Question 1

Which of the following statements is true regarding inventory cost flow assumptions?

Accepted Answer

A)  A company may use more than one costing method concurrently. 
B)  A company must comply with the method specified by industry standards. 
C)  A company must use the same method for domestic and foreign operations. 
D)  A company may never change its inventory costing method once it has chosen a method. 
A)  A company may use more than one costing method concurrently. 
B)  A company must comply with the method specified by industry standards. 
C)  A company must use the same method for domestic and foreign operations. 
D)  A company may never change its inventory costing method once it has chosen a method.

Question 2

Inventories affect

Accepted Answer

A)  only the balance sheet. 
B)  only the income statement. 
C)  both the balance sheet and the income statement. 
D)  neither the balance sheet nor the income statement. 
A)  only the balance sheet. 
B)  only the income statement. 
C)  both the balance sheet and the income statement. 
D)  neither the balance sheet nor the income statement.

Question 3

Beginning inventory plus the cost of goods purchased equals

Accepted Answer

A)  cost of goods sold. 
B)  cost of goods available for sale. 
C)  net purchases. 
D)  total goods purchased. 
A)  cost of goods sold. 
B)  cost of goods available for sale. 
C)  net purchases. 
D)  total goods purchased.

Question 4

Inventoriable costs may be thought of as a pool of costs consisting of which two elements?

Accepted Answer

A)  The cost of beginning inventory and the cost of ending inventory 
B)  The cost of ending inventory and the cost of goods purchased during the year 
C)  The cost of beginning inventory and the cost of goods purchased during the year 
D)  The difference between the costs of goods purchased and the cost of goods sold during the year 
A)  The cost of beginning inventory and the cost of ending inventory 
B)  The cost of ending inventory and the cost of goods purchased during the year 
C)  The cost of beginning inventory and the cost of goods purchased during the year 
D)  The difference between the costs of goods purchased and the cost of goods sold during the year

Question 5

Under the FIFO method, the costs of the earliest units purchased are the first charged to cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 6

Goodman Company's inventory records show the following data: $\begin{array}{lrr}&\text { Units }& \text { Unit Cost }\
\text {Inventory, January 1 } & 10,000 & \$ 9.00 \
\quad \quad \text {Purchases: June 18 } & 9,000 & 8.20 \
\quad \text { November 8 } & 6,000 & 7.00
\end{array}$ A physical inventory on December 31 shows 6,000 units on hand. Under the FIFO method, the December 31 inventory is

Accepted Answer

A)  $42,000. 
B)  $49,200. 
C)  $49,392. 
D)  $54,000. 
A)  $42,000. 
B)  $49,200. 
C)  $49,392. 
D)  $54,000.

Question 7

Eneri Company's inventory records show the following data: $\begin{array}{lcrr}&\text { Units }&\text { Unit Cost }\
\text { Inventory, January 1 } & 10,000 & \$ 9.20 \
\text { Purchases: }  \text { June 18 } & 9,000 & 8.00 \
 \text { November 8 } & 6,000 & 7.00
\end{array}$ A physical inventory on December 31 shows 4,000 units on hand. Eneri sells the units for $13 each. The company has an effective tax rate of 20%. Eneri uses the periodic inventory method. Under the LIFO method, cost of goods sold is

Accepted Answer

A)  $28,000. 
B)  $169,200. 
C)  $173,040. 
D)  $178,000. 
A)  $28,000. 
B)  $169,200. 
C)  $173,040. 
D)  $178,000.

Question 8

Priscilla has the following inventory information. $$\begin{array} { r l l r } 
\text { July } 1 & \text { Beginning Inventory } & 20 \text { units at } \$ 19 & \$ 380 \
7 & \text { Purchases } & 70 \text { units at } \$ 20 & 1,400 \
22 & \text { Purchases } & 10 \text { units at } \$ 23 &  { 230 } \&&&{ \$ 2,010 }
\end{array}$$ A physical count of merchandise inventory on July 31 reveals that there are 35 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for July is

Accepted Answer

A)  $1,280. 
B)  $1,287 
C)  $1,306. 
D)  $1,330. 
A)  $1,280. 
B)  $1,287 
C)  $1,306. 
D)  $1,330.

Question 9

Days in inventory is calculated by dividing

Accepted Answer

A)  the inventory turnover by 365 days. 
B)  average inventory by 365 days. 
C)  365 days by the inventory turnover. 
D)  365 days by average inventory. 
A)  the inventory turnover by 365 days. 
B)  average inventory by 365 days. 
C)  365 days by the inventory turnover. 
D)  365 days by average inventory.

Question 10

Goods in transit should be included in the inventory of the buyer when the

Accepted Answer

A)  public carrier accepts the goods from the seller. 
B)  goods reach the buyer. 
C)  terms of sale are FOB destination. 
D)  terms of sale are FOB shipping point. 
A)  public carrier accepts the goods from the seller. 
B)  goods reach the buyer. 
C)  terms of sale are FOB destination. 
D)  terms of sale are FOB shipping point.

Question 11

If companies have identical inventoriable costs but use different inventory flow assumptions when the price of goods have not been constant, then the

Accepted Answer

A)  cost of goods sold of the companies will be identical. 
B)  cost of goods available for sale of the companies will be identical. 
C)  ending inventory of the companies will be identical. 
D)  net income of the companies will be identical. 
A)  cost of goods sold of the companies will be identical. 
B)  cost of goods available for sale of the companies will be identical. 
C)  ending inventory of the companies will be identical. 
D)  net income of the companies will be identical.

Question 12

TB Nelson Company prepares monthly financial statements and uses the gross profit method to estimate ending inventories. Historically, the company has had a 40% gross profit rate. During June, net sales amounted to $180,000; the beginning inventory on June 1 was $54,000; and the cost of goods purchased during June amounted to $90,000. The estimated cost of TB Nelson Company's inventory on June 30 is

Accepted Answer

A)  $21,600. 
B)  $36,000. 
C)  $72,000. 
D)  $126,000. 
A)  $21,600. 
B)  $36,000. 
C)  $72,000. 
D)  $126,000.

Question 13

Under the lower-of-cost-or-market basis in valuing inventory, net realizable value is defined as

Accepted Answer

A)  current replacement cost. 
B)  selling price. 
C)  historical cost plus 10%. 
D)  selling price less markup. 
A)  current replacement cost. 
B)  selling price. 
C)  historical cost plus 10%. 
D)  selling price less markup.

Question 14

Raw materials inventories are the goods that a manufacturer has completed and are ready to be sold to customers.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not a common cost flow assumption used in costing inventory?

Accepted Answer

A)  First-in, first-out 
B)  Middle-in, first-out 
C)  Last-in, first-out 
D)  Average cost 
A)  First-in, first-out 
B)  Middle-in, first-out 
C)  Last-in, first-out 
D)  Average cost

Question 16

Goods that have been purchased FOB destination but are in transit, should be excluded from a physical count of goods.

Accepted Answer

A) True 
 B)False

Question 17

The specific identification method of costing inventories is used when the

Accepted Answer

A)  physical flow of units cannot be determined. 
B)  company sells large quantities of relatively low cost homogeneous items. 
C)  company sells large quantities of relatively low cost heterogeneous items. 
D)  company sells a limited quantity of high-unit cost items. 
A)  physical flow of units cannot be determined. 
B)  company sells large quantities of relatively low cost homogeneous items. 
C)  company sells large quantities of relatively low cost heterogeneous items. 
D)  company sells a limited quantity of high-unit cost items.

Question 18

Specific Identification can be used for inventory valuation 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 Specific Identification can be used for inventory...

Question 19

Management may choose any inventory costing method it desires as long as the cost flow assumption chosen is consistent with the physical movement of goods in the company.

Accepted Answer

A) True 
 B)False

Which of the following statements is true regarding inventory cost flow assumptions?

Inventories affect

Beginning inventory plus the cost of goods purchased equals

Inventoriable costs may be thought of as a pool of costs consisting of which two elements?

Under the FIFO method, the costs of the earliest units purchased are the first charged to cost of goods sold.

Goodman Company's inventory records show the following data: Units Unit Cost Inventory, January 1 10,000 \ 9.00 Purchases: June 18 9,000 8.20 November 8 6,000 7.00 A physical inventory on December 31 shows 6,000 units on hand. Under the FIFO method, the December 31 inventory is

Days in inventory is calculated by dividing

Goods in transit should be included in the inventory of the buyer when the

If companies have identical inventoriable costs but use different inventory flow assumptions when the price of goods have not been constant, then the

Under the lower-of-cost-or-market basis in valuing inventory, net realizable value is defined as

Raw materials inventories are the goods that a manufacturer has completed and are ready to be sold to customers.

Which of the following is not a common cost flow assumption used in costing inventory?

Goods that have been purchased FOB destination but are in transit, should be excluded from a physical count of goods.

The specific identification method of costing inventories is used when the

Specific Identification can be used for inventory valuation under GAAP $\quad$ IFRS a. Yes $\quad$ $\quad$ No b. Yes $\quad$ $\quad$ Yes c. No $\quad$ $\quad$ No d. No $\quad$ $\quad$ Yes

Management may choose any inventory costing method it desires as long as the cost flow assumption chosen is consistent with the physical movement of goods in the company.

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

Which of the following statements is true regarding inventory cost flow assumptions?

Inventories affect

Beginning inventory plus the cost of goods purchased equals

Inventoriable costs may be thought of as a pool of costs consisting of which two elements?

Under the FIFO method, the costs of the earliest units purchased are the first charged to cost of goods sold.

Goodman Company's inventory records show the following data: Units Unit Cost Inventory, January 1 10,000 \ 9.00 Purchases: June 18 9,000 8.20 November 8 6,000 7.00 A physical inventory on December 31 shows 6,000 units on hand. Under the FIFO method, the December 31 inventory is

Days in inventory is calculated by dividing

Goods in transit should be included in the inventory of the buyer when the

If companies have identical inventoriable costs but use different inventory flow assumptions when the price of goods have not been constant, then the

Under the lower-of-cost-or-market basis in valuing inventory, net realizable value is defined as

Raw materials inventories are the goods that a manufacturer has completed and are ready to be sold to customers.

Which of the following is not a common cost flow assumption used in costing inventory?

Goods that have been purchased FOB destination but are in transit, should be excluded from a physical count of goods.

The specific identification method of costing inventories is used when the

Specific Identification can be used for inventory valuation under GAAP \quad IFRS a. Yes \quad\quad No b. Yes \quad\quad Yes c. No \quad\quad No d. No \quad\quad Yes

Management may choose any inventory costing method it desires as long as the cost flow assumption chosen is consistent with the physical movement of goods in the company.

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

Specific Identification can be used for inventory valuation under GAAP $\quad$ IFRS a. Yes $\quad$ $\quad$ No b. Yes $\quad$ $\quad$ Yes c. No $\quad$ $\quad$ No d. No $\quad$ $\quad$ Yes