Exam 5: Inventories and Cost of Sales
Exam 1: Accounting in Business207 Questions
Exam 2: Accounting for Business Transactions183 Questions
Exam 3: Adjusting Accounts for Financial Statements192 Questions
Exam 4: Accounting for Merchandising Operations141 Questions
Exam 5: Inventories and Cost of Sales115 Questions
Exam 6: Cash and Internal Controls172 Questions
Exam 7: Accounting for Receivables141 Questions
Exam 8: Accounting for Long-Term Assets131 Questions
Exam 9: Accounting for Current Liabilities183 Questions
Exam 10: Accounting for Long-Term Liabilities186 Questions
Exam 11: Corporate Reporting and Analysis183 Questions
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An inventory error is sometimes said to be self-correcting because it yields an offsetting error in the next period.
(True/False)
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The Inventory account is a controlling account for the inventory subsidiary ledger that contains a separate record for each separate product.
(True/False)
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During a period of steadily rising costs, the inventory valuation method that yields the highest reported net income is:
(Multiple Choice)
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If a period-end inventory amount is reported in error, it can cause a misstatement in all of the following except:
(Multiple Choice)
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A company has inventory with a selling price of $451,000, a market value of $223,000 and a cost of $241,000. According to the lower of cost or market, the inventory should be written down to $223,000.
(True/False)
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The reliability of the gross profit method depends on a good estimate of the gross profit ratio.
(True/False)
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When costs to purchase inventory regularly decline, which method of inventory costing will yield the lowest cost of goods sold?
(Multiple Choice)
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Explain the reason a company might use the retail inventory method for valuing inventory.
(Essay)
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Describe the internal controls that must be applied when taking a physical count of inventory.
(Essay)
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Internal controls that should be applied when a business takes a physical count of inventory should include all of the following except:
(Multiple Choice)
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In applying the lower of cost or market method to inventory valuation, market is defined as the current selling price.
(True/False)
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An advantage of FIFO is that it assigns the most recent costs to cost of goods sold, and does a better job of matching current costs with revenues on the income statement.
(True/False)
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IFRS reporting currently does not allow which method of inventory costing?
(Multiple Choice)
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A company's current inventory consists of 5,000 units purchased at $6 per unit. Replacement cost has now fallen to $5 per unit. What is the entry the company must record to adjust inventory to market?
(Multiple Choice)
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McCarthy Company has inventory of 8 units at a cost of $200 each on October 1. On October 2, it purchased 20 units at $205 each. 11 units are sold on October 4. Using the FIFO perpetual inventory method, what amount will be reported in cost of goods sold for the 11 units that were sold?
(Multiple Choice)
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An error in the period-end inventory balance will cause an error in the calculation of cost of goods sold.
(True/False)
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