Question 1

Days to sell for 2010 is:

Accepted Answer

A)  91.25 
B)  94.3 
C)  88.16 
D)  182.5 
A)  91.25 
B)  94.3 
C)  88.16 
D)  182.5

Question 2

The LIFO inventory costing method assumes that the cost of the units most recently purchased is:

Accepted Answer

A)  the last to be assigned to cost of goods sold. 
B)  the first to be assigned to ending inventory. 
C)  the first to be assigned to cost of goods sold. 
D)  not assigned to cost of goods sold or ending inventory. 
A)  the last to be assigned to cost of goods sold. 
B)  the first to be assigned to ending inventory. 
C)  the first to be assigned to cost of goods sold. 
D)  not assigned to cost of goods sold or ending inventory.

Question 3

If a company purchased 200 units of inventory at $9 per unit and 300 units at $10 per unit, its weighted average unit cost for this inventory would be:

Accepted Answer

A)  $9.00. 
B)  $9.50. 
C)  $9.60. 
D)  $10.00. 
A)  $9.00. 
B)  $9.50. 
C)  $9.60. 
D)  $10.00.

Question 4

What is the amount of the discount to be taken by a company that purchases inventory for $10,000 with terms 2/10,n/30, returns $2,000 of the inventory purchased, receives an allowance for defective merchandise of $100, and pays the amount due within the discount period?

Accepted Answer

A)  $200 
B)  $158 
C)  $160 
D)  $198 
A)  $200 
B)  $158 
C)  $160 
D)  $198

Question 5

The choice of an inventory costing method can have a major impact on gross profit and cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 6

What is the journal entry to be recorded by

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
E)  Flynn Company on November 6?
  
A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
E)  Flynn Company on November 6?

Question 7

In applying the lower of cost or market rule to report inventory, "market" is defined as the current selling price.

Accepted Answer

A) True 
 B)False

Question 8

A one-time error in the application of the lower of cost or market (LCM) rule in the current period distorts financial results for the current accounting period

Accepted Answer

A)  only. 
B)  and the period before. 
C)  and the period after. 
D)  and all periods after. 
A)  only. 
B)  and the period before. 
C)  and the period after. 
D)  and all periods after.

Question 9

Which of the following statements regarding inventory calculations is true?

Accepted Answer

A)  Beginning inventory + net purchases - ending inventory = cost of goods sold. 
B)  Goods available for sale + ending inventory = cost of goods sold. 
C)  Beginning inventory - cost of goods sold = goods available for sale. 
D)  Beginning inventory + purchases + purchase discounts + ending inventory = cost of goods sold. 
A)  Beginning inventory + net purchases - ending inventory = cost of goods sold. 
B)  Goods available for sale + ending inventory = cost of goods sold. 
C)  Beginning inventory - cost of goods sold = goods available for sale. 
D)  Beginning inventory + purchases + purchase discounts + ending inventory = cost of goods sold.

Question 10

Because LIFO uses older costs for inventory, in times of rising prices:

Accepted Answer

A)  LIFO results in a higher book value of inventory and lower inventory turnover ratio than FIFO. 
B)  LIFO results in a lower book value of inventory and lower inventory turnover ratio than FIFO. 
C)  LIFO results in a higher book value of inventory and higher inventory turnover ratio than FIFO. 
D)  LIFO results in a lower book value of inventory and higher inventory turnover ratio than FIFO. 
A)  LIFO results in a higher book value of inventory and lower inventory turnover ratio than FIFO. 
B)  LIFO results in a lower book value of inventory and lower inventory turnover ratio than FIFO. 
C)  LIFO results in a higher book value of inventory and higher inventory turnover ratio than FIFO. 
D)  LIFO results in a lower book value of inventory and higher inventory turnover ratio than FIFO.

Question 11

If the company uses the specific identification method, what is the cost of its ending inventory?

Accepted Answer

A)  $31 
B)  $69 
C)  $76 
D)  $100 
A)  $31 
B)  $69 
C)  $76 
D)  $100

Question 12

The journal entry necessary at the end of the period to transfer beginning inventory and net purchases to cost of goods sold will include which of the following?

Accepted Answer

A)  Credit Inventory, $6,250. 
B)  Debit Purchases, $11,250. 
C)  Debit Inventory, $6,250. 
D)  Debit Cost of goods sold, $11,250. 
A)  Credit Inventory, $6,250. 
B)  Debit Purchases, $11,250. 
C)  Debit Inventory, $6,250. 
D)  Debit Cost of goods sold, $11,250.

Question 13

If the company uses the weighted average method, what is the cost of its ending inventory (rounded to the nearest dollar)?

Accepted Answer

A)  $38 
B)  $48 
C)  $67 
D)  $75 
A)  $38 
B)  $48 
C)  $67 
D)  $75

Question 14

Inventories regularly rise and fall as the company buys and sells merchandise.

Accepted Answer

A) True 
 B)False

Question 15

Your company has 500 units in inventory that had been purchased for $12 each and that would currently cost $15 to replace. Your supplier has just announced the cost of these goods is rising to $16.50.

Accepted Answer

A)  Your company should make no adjustments to the inventory account. 
B)  Your company should adjust the inventory account using the lower of the recent market values, which is $15. 
C)  Your company should adjust the inventory account using the higher of the recent market values, which is $16.50. 
D)  Your company should adjust the inventory account using the average of the recent market values, which is 
A)  Your company should make no adjustments to the inventory account. 
B)  Your company should adjust the inventory account using the lower of the recent market values, which is $15. 
C)  Your company should adjust the inventory account using the higher of the recent market values, which is $16.50. 
D)  Your company should adjust the inventory account using the average of the recent market values, which is

Question 16

How many of the following statements regarding inventory management is (are) true?
An increase in inventory levels is always a sign of inefficiency in inventory management.
The measurement of inventory affects both the balance sheet and the income statement within an accounting period.
The ending inventory of one accounting period becomes the beginning inventory of the next accounting period.

Accepted Answer

A)  None 
B)  One 
C)  Two 
D)  Three 
A)  None 
B)  One 
C)  Two 
D)  Three

Question 17

BetterBuy records $3,000 as the cost of goods sold. BetterBuy is using the:

Accepted Answer

A)  Specific identification method. 
B)  LIFO method. 
C)  FIFO method. 
D)  Weighted average cost method. FIFO 2 @ $1,500 = $3,000 
A)  Specific identification method. 
B)  LIFO method. 
C)  FIFO method. 
D)  Weighted average cost method. FIFO 2 @ $1,500 = $3,000

Question 18

Which of the following statements is true?

Accepted Answer

A)  Valuing inventory under LIFO may produce different results depending on whether a perpetual or periodic inventory system is used. 
B)  Valuing inventory under the weighted average cost method always produces the same results using either a perpetual or periodic inventory system. 
C)  Valuing inventory under FIFO may produce different results depending on whether a perpetual or periodic inventory system is used. 
D)  Using the specific identification method will produce different results depending on whether perpetual or 
A)  Valuing inventory under LIFO may produce different results depending on whether a perpetual or periodic inventory system is used. 
B)  Valuing inventory under the weighted average cost method always produces the same results using either a perpetual or periodic inventory system. 
C)  Valuing inventory under FIFO may produce different results depending on whether a perpetual or periodic inventory system is used. 
D)  Using the specific identification method will produce different results depending on whether perpetual or

Question 19

In a period of falling prices, the inventory costing method that will cause the company to have the lowest cost of goods sold is

Accepted Answer

A)  LIFO. 
B)  FIFO. 
C)  Weighted average. 
D)  Specific identification. 
A)  LIFO. 
B)  FIFO. 
C)  Weighted average. 
D)  Specific identification.

Question 20

When LIFO is used with the periodic inventory system, cost of goods sold is assigned cost using the most recent purchase at the point of each sale, rather than from the most recent purchase as of the end of the period.

Accepted Answer

A) True 
 B)False

Days to sell for 2010 is:

The LIFO inventory costing method assumes that the cost of the units most recently purchased is:

If a company purchased 200 units of inventory at $9 per unit and 300 units at $10 per unit, its weighted average unit cost for this inventory would be:

What is the amount of the discount to be taken by a company that purchases inventory for $10,000 with terms 2/10,n/30, returns $2,000 of the inventory purchased, receives an allowance for defective merchandise of $100, and pays the amount due within the discount period?

The choice of an inventory costing method can have a major impact on gross profit and cost of goods sold.

What is the journal entry to be recorded by

In applying the lower of cost or market rule to report inventory, "market" is defined as the current selling price.

A one-time error in the application of the lower of cost or market (LCM) rule in the current period distorts financial results for the current accounting period

Which of the following statements regarding inventory calculations is true?

Because LIFO uses older costs for inventory, in times of rising prices:

If the company uses the specific identification method, what is the cost of its ending inventory?

The journal entry necessary at the end of the period to transfer beginning inventory and net purchases to cost of goods sold will include which of the following?

If the company uses the weighted average method, what is the cost of its ending inventory (rounded to the nearest dollar)?

Inventories regularly rise and fall as the company buys and sells merchandise.

Your company has 500 units in inventory that had been purchased for $12 each and that would currently cost $15 to replace. Your supplier has just announced the cost of these goods is rising to $16.50.

BetterBuy records $3,000 as the cost of goods sold. BetterBuy is using the:

Which of the following statements is true?

In a period of falling prices, the inventory costing method that will cause the company to have the lowest cost of goods sold is

When LIFO is used with the periodic inventory system, cost of goods sold is assigned cost using the most recent purchase at the point of each sale, rather than from the most recent purchase as of the end of the period.

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control and Financial Reporting for Cash and Merchandise Sales

Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

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Exam 7: Reporting and Interpreting Inventories and Cost of Goods Sold

Days to sell for 2010 is:

The LIFO inventory costing method assumes that the cost of the units most recently purchased is:

If a company purchased 200 units of inventory at $9 per unit and 300 units at $10 per unit, its weighted average unit cost for this inventory would be:

What is the amount of the discount to be taken by a company that purchases inventory for $10,000 with terms 2/10,n/30, returns $2,000 of the inventory purchased, receives an allowance for defective merchandise of $100, and pays the amount due within the discount period?

The choice of an inventory costing method can have a major impact on gross profit and cost of goods sold.

What is the journal entry to be recorded by

In applying the lower of cost or market rule to report inventory, "market" is defined as the current selling price.

A one-time error in the application of the lower of cost or market (LCM) rule in the current period distorts financial results for the current accounting period

Which of the following statements regarding inventory calculations is true?

Because LIFO uses older costs for inventory, in times of rising prices:

If the company uses the specific identification method, what is the cost of its ending inventory?

The journal entry necessary at the end of the period to transfer beginning inventory and net purchases to cost of goods sold will include which of the following?

If the company uses the weighted average method, what is the cost of its ending inventory (rounded to the nearest dollar)?

Inventories regularly rise and fall as the company buys and sells merchandise.

Your company has 500 units in inventory that had been purchased for $12 each and that would currently cost $15 to replace. Your supplier has just announced the cost of these goods is rising to $16.50.

BetterBuy records $3,000 as the cost of goods sold. BetterBuy is using the:

Which of the following statements is true?

In a period of falling prices, the inventory costing method that will cause the company to have the lowest cost of goods sold is

When LIFO is used with the periodic inventory system, cost of goods sold is assigned cost using the most recent purchase at the point of each sale, rather than from the most recent purchase as of the end of the period.

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control and Financial Reporting for Cash and Merchandise Sales

Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

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