Question 1

All of the following costs should be charged against revenue in the period in which costs are incurred except for

Accepted Answer

A) manufacturing overhead costs for a product manufactured and sold in the same accounting period. 
B) costs which will not benefit any future period. 
C) costs from idle manufacturing capacity resulting from an unexpected plant shutdown. 
D) costs of normal shrinkage and scrap incurred for the manufacture of a product in ending inventory. 
A) manufacturing overhead costs for a product manufactured and sold in the same accounting period. 
B) costs which will not benefit any future period. 
C) costs from idle manufacturing capacity resulting from an unexpected plant shutdown. 
D) costs of normal shrinkage and scrap incurred for the manufacture of a product in ending inventory.

Question 2

A company's cost of goods sold and sales were $281,250 and $1.2 million respectively. Assuming an inventory turnover of 3.5 what was the company's average inventory? (round to the nearest dollar)

Accepted Answer

A) $342,857 
B) $85,341 
C) $80,357 
D) $61,433 
A) $342,857 
B) $85,341 
C) $80,357 
D) $61,433

Question 3

If a material amount of inventory has been ordered through a formal purchase contract at the balance sheet date for future delivery at firm prices,

Accepted Answer

A) this fact must be disclosed. 
B) disclosure is required only if prices have declined since the date of the order. 
C) disclosure is required only if prices have since risen substantially. 
D) an appropriation of retained earnings is necessary. 
A) this fact must be disclosed. 
B) disclosure is required only if prices have declined since the date of the order. 
C) disclosure is required only if prices have since risen substantially. 
D) an appropriation of retained earnings is necessary.

Question 4

The balance in Jordan Co.'s accounts payable account at December 31, 2010 was $600,000 before any necessary year-end adjustments relating to the following:   In Jordan's December 31, 2010 balance sheet, the accounts payable should be

Accepted Answer

A) $680,000 
B) $675,000 
C) $650,000 
D) $630,000 
A) $680,000 
B) $675,000 
C) $650,000 
D) $630,000

Question 5

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. 
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.

Question 6

Which of the following is correct?

Accepted Answer

A) Selling costs are product costs. 
B) Manufacturing overhead costs are product costs. 
C) Interest costs for routine inventories are product costs. 
D) All of these. 
A) Selling costs are product costs. 
B) Manufacturing overhead costs are product costs. 
C) Interest costs for routine inventories are product costs. 
D) All of these.

Question 7

On June 15, 2010, Solder Corporation accepted delivery of merchandise which it purchased on account.As of June 30, Solder had not recorded the transaction or included the merchandise in its inventory.The effect of this on its balance sheet for June 30, 2010 would be

Accepted Answer

A) assets and shareholders' equity were overstated but liabilities were not affected. 
B) shareholders' equity was the only item affected by the omission. 
C) assets, liabilities, and shareholders' equity were understated. 
D) none of these. 
A) assets and shareholders' equity were overstated but liabilities were not affected. 
B) shareholders' equity was the only item affected by the omission. 
C) assets, liabilities, and shareholders' equity were understated. 
D) none of these.

Question 8

Which statement is true about the gross profit method of inventory valuation?

Accepted Answer

A) It can be used as a substitute for the annual physical count of inventory. 
B) It assumes past percentages are appropriate for the current period. 
C) It uses mark-ups but not markdowns. 
D) It is designed to approximate inventory valuation at the lower of cost and market. 
A) It can be used as a substitute for the annual physical count of inventory. 
B) It assumes past percentages are appropriate for the current period. 
C) It uses mark-ups but not markdowns. 
D) It is designed to approximate inventory valuation at the lower of cost and market.

Question 9

For 2010, cost of goods available for sale for Volker Corporation was $870,000.The gross profit rate was 40%.Sales for the year were $600,000.What was the amount of the ending inventory?

Accepted Answer

A) $260,000. 
B) $320,000. 
C) $0. 
D) $510,000. 
A) $260,000. 
B) $320,000. 
C) $0. 
D) $510,000.

Question 10

Which of the following statements best describes the treatment of selling expenses with respect to inventories?

Accepted Answer

A) They are generally treated as period costs. 
B) They are generally unlikely to be related to unsold inventory. 
C) None of these 
D) (a) and (b) 
A) They are generally treated as period costs. 
B) They are generally unlikely to be related to unsold inventory. 
C) None of these 
D) (a) and (b)

Question 11

The primary basis of accounting for inventories is cost.A departure from the cost basis of pricing the inventory is required where there is evidence that when the goods are sold in the ordinary course of business their

Accepted Answer

A) selling price will be less than their replacement cost. 
B) replacement cost will be more than their net realizable value. 
C) cost will be less than their replacement cost. 
D) future utility will be less than their cost. 
A) selling price will be less than their replacement cost. 
B) replacement cost will be more than their net realizable value. 
C) cost will be less than their replacement cost. 
D) future utility will be less than their cost.

Question 12

Lower of cost and market

Accepted Answer

A) is most conservative if applied to the total inventory. 
B) is most conservative if applied to major categories of inventory. 
C) is most conservative if applied to individual items of inventory. 
D) must be applied to major categories for taxes. 
A) is most conservative if applied to the total inventory. 
B) is most conservative if applied to major categories of inventory. 
C) is most conservative if applied to individual items of inventory. 
D) must be applied to major categories for taxes.

Question 13

On June 1, 2006, Meisner Corp.sold merchandise with a list price of $15,000 to Metz on account.Meisner allowed trade discounts of 30 percent and 20 percent.Credit terms were 2/15, n/40 and the sale was made f.o.b.shipping point.Meisner prepaid $300 of delivery costs for Metz as an accommodation.On June 12, 2010, Meisner received from Metz a remittance in full payment amounting to

Accepted Answer

A) $8,397. 
B) $8,532. 
C) $8,526. 
D) $8,232. 
A) $8,397. 
B) $8,532. 
C) $8,526. 
D) $8,232.

Question 14

Napier Co.had 150 units of product A on hand at January 1, 2010, costing $42 each. Purchases of product A during January were as follows:   A physical count on January 31, 2010 shows 200 units of product A on hand.The cost of the inventory at January 31, 2010 under the FIFO method is

Accepted Answer

A) $8,200. 
B) $9,400. 
C) $8,900. 
D) $9,400 
A) $8,200. 
B) $9,400. 
C) $8,900. 
D) $9,400

Question 15

Which of the following criteria does not have to be met in order to be able to value inventory above cost?

Accepted Answer

A) The cost of disposal can be estimated. 
B) The sale is assured. 
C) There is an active market for the product 
D) The sale must already have occurred 
A) The cost of disposal can be estimated. 
B) The sale is assured. 
C) There is an active market for the product 
D) The sale must already have occurred

Question 16

If a unit of inventory has declined in value below original cost, but the market value exceeds net realizable value, the amount to be used for purposes of inventory valuation is

Accepted Answer

A) net realizable value. 
B) original cost. 
C) market value. 
D) net realizable value less a normal profit margin. 
A) net realizable value. 
B) original cost. 
C) market value. 
D) net realizable value less a normal profit margin.

Question 17

Which of the following statements is correct for a company that uses the FIFO costing method under a perpetual inventory system? All else being equal

Accepted Answer

A) The value of the ending inventory would be higher under a periodic system. 
B) The value of the ending inventory would be lower under a periodic system. 
C) The value of the ending inventory would be the same under a periodic system. 
D) The periodic system would not require any additional entries at the end of the period. 
A) The value of the ending inventory would be higher under a periodic system. 
B) The value of the ending inventory would be lower under a periodic system. 
C) The value of the ending inventory would be the same under a periodic system. 
D) The periodic system would not require any additional entries at the end of the period.

Question 18

Use the following information for questions 
During 2010 Ebert Corporation transferred inventory to Holger Corporation and agreed to repurchase the merchandise early in 2011.Holger then used the inventory as collateral to borrow from Norwalk Bank, remitting the proceeds to Ebert.In 2011 when Ebert repurchased the inventory, Holger used the proceeds to repay its bank loan.
-This transaction is known as a(n)

Accepted Answer

A) consignment. 
B) instalment sale. 
C) assignment for the benefit of creditors. 
D) product financing arrangement. 
A) consignment. 
B) instalment sale. 
C) assignment for the benefit of creditors. 
D) product financing arrangement.

Question 19

An inventory method which is designed to approximate inventory valuation at the lower of average cost and market is

Accepted Answer

A) last-in, first-out. 
B) weighted average. 
C) conventional retail method. 
D) specific identification. 
A) last-in, first-out. 
B) weighted average. 
C) conventional retail method. 
D) specific identification.

All of the following costs should be charged against revenue in the period in which costs are incurred except for

A company's cost of goods sold and sales were $281,250 and $1.2 million respectively. Assuming an inventory turnover of 3.5 what was the company's average inventory? (round to the nearest dollar)

If a material amount of inventory has been ordered through a formal purchase contract at the balance sheet date for future delivery at firm prices,

The balance in Jordan Co.'s accounts payable account at December 31, 2010 was $600,000 before any necessary year-end adjustments relating to the following: In Jordan's December 31, 2010 balance sheet, the accounts payable should be

When using a perpetual inventory system,

Which of the following is correct?

On June 15, 2010, Solder Corporation accepted delivery of merchandise which it purchased on account.As of June 30, Solder had not recorded the transaction or included the merchandise in its inventory.The effect of this on its balance sheet for June 30, 2010 would be

Which statement is true about the gross profit method of inventory valuation?

For 2010, cost of goods available for sale for Volker Corporation was $870,000.The gross profit rate was 40%.Sales for the year were $600,000.What was the amount of the ending inventory?

Which of the following statements best describes the treatment of selling expenses with respect to inventories?

The primary basis of accounting for inventories is cost.A departure from the cost basis of pricing the inventory is required where there is evidence that when the goods are sold in the ordinary course of business their

Lower of cost and market

Napier Co.had 150 units of product A on hand at January 1, 2010, costing $42 each. Purchases of product A during January were as follows: A physical count on January 31, 2010 shows 200 units of product A on hand.The cost of the inventory at January 31, 2010 under the FIFO method is

Which of the following criteria does not have to be met in order to be able to value inventory above cost?

If a unit of inventory has declined in value below original cost, but the market value exceeds net realizable value, the amount to be used for purposes of inventory valuation is

Which of the following statements is correct for a company that uses the FIFO costing method under a perpetual inventory system? All else being equal

An inventory method which is designed to approximate inventory valuation at the lower of average cost and market is

The Canadian Financial Reporting Environment

Conceptual Framework Underlying Financial Reporting

The Accounting Information System

Reporting Financial Performance

Financial Position and Cash Flows

Revenue Recognition

Cash and Receivables

Investments

Property, Plant, and Equipment: Accounting Model Basics

Depreciation, Impairment, and Disposition

Intangible Assets and Goodwill

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Exam 8: Inventory

All of the following costs should be charged against revenue in the period in which costs are incurred except for

A company's cost of goods sold and sales were $281,250 and $1.2 million respectively. Assuming an inventory turnover of 3.5 what was the company's average inventory? (round to the nearest dollar)

If a material amount of inventory has been ordered through a formal purchase contract at the balance sheet date for future delivery at firm prices,

The balance in Jordan Co.'s accounts payable account at December 31, 2010 was $600,000 before any necessary year-end adjustments relating to the following: In Jordan's December 31, 2010 balance sheet, the accounts payable should be

When using a perpetual inventory system,

Which of the following is correct?

On June 15, 2010, Solder Corporation accepted delivery of merchandise which it purchased on account.As of June 30, Solder had not recorded the transaction or included the merchandise in its inventory.The effect of this on its balance sheet for June 30, 2010 would be

Which statement is true about the gross profit method of inventory valuation?

For 2010, cost of goods available for sale for Volker Corporation was $870,000.The gross profit rate was 40%.Sales for the year were $600,000.What was the amount of the ending inventory?

Which of the following statements best describes the treatment of selling expenses with respect to inventories?

The primary basis of accounting for inventories is cost.A departure from the cost basis of pricing the inventory is required where there is evidence that when the goods are sold in the ordinary course of business their

Lower of cost and market

Napier Co.had 150 units of product A on hand at January 1, 2010, costing $42 each. Purchases of product A during January were as follows: A physical count on January 31, 2010 shows 200 units of product A on hand.The cost of the inventory at January 31, 2010 under the FIFO method is

Which of the following criteria does not have to be met in order to be able to value inventory above cost?

If a unit of inventory has declined in value below original cost, but the market value exceeds net realizable value, the amount to be used for purposes of inventory valuation is

Which of the following statements is correct for a company that uses the FIFO costing method under a perpetual inventory system? All else being equal

An inventory method which is designed to approximate inventory valuation at the lower of average cost and market is

The Canadian Financial Reporting Environment

Conceptual Framework Underlying Financial Reporting

The Accounting Information System

Reporting Financial Performance

Financial Position and Cash Flows

Revenue Recognition

Cash and Receivables

Investments

Property, Plant, and Equipment: Accounting Model Basics

Depreciation, Impairment, and Disposition

Intangible Assets and Goodwill

Filters