)  first-in, first-out. 
C)  last-in, first-out. 
D)  weighted-average.

Question 15

Use the following information for questions 125 through 127.
Gross Corporation adopted the dollar-value LIFO method of inventory valuation on December 31, 2013. Its inventory at that date was $550,000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows:  
-What is the cost of the ending inventory at December 31, 2016 under dollar-value LIFO?

Accepted Answer

A)  $640,600. 
B)  $637,000. 
C)  $625,000. 
D)  $658,500. 
A)  $640,600. 
B)  $637,000. 
C)  $625,000. 
D)  $658,500.

Question 16

Checkers uses the periodic inventory system. For the current month, the beginning inventory consisted of 4,800 units that cost $12 each. During the month, the company made two purchases: 2,000 units at $13 each and 8,000 units at $13.50 each. Checkers also sold 8,600 units during the month. Using the LIFO method, what is the ending inventory?

Accepted Answer

A)  $80,292. 
B)  $74,400. 
C)  $83,700. 
D)  $75,800. 
A)  $80,292. 
B)  $74,400. 
C)  $83,700. 
D)  $75,800.

Question 17

Use the following information for 123 and 124
Hay Company had January 1 inventory of $180,000 when it adopted dollar-value LIFO. During the year, purchases were $1,080,000 and sales were $1,800,000. December 31 inventory at year-end prices was $227,700, and the price index was 110.
-What is Hay Company's gross profit?

Accepted Answer

A)  $747,000. 
B)  $749,700. 
C)  $767,700. 
D)  $1,590,300. 
A)  $747,000. 
B)  $749,700. 
C)  $767,700. 
D)  $1,590,300.

Question 18

Recording purchases at net amounts.
Dill Co. records purchases at net amounts and uses periodic inventories. Prepare entries for the following:June 11 Purchased merchandise on account, $9,000, terms 2/10, n/30.15 Returned part of June 11 purchase, $500, and received credit on account.30 Prepared the adjusting entry required for financial statements.

Accepted Answer

The answer of Recording purchases at net amounts.
Dill Co. records...

Question 19

When using a perpetual inventory system,

Accepted Answer

A)  no Purchases account is used. 
B)  a Cost of Goods Sold account is used. 
C)  two entries are required to record a sale. 
D)  All of these answer choices are correct. 
A)  no Purchases account is used. 
B)  a Cost of Goods Sold account is used. 
C)  two entries are required to record a sale. 
D)  All of these answer choices are correct.

Question 20

Both U.S. GAAP and IFRS permit the use of the LIFO method to account for inventories.

Accepted Answer

A) True 
 B)False

The use of a Purchase Discounts Lost account implies that the recorded cost of a purchased inventory item is its

Who owns the goods, as well as the costs to include in inventory, are essentially accounted for the same under IFRS and U.S. GAAP.

The following information is available for Naab Company for 2014: The cost of goods sold is equal to 400% of selling expenses. What is the cost of goods available for sale?

Recording purchases at net amounts. Flint Co. records purchase discounts lost and uses perpetual inventories. Prepare journal entries in general journal form for the following:(a) Purchased merchandise costing $2,500 with terms 2/10, n/30.(b) Payment was made thirty days after the purchase.

Which of the following best describes the IFRS requirement for applying the same cost formula to all inventories?

If a company uses the periodic inventory system, what is the impact on net income of including goods in transit F.o.b. shipping point in purchases, but not ending inventory?

Goods on consignment are

Nichols Company had 500 units of "Dink" in its inventory at a cost of $5 each. It purchased, for $2,400, 300 more units of "Dink". Nichols then sold 600 units at a selling price of $10 each, resulting in a gross profit of $2,100. The cost flow assumption used by Nichols.

LIFO liquidations can occur frequently when using a specific-goods LIFO approach.

In a period of rising prices, the inventory method which tends to give the highest reported net income is

When using a perpetual inventory system,

Both U.S. GAAP and IFRS permit the use of the LIFO method to account for inventories.

Financial Accounting and Accounting Standards

Conceptual Framework for Financial Reporting

The Accounting Information System

Income Statement and Related Information

Balance Sheet and Statement of Cash Flows

Accounting and the Time Value of Money

Cash and Receivables

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities and Contingencies

Long-Term Liabilities

Stockholders Equity

Dilutive Securities and Earnings Per Share

Investments

Revenue Recognition

Accounting for Income Taxes

Accounting for Pensions and Postretirement Benefits

Accounting for Leases

Accounting Changes and Error Analysis

Statement of Cash Flows

Full Disclosure in Financial Reporting

Appendix

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Exam 8: Valuation of Inventories: a Cost-Basis Approach

The use of a Purchase Discounts Lost account implies that the recorded cost of a purchased inventory item is its

Who owns the goods, as well as the costs to include in inventory, are essentially accounted for the same under IFRS and U.S. GAAP.

The following information is available for Naab Company for 2014: The cost of goods sold is equal to 400% of selling expenses. What is the cost of goods available for sale?

Recording purchases at net amounts. Flint Co. records purchase discounts lost and uses perpetual inventories. Prepare journal entries in general journal form for the following:(a) Purchased merchandise costing $2,500 with terms 2/10, n/30.(b) Payment was made thirty days after the purchase.

Which of the following best describes the IFRS requirement for applying the same cost formula to all inventories?

If a company uses the periodic inventory system, what is the impact on net income of including goods in transit F.o.b. shipping point in purchases, but not ending inventory?

Goods on consignment are

Nichols Company had 500 units of "Dink" in its inventory at a cost of $5 each. It purchased, for $2,400, 300 more units of "Dink". Nichols then sold 600 units at a selling price of $10 each, resulting in a gross profit of $2,100. The cost flow assumption used by Nichols.

LIFO liquidations can occur frequently when using a specific-goods LIFO approach.

In a period of rising prices, the inventory method which tends to give the highest reported net income is

When using a perpetual inventory system,

Both U.S. GAAP and IFRS permit the use of the LIFO method to account for inventories.

Financial Accounting and Accounting Standards

Conceptual Framework for Financial Reporting

The Accounting Information System

Income Statement and Related Information

Balance Sheet and Statement of Cash Flows

Accounting and the Time Value of Money

Cash and Receivables

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities and Contingencies

Long-Term Liabilities

Stockholders Equity

Dilutive Securities and Earnings Per Share

Investments

Revenue Recognition

Accounting for Income Taxes

Accounting for Pensions and Postretirement Benefits

Accounting for Leases

Accounting Changes and Error Analysis

Statement of Cash Flows

Full Disclosure in Financial Reporting

Appendix

Filters