Exam 6: Reporting and Analyzing Inventory

In a period of inflation (prices are rising), which inventory cost formula will result in higher profit?

An overstatement of the beginning inventory results in

Gene's Used Cars uses the specific identification method of costing inventory.During March, Gene purchased three cars for $5,000, $6,500, and $8,000, respectively.During March, two cars are sold for $7,500 each.Gene determines that at March 31, the $8,000 car is still on hand.What is Gene's cost of goods sold for March?

A problem with the specific identification method is that

XYZ Inc.is a wholesaler of electronics.It purchased 1,000 units of Product X for $500 each during 2015.The selling price during the year was $750 per unit.At year end, it had 100 units on hand and due of changes in technology, the selling price will have to be reduced by 40% in order to sell them.The value of each unit of Product X for the year-end inventory presentation should be

If goods in transit are shipped FOB destination,

XYZ Inc.uses the average cost formula in a perpetual inventory system. (Use unrounded numbers in your calculations but round to the nearest cent for presentation purposes in your answer.) If XYZ Inc.was using the FIFO cost formula instead of average, gross profit from the June 8 sale would be

A system of internal control is not needed when a company regularly takes a physical inventory.

Identify the effects of inventory errors on the financial statements.

To accurately determine inventory quantities, a company must

If beginning inventory is understated by $10,000, the effect of this error in the current period is

Use the following information for the month of June for questions XYZ Inc.uses the average cost formula in a perpetual inventory system. (Use unrounded numbers in your calculations but round to the nearest cent for presentation purposes in your answer.) -XYZ Inc.has an ending inventory on June 30 of

Use the following information for the month of June for questions XYZ Inc.uses the average cost formula in a perpetual inventory system. (Use unrounded numbers in your calculations but round to the nearest cent for presentation purposes in your answer.) -Total cost of goods sold for the month of June is

The selection of an appropriate inventory cost formula for a company is made by:

Use the following information for questions The following information was available for Riley Limited at December 31, 2015: -Riley's inventory turnover was

Inventory cost methods such as FIFO and average deal more with the flow of costs than with the flow of goods.

In order to remove the cost of items sold from inventory, a unit cost must be determined.

In periods of falling prices, FIFO will result in a higher ending inventory valuation than the average cost formula.

The FIFO inventory cost formula agrees closely to the actual physical movement of goods in most businesses.

A company may use more than one inventory cost determination method if it has different types of inventory.