Question 1

Under a consignment arrangement, the

Accepted Answer

A) consignor has ownership until goods are sold to a customer. 
B) consignor has ownership until goods are shipped to the consignee. 
C) consignee has ownership when the goods are in the consignee's possession. 
D) consigned goods are included in the inventory of the consignee. 
A) consignor has ownership until goods are sold to a customer. 
B) consignor has ownership until goods are shipped to the consignee. 
C) consignee has ownership when the goods are in the consignee's possession. 
D) consigned goods are included in the inventory of the consignee. A

Question 2

Effie Company uses a periodic inventory system. Details for the inventory account for the month of January, 2015 are as follows:   An end of the month (1/31/15) inventory showed that 160 units were on hand. How many units did the company sell during January, 2015?

Accepted Answer

A) 60 
B) 160 
C) 200 
D) 240 
A) 60 
B) 160 
C) 200 
D) 240 D

Question 3

Inventoriable costs include all of the following except the

Accepted Answer

A) freight costs incurred when buying inventory. 
B) costs of the purchasing and warehousing departments. 
C) cost of the beginning inventory. 
D) cost of goods purchased. 
A) freight costs incurred when buying inventory. 
B) costs of the purchasing and warehousing departments. 
C) cost of the beginning inventory. 
D) cost of goods purchased. B

Question 4

Two companies report the same cost of goods available for sale but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using

Accepted Answer

A) LIFO will have the highest ending inventory. 
B) FIFO will have the highest cost of good sold. 
C) FIFO will have the highest ending inventory. 
D) LIFO will have the lowest cost of goods sold. 
A) LIFO will have the highest ending inventory. 
B) FIFO will have the highest cost of good sold. 
C) FIFO will have the highest ending inventory. 
D) LIFO will have the lowest cost of goods sold.

Question 5

Use of the LIFO inventory valuation method enables a company to report paper or phantom profits.

Accepted Answer

A) True 
 B)False

Question 6

The specific identification method of inventory costing

Accepted Answer

A) always maximizes a company's net income. 
B) always minimizes a company's net income. 
C) has no effect on a company's net income. 
D) may enable management to manipulate net income. 
A) always maximizes a company's net income. 
B) always minimizes a company's net income. 
C) has no effect on a company's net income. 
D) may enable management to manipulate net income.

Question 7

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 8

If a company uses the FIFO cost flow assumption, the cost of goods sold for the period will be the same under a perpetual or periodic inventory system.

Accepted Answer

A) True 
 B)False

Question 9

The cost of goods available for sale consists of the beginning inventory plus the cost of goods purchased.

Accepted Answer

A) True 
 B)False

Question 10

An error that overstates the ending inventory will also cause net income for the period to be overstated.

Accepted Answer

A) True 
 B)False

Question 11

Under the lower-of-cost-or-market basis in valuing inventory, market 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 12

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

Question 13

Companies adopt different cost flow methods for each of the following reasons except

Accepted Answer

A) balance sheet effects. 
B) cost effects. 
C) income statements effects. 
D) tax effects. 
A) balance sheet effects. 
B) cost effects. 
C) income statements effects. 
D) tax effects.

Question 14

Inventories are reported in the current assets section of the balance sheet immediately below receivables.

Accepted Answer

A) True 
 B)False

Question 15

Sawyer Company uses the perpetual inventory system and the moving-average method to value inventories. On August 1, there were 10,000 units valued at $30,000 in the beginning inventory. On August 10, 20,000 units were purchased for $6 per unit. On August 15, 24,000 units were sold for $12 per unit. The amount charged to cost of goods sold on August 15 was

Accepted Answer

A) $30,000. 
B) $108,000. 
C) $120,000. 
D) $144,000. 
A) $30,000. 
B) $108,000. 
C) $120,000. 
D) $144,000.

Question 16

The accounting principle that requires that the cost flow assumption be consistent with the physical movement of goods is

Accepted Answer

A) called the expense recognition principle. 
B) called the consistency principle. 
C) nonexistent; that is, there is no accounting requirement. 
D) called the physical flow assumption. 
A) called the expense recognition principle. 
B) called the consistency principle. 
C) nonexistent; that is, there is no accounting requirement. 
D) called the physical flow assumption.

Question 17

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 18

The only acceptable cost flow assumptions under IFRS are

Accepted Answer

A) FIFO and LIFO. 
B) FIFO and average. 
C) LIFO and average. 
D) FIFO, LIFO and average. 
A) FIFO and LIFO. 
B) FIFO and average. 
C) LIFO and average. 
D) FIFO, LIFO and average.

Question 19

Inventory items on an assembly line in various stages of production are classified as

Accepted Answer

A) Finished goods. 
B) Work in process. 
C) Raw materials. 
D) Merchandise inventory. 
A) Finished goods. 
B) Work in process. 
C) Raw materials. 
D) Merchandise inventory.

Question 20

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.

Under a consignment arrangement, the

Effie Company uses a periodic inventory system. Details for the inventory account for the month of January, 2015 are as follows: An end of the month (1/31/15) inventory showed that 160 units were on hand. How many units did the company sell during January, 2015?

Inventoriable costs include all of the following except the

Two companies report the same cost of goods available for sale but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using

Use of the LIFO inventory valuation method enables a company to report paper or phantom profits.

The specific identification method of inventory costing

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

If a company uses the FIFO cost flow assumption, the cost of goods sold for the period will be the same under a perpetual or periodic inventory system.

The cost of goods available for sale consists of the beginning inventory plus the cost of goods purchased.

An error that overstates the ending inventory will also cause net income for the period to be overstated.

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

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.

Companies adopt different cost flow methods for each of the following reasons except

Inventories are reported in the current assets section of the balance sheet immediately below receivables.

The accounting principle that requires that the cost flow assumption be consistent with the physical movement of goods is

Days in inventory is calculated by dividing

The only acceptable cost flow assumptions under IFRS are

Inventory items on an assembly line in various stages of production are classified as

Beginning inventory plus the cost of goods purchased equals

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

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Exam 6: Inventories

Under a consignment arrangement, the

Effie Company uses a periodic inventory system. Details for the inventory account for the month of January, 2015 are as follows: An end of the month (1/31/15) inventory showed that 160 units were on hand. How many units did the company sell during January, 2015?

Inventoriable costs include all of the following except the

Two companies report the same cost of goods available for sale but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using

Use of the LIFO inventory valuation method enables a company to report paper or phantom profits.

The specific identification method of inventory costing

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

If a company uses the FIFO cost flow assumption, the cost of goods sold for the period will be the same under a perpetual or periodic inventory system.

The cost of goods available for sale consists of the beginning inventory plus the cost of goods purchased.

An error that overstates the ending inventory will also cause net income for the period to be overstated.

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

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.

Companies adopt different cost flow methods for each of the following reasons except

Inventories are reported in the current assets section of the balance sheet immediately below receivables.

The accounting principle that requires that the cost flow assumption be consistent with the physical movement of goods is

Days in inventory is calculated by dividing

The only acceptable cost flow assumptions under IFRS are

Inventory items on an assembly line in various stages of production are classified as

Beginning inventory plus the cost of goods purchased equals

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

Filters