Question 1

Under IFRS, companies can choose which inventory system? LIFO$\quad$$\quad$ FIFO
a. Yes$\quad$$\quad$No
b. Yes$\quad$$\quad$Yes
c. No$\quad$$\quad$Yes
d. No$\quad$$\quad$No

Accepted Answer

C

Question 2

Selection of an inventory costing method by management does not usually depend on

Accepted Answer

A)  the fiscal year end. 
B)  income statement effects. 
C)  balance sheet effects. 
D)  tax effects. 
A)  the fiscal year end. 
B)  income statement effects. 
C)  balance sheet effects. 
D)  tax effects. A

Question 3

Inventories are defined by IFRS as

Accepted Answer

A)  held-for-sale in the ordinary course of business. 
B)  in the process of production for sale in the ordinary course of business. 
C)  in the form of materials or supplies to be consumed in the production process or in the providing of services. 
D)  All of these answers are correct. 
A)  held-for-sale in the ordinary course of business. 
B)  in the process of production for sale in the ordinary course of business. 
C)  in the form of materials or supplies to be consumed in the production process or in the providing of services. 
D)  All of these answers are correct. D

Question 4

If a company has no beginning inventory and the unit price of inventory is increasing during a period, the cost of goods available for sale during the period will be the same under the LIFO and FIFO inventory methods.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A)  the external auditors. 
B)  the SEC. 
C)  the internal auditors. 
D)  management. 
A)  the external auditors. 
B)  the SEC. 
C)  the internal auditors. 
D)  management.

Question 6

Inventory written down under lower-of-cost-or market may be written back up to original cost in a subsequent period under GAAP$\quad$IFRS
a. Yes$\quad$$\quad$No
b. Yes$\quad$$\quad$Yes
c. No$\quad$$\quad$No
d. No$\quad$$\quad$Yes

Accepted Answer

The answer of Inventory written down under lower-of-cost-or market may...

Question 7

An error that overstates the ending inventory will also cause net income for the period to be overstated.

Accepted Answer

A) True 
 B)False

Question 8

Inventory turnover is calculated as cost of goods sold divided by ending inventory.

Accepted Answer

A) True 
 B)False

Question 9

If inventories are valued using the LIFO cost flow assumption, they should not be classified as a current asset on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 10

Disclosures about inventory should include each of the following except the

Accepted Answer

A)  basis of accounting. 
B)  costing method. 
C)  quantity of inventory. 
D)  major inventory classifications. 
A)  basis of accounting. 
B)  costing method. 
C)  quantity of inventory. 
D)  major inventory classifications.

Question 11

Under the retail inventory method, the estimated cost of ending inventory is computed by multiplying the cost-to-retail ratio by

Accepted Answer

A)  net sales. 
B)  goods available for sale at retail. 
C)  goods purchased at retail. 
D)  ending inventory at retail. 
A)  net sales. 
B)  goods available for sale at retail. 
C)  goods purchased at retail. 
D)  ending inventory at retail.

Question 12

The accountant at Almira Company is figuring out the difference in income taxes the company will pay depending on the choice of either FIFO or LIFO as an inventory costing method. The tax rate is 30% and the FIFO method will result in income before taxes of $8,190. The LIFO method will result in income before taxes of $7,290. What is the difference in tax that would be paid between the two methods?

Accepted Answer

A)  $270. 
B)  $630. 
C)  $900. 
D)  Cannot be determined from the information provided. 
A)  $270. 
B)  $630. 
C)  $900. 
D)  Cannot be determined from the information provided.

Question 13

Manufacturers usually classify inventory into all the following general categories except

Accepted Answer

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

Question 14

The cost of goods available for sale consists of the beginning inventory plus the cost of goods purchased.

Accepted Answer

A) True 
 B)False

Question 15

Inventory is reported in the financial statements at

Accepted Answer

A)  cost. 
B)  market. 
C)  the higher-of-cost-or-market. 
D)  the lower-of-cost-or-market. 
A)  cost. 
B)  market. 
C)  the higher-of-cost-or-market. 
D)  the lower-of-cost-or-market.

Question 16

In applying the LIFO assumption in a perpetual inventory system, the cost of the units most recently purchased prior to sale is allocated first to the units sold.

Accepted Answer

A) True 
 B)False

Question 17

The expense recognition principle requires that the cost of goods sold be matched against the ending merchandise inventory in order to determine income.

Accepted Answer

A) True 
 B)False

Question 18

At May 1, 2015, Kibbee Company had beginning inventory consisting of 200 units with a unit cost of $7. During May, the company purchased inventory as follows: 800 units at $7
600 units at $8
The company sold 1,000 units during the month for $12 per unit. Kibbee uses the average cost method. The value of Kibbee's inventory at May 31, 2015 is

Accepted Answer

A)  $3,000. 
B)  $4,425. 
C)  $4,500. 
D)  $7,500. 
A)  $3,000. 
B)  $4,425. 
C)  $4,500. 
D)  $7,500.

Question 19

In periods of inflation, phantom or paper profits may be reported as a result of using the

Accepted Answer

A)  perpetual inventory method. 
B)  FIFO costing assumption. 
C)  LIFO costing assumption. 
D)  periodic inventory method. 
A)  perpetual inventory method. 
B)  FIFO costing assumption. 
C)  LIFO costing assumption. 
D)  periodic inventory method.

Question 20

Understating beginning inventory will understate

Accepted Answer

A)  assets. 
B)  cost of goods sold. 
C)  net income. 
D)  stockholder's equity. 
A)  assets. 
B)  cost of goods sold. 
C)  net income. 
D)  stockholder's equity.

Under IFRS, companies can choose which inventory system? LIFO $\quad$ $\quad$ FIFO a. Yes $\quad$ $\quad$ No b. Yes $\quad$ $\quad$ Yes c. No $\quad$ $\quad$ Yes d. No $\quad$ $\quad$ No

Selection of an inventory costing method by management does not usually depend on

Inventories are defined by IFRS as

If a company has no beginning inventory and the unit price of inventory is increasing during a period, the cost of goods available for sale during the period will be the same under the LIFO and FIFO inventory methods.

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

Inventory written down under lower-of-cost-or market may be written back up to original cost in a subsequent period under GAAP $\quad$ IFRS a. Yes $\quad$ $\quad$ No b. Yes $\quad$ $\quad$ Yes c. No $\quad$ $\quad$ No d. No $\quad$ $\quad$ Yes

An error that overstates the ending inventory will also cause net income for the period to be overstated.

Inventory turnover is calculated as cost of goods sold divided by ending inventory.

If inventories are valued using the LIFO cost flow assumption, they should not be classified as a current asset on the balance sheet.

Disclosures about inventory should include each of the following except the

Under the retail inventory method, the estimated cost of ending inventory is computed by multiplying the cost-to-retail ratio by

Manufacturers usually classify inventory into all the following general categories except

The cost of goods available for sale consists of the beginning inventory plus the cost of goods purchased.

Inventory is reported in the financial statements at

In applying the LIFO assumption in a perpetual inventory system, the cost of the units most recently purchased prior to sale is allocated first to the units sold.

The expense recognition principle requires that the cost of goods sold be matched against the ending merchandise inventory in order to determine income.

In periods of inflation, phantom or paper profits may be reported as a result of using the

Understating beginning inventory will understate

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, Stock Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Filters

Exam 6: Inventories

Under IFRS, companies can choose which inventory system? LIFO \quad\quad FIFO a. Yes \quad\quad No b. Yes \quad\quad Yes c. No \quad\quad Yes d. No \quad\quad No

Selection of an inventory costing method by management does not usually depend on

Inventories are defined by IFRS as

If a company has no beginning inventory and the unit price of inventory is increasing during a period, the cost of goods available for sale during the period will be the same under the LIFO and FIFO inventory methods.

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

Inventory written down under lower-of-cost-or market may be written back up to original cost in a subsequent period under GAAP \quad IFRS a. Yes \quad\quad No b. Yes \quad\quad Yes c. No \quad\quad No d. No \quad\quad Yes

An error that overstates the ending inventory will also cause net income for the period to be overstated.

Inventory turnover is calculated as cost of goods sold divided by ending inventory.

If inventories are valued using the LIFO cost flow assumption, they should not be classified as a current asset on the balance sheet.

Disclosures about inventory should include each of the following except the

Under the retail inventory method, the estimated cost of ending inventory is computed by multiplying the cost-to-retail ratio by

Manufacturers usually classify inventory into all the following general categories except

The cost of goods available for sale consists of the beginning inventory plus the cost of goods purchased.

Inventory is reported in the financial statements at

In applying the LIFO assumption in a perpetual inventory system, the cost of the units most recently purchased prior to sale is allocated first to the units sold.

The expense recognition principle requires that the cost of goods sold be matched against the ending merchandise inventory in order to determine income.

In periods of inflation, phantom or paper profits may be reported as a result of using the

Understating beginning inventory will understate

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, Stock Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Filters

Under IFRS, companies can choose which inventory system? LIFO $\quad$ $\quad$ FIFO a. Yes $\quad$ $\quad$ No b. Yes $\quad$ $\quad$ Yes c. No $\quad$ $\quad$ Yes d. No $\quad$ $\quad$ No

Inventory written down under lower-of-cost-or market may be written back up to original cost in a subsequent period under GAAP $\quad$ IFRS a. Yes $\quad$ $\quad$ No b. Yes $\quad$ $\quad$ Yes c. No $\quad$ $\quad$ No d. No $\quad$ $\quad$ Yes