Question 1

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

Accepted Answer

A) True 
 B)False  True

Question 2

Selection of an inventory cost formula by management should be influenced most by the

Accepted Answer

A) fiscal year end. 
B) physical flow of goods. 
C) goal of reporting inventory at its lowest cost. 
D) Income tax effects. 
A) fiscal year end. 
B) physical flow of goods. 
C) goal of reporting inventory at its lowest cost. 
D) Income tax effects. B

Question 3

Cost of goods available for sale consists of the

Accepted Answer

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

Question 4

It is not possible to determine inventory losses due to theft in a periodic inventory system.

Accepted Answer

A) True 
 B)False

Question 5

Under the lower of cost and net realizable value basis, the adjusting entry to record a decline in net realizable value below cost includes a

Accepted Answer

A) debit to the Inventory account. 
B) debit to the Cost of Goods Sold account. 
C) credit to the Cost of Goods Sold account. 
D) credit to the Sales account. 
A) debit to the Inventory account. 
B) debit to the Cost of Goods Sold account. 
C) credit to the Cost of Goods Sold account. 
D) credit to the Sales account.

Question 6

The cost of goods available for sale is allocated between

Accepted Answer

A) beginning inventory and ending inventory. 
B) beginning inventory and cost of goods on hand. 
C) beginning inventory and cost of goods purchased. 
D) ending inventory and cost of goods sold. 
A) beginning inventory and ending inventory. 
B) beginning inventory and cost of goods on hand. 
C) beginning inventory and cost of goods purchased. 
D) ending inventory and cost of goods sold.

Question 7

Management may be able to manipulate profit using

Accepted Answer

A) the FIFO cost formula. 
B) specific identification. 
C) the average cost formula. 
D) Need more information to answer. 
A) the FIFO cost formula. 
B) specific identification. 
C) the average cost formula. 
D) Need more information to answer.

Question 8

An overstatement of the beginning inventory results in

Accepted Answer

A) an overstatement of profit. 
B) an understatement of profit. 
C) no effect on the period's profit. 
D) a need to adjust purchases. 
A) an overstatement of profit. 
B) an understatement of profit. 
C) no effect on the period's profit. 
D) a need to adjust purchases.

Question 9

An inventory write down from cost to net realizable value should not be made in the period in which the price decline occurs.

Accepted Answer

A) True 
 B)False

Question 10

An error that understates the ending inventory will cause the cost of goods sold for the period to be understated.

Accepted Answer

A) True 
 B)False

Question 11

Under a perpetual inventory system, both the sales amount and the cost of goods sold amount are recorded when each item of merchandise is sold.

Accepted Answer

A) True 
 B)False

Question 12

Consigned goods are held for sale by one party although ownership of the goods is retained by another party.

Accepted Answer

A) True 
 B)False

Question 13

The first-in, first-out (FIFO) inventory cost formula results in an ending inventory valued at the most recent cost.

Accepted Answer

A) True 
 B)False

Question 14

Goods in transit shipped FOB shipping point should be included in the buyer's ending inventory.

Accepted Answer

A) True 
 B)False

Question 15

Using the FIFO cost formula, the amount of the cost of goods sold for June is

Accepted Answer

A) $645. 
B) $695. 
C) $1,650. 
D) $1,700. 
A) $645. 
B) $695. 
C) $1,650. 
D) $1,700.

Question 16

The inventory turnover ratio is calculated by dividing cost of goods sold by

Accepted Answer

A) beginning inventory. 
B) ending inventory. 
C) average inventory. 
D) 365 days. 
A) beginning inventory. 
B) ending inventory. 
C) average inventory. 
D) 365 days.

Question 17

For 2012, Nervous Energy Inc. reported $24,000 beginning inventory and $26,000 ending inventory. Net sales were $160,000 and gross profit was $55,000 for the same period. Based on these figures, inventory turnover for 2012 was:

Accepted Answer

A) 3.4 times. 
B) 4.2 times. 
C) 6.4 times. 
D) 9.2 times. 
A) 3.4 times. 
B) 4.2 times. 
C) 6.4 times. 
D) 9.2 times.

Question 18

The factor which determines whether or not goods should be included in a physical count of inventory is

Accepted Answer

A) physical possession. 
B) ownership. 
C) management's judgement. 
D) whether or not the purchase price has been paid. 
A) physical possession. 
B) ownership. 
C) management's judgement. 
D) whether or not the purchase price has been paid.

Question 19

ABC Inc. uses the FIFO cost formula in a perpetual inventory system. Use the following information for the month of July for questions .  
-Ending inventory at July 31 is

Accepted Answer

A) $2,330. 
B) $720. 
C) $680. 
D) $550. 
A) $2,330. 
B) $720. 
C) $680. 
D) $550.

Question 20

A problem with the specific identification method is that

Accepted Answer

A) inventories can be reported at actual costs. 
B) management can manipulate profit. 
C) matching is not achieved. 
D) lower of cost and net realizable value cannot be applied. 
A) inventories can be reported at actual costs. 
B) management can manipulate profit. 
C) matching is not achieved. 
D) lower of cost and net realizable value cannot be applied.

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

Selection of an inventory cost formula by management should be influenced most by the

Cost of goods available for sale consists of the

It is not possible to determine inventory losses due to theft in a periodic inventory system.

Under the lower of cost and net realizable value basis, the adjusting entry to record a decline in net realizable value below cost includes a

The cost of goods available for sale is allocated between

Management may be able to manipulate profit using

An overstatement of the beginning inventory results in

An inventory write down from cost to net realizable value should not be made in the period in which the price decline occurs.

An error that understates the ending inventory will cause the cost of goods sold for the period to be understated.

Under a perpetual inventory system, both the sales amount and the cost of goods sold amount are recorded when each item of merchandise is sold.

Consigned goods are held for sale by one party although ownership of the goods is retained by another party.

The first-in, first-out (FIFO) inventory cost formula results in an ending inventory valued at the most recent cost.

Goods in transit shipped FOB shipping point should be included in the buyer's ending inventory.

Using the FIFO cost formula, the amount of the cost of goods sold for June is

The inventory turnover ratio is calculated by dividing cost of goods sold by

For 2012, Nervous Energy Inc. reported $24,000 beginning inventory and $26,000 ending inventory. Net sales were $160,000 and gross profit was $55,000 for the same period. Based on these figures, inventory turnover for 2012 was:

The factor which determines whether or not goods should be included in a physical count of inventory is

ABC Inc. uses the FIFO cost formula in a perpetual inventory system. Use the following information for the month of July for questions . -Ending inventory at July 31 is

A problem with the specific identification method is that

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

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Exam 6: Reporting and Analyzing Inventory

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

Selection of an inventory cost formula by management should be influenced most by the

Cost of goods available for sale consists of the

It is not possible to determine inventory losses due to theft in a periodic inventory system.

Under the lower of cost and net realizable value basis, the adjusting entry to record a decline in net realizable value below cost includes a

The cost of goods available for sale is allocated between

Management may be able to manipulate profit using

An overstatement of the beginning inventory results in

An inventory write down from cost to net realizable value should not be made in the period in which the price decline occurs.

An error that understates the ending inventory will cause the cost of goods sold for the period to be understated.

Under a perpetual inventory system, both the sales amount and the cost of goods sold amount are recorded when each item of merchandise is sold.

Consigned goods are held for sale by one party although ownership of the goods is retained by another party.

The first-in, first-out (FIFO) inventory cost formula results in an ending inventory valued at the most recent cost.

Goods in transit shipped FOB shipping point should be included in the buyer's ending inventory.

Using the FIFO cost formula, the amount of the cost of goods sold for June is

The inventory turnover ratio is calculated by dividing cost of goods sold by

For 2012, Nervous Energy Inc. reported $24,000 beginning inventory and $26,000 ending inventory. Net sales were $160,000 and gross profit was $55,000 for the same period. Based on these figures, inventory turnover for 2012 was:

The factor which determines whether or not goods should be included in a physical count of inventory is

ABC Inc. uses the FIFO cost formula in a perpetual inventory system. Use the following information for the month of July for questions . -Ending inventory at July 31 is

A problem with the specific identification method is that

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters