Exam 6: Reporting and Analyzing Inventory

A company just starting in business purchased three merchandise inventory items at the following prices. March 2, $75; March 7, $80; and March 15, $90. If the company sold two units for $125 each on March 10 and March 20, and used the FIFO cost formula in a perpetual inventory system, the gross profit for March would be

An error that overstates the ending inventory will cause profit for the period to be understated.

If goods in transit are shipped FOB destination,

NHL Canada Ltd. has a days in inventory ratio of 40 and average inventory of $254,000. What is its cost of goods sold?

Use the following information for questions The following information was available for Riley Limited at December 31, 2012: -Riley's inventory turnover was

XYZ Inc. uses the average cost formula in a perpetual inventory system. Use the following information for the month of June for questions . (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

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

An error in the physical count of goods on hand at the end of a period resulted in a $10,000 overstatement of the ending inventory. The effect of this error in the current period is

Westcom Corporation's goods in transit at December 31 include (1) sales made FOB destination, (2) sales made FOB shipping point, (3) purchases made FOB destination, and (4) purchases made FOB shipping point. Which items should be included in Westcom's inventory at December 31?

ABC Inc. uses the FIFO cost formula in a perpetual inventory system. Use the following information for the month of July for questions . -The cost of goods sold for the July 9 sale was

XYZ Inc. uses the average cost formula in a perpetual inventory system. Use the following information for the month of June for questions . (Use unrounded numbers in your calculations but round to the nearest cent for presentation purposes in your answer.) -The cost of goods sold for the June 10 sale is

Inventory that originally cost $100 had been written down to its net realizable value (NRV) of $75. Subsequently, the NRV of the inventory recovered to equal its cost of $100. In this situation, the amount of the $25 ($100 - $75) prior write-down in value should be reversed.

Approximating the physical flow of inventory is not important when selecting an inventory cost formula.

To ensure the accuracy of the inventory summary sheets during a physical inventory count,

Use the following information for questions The following information was available for Riley Limited at December 31, 2012: -Riley's days in inventory was

The method of inventory cost determination that best matches cost and revenues is FIFO.

If net realizable value of the inventory is lower than its cost, the total assets on the statement of financial position and profit on the income statement will be reduced.

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

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

The specific identification method of costing inventories is used when the