Question 1

In a period of inflation, the cost flow method that results in the lowest income taxes is the

Accepted Answer

A) FIFO method. 
B) LIFO method. 
C) average-cost method. 
D) gross profit method. 
A) FIFO method. 
B) LIFO method. 
C) average-cost method. 
D) gross profit method.

Question 2

If a company changes its inventory valuation method, the effect of the change on net income should be disclosed in the financial statements.

Accepted Answer

A) True 
 B)False

Question 3

IFRS defines market for lower-of-cost-or market as

Accepted Answer

A) net realizable value. 
B) estimated selling price in the ordinary course of business. 
C) replacement cost. 
D) replacement cost less costs of disposal. 
A) net realizable value. 
B) estimated selling price in the ordinary course of business. 
C) replacement cost. 
D) replacement cost less costs of disposal.

Question 4

The inventory turnover is computed 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 5

In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the

Accepted Answer

A) FIFO method. 
B) LIFO method. 
C) average-cost method. 
D) tax method. 
A) FIFO method. 
B) LIFO method. 
C) average-cost method. 
D) tax method.

Question 6

Langer Company has the following inventory information.   Assuming that a perpetual inventory system is used, what is the ending inventory (round all calculations to nearest dollar) under the moving-average cost method?

Accepted Answer

A) $2,930 
B) $2,966 
C) $2,986 
D) $3,054 
A) $2,930 
B) $2,966 
C) $2,986 
D) $3,054

Question 7

Accountants believe that the write down from cost to market should not be made in the period in which the price decline occurs.

Accepted Answer

A) True 
 B)False

Question 8

Transactions that affect inventories on hand have an effect on both the balance sheet and the income statement.

Accepted Answer

A) True 
 B)False

Question 9

Items waiting to be used in production are considered to be

Accepted Answer

A) raw materials. 
B) work in progress. 
C) finished goods. 
D) merchandise inventory. 
A) raw materials. 
B) work in progress. 
C) finished goods. 
D) merchandise inventory.

Question 10

At May 1, 2015, Kibbee Company had beginning inventory consisting of 200 units with a unit cost of $7. During May, the company purchased inventory as follows:   The company sold 1,000 units during the month for $12 per unit. Kibbee uses the average cost method. Kibbee's gross profit for the month of May is

Accepted Answer

A) $4,625. 
B) $4,571. 
C) $4,000. 
D) $4,500. 
A) $4,625. 
B) $4,571. 
C) $4,000. 
D) $4,500.

Question 11

Inventoriable costs may be thought of as a pool of costs consisting of which two elements?

Accepted Answer

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

Question 12

Which of the following items will increase inventoriable costs for the buyer of goods?

Accepted Answer

A) Purchase returns and allowances granted by the seller 
B) Purchase discounts taken by the purchaser 
C) Freight charges paid by the seller 
D) Freight charges paid by the purchaser 
A) Purchase returns and allowances granted by the seller 
B) Purchase discounts taken by the purchaser 
C) Freight charges paid by the seller 
D) Freight charges paid by the purchaser

Question 13

Under generally accepted accounting principles, management has the choice of physically counting inventory on hand at the end of the year or using the gross profit method to estimate the ending inventory.

Accepted Answer

A) True 
 B)False

Question 14

The major IFRS requirements related to accounting for and reporting inventories are

Accepted Answer

A) the same as GAAP. 
B) the same as GAAP with a couple of exceptions. 
C) completely different from GAAP. 
D) not comparable to GAAP. 
A) the same as GAAP. 
B) the same as GAAP with a couple of exceptions. 
C) completely different from GAAP. 
D) not comparable to GAAP.

Question 15

Which of the following is not a common cost flow assumption used in costing inventory?

Accepted Answer

A) First-in, first-out 
B) Middle-in, first-out 
C) Last-in, first-out 
D) Average cost 
A) First-in, first-out 
B) Middle-in, first-out 
C) Last-in, first-out 
D) Average cost

Question 16

Which of the following statements is true regarding inventory cost flow assumptions?

Accepted Answer

A) A company may use more than one costing method concurrently. 
B) A company must comply with the method specified by industry standards. 
C) A company must use the same method for domestic and foreign operations. 
D) A company may never change its inventory costing method once it has chosen a method. 
A) A company may use more than one costing method concurrently. 
B) A company must comply with the method specified by industry standards. 
C) A company must use the same method for domestic and foreign operations. 
D) A company may never change its inventory costing method once it has chosen a method.

Question 17

Romanoff Industries had the following inventory transactions occur during 2015:   The company sold 150 units at $70 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's after-tax income using LIFO? (rounded to whole dollars)

Accepted Answer

A) $2,323 
B) $2,486 
C) $3,318 
D) $3,552 
A) $2,323 
B) $2,486 
C) $3,318 
D) $3,552

Question 18

GAAP defines market for lower-of-cost-or market essentially as

Accepted Answer

A) net realizable value. 
B) estimated selling price in the ordinary course of business. 
C) replacement cost. 
D) replacement cost less costs of disposal. 
A) net realizable value. 
B) estimated selling price in the ordinary course of business. 
C) replacement cost. 
D) replacement cost less costs of disposal.

Question 19

In a period of rising prices, FIFO will have

Accepted Answer

A) lower net income than LIFO. 
B) lower cost of goods sold than LIFO. 
C) lower income tax expense than LIFO. 
D) lower net purchases than LIFO. 
A) lower net income than LIFO. 
B) lower cost of goods sold than LIFO. 
C) lower income tax expense than LIFO. 
D) lower net purchases than LIFO.

Question 20

The managers of Constantine Company receive performance bonuses based on the net income of the firm. Which inventory costing method are they likely to favor in periods of declining prices?

Accepted Answer

A) LIFO 
B) Average Cost 
C) FIFO 
D) Physical inventory method 
A) LIFO 
B) Average Cost 
C) FIFO 
D) Physical inventory method

In a period of inflation, the cost flow method that results in the lowest income taxes is the

If a company changes its inventory valuation method, the effect of the change on net income should be disclosed in the financial statements.

IFRS defines market for lower-of-cost-or market as

The inventory turnover is computed by dividing cost of goods sold by

In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the

Langer Company has the following inventory information. Assuming that a perpetual inventory system is used, what is the ending inventory (round all calculations to nearest dollar) under the moving-average cost method?

Accountants believe that the write down from cost to market should not be made in the period in which the price decline occurs.

Transactions that affect inventories on hand have an effect on both the balance sheet and the income statement.

Items waiting to be used in production are considered to be

Inventoriable costs may be thought of as a pool of costs consisting of which two elements?

Which of the following items will increase inventoriable costs for the buyer of goods?

Under generally accepted accounting principles, management has the choice of physically counting inventory on hand at the end of the year or using the gross profit method to estimate the ending inventory.

The major IFRS requirements related to accounting for and reporting inventories are

Which of the following is not a common cost flow assumption used in costing inventory?

Which of the following statements is true regarding inventory cost flow assumptions?

Romanoff Industries had the following inventory transactions occur during 2015: The company sold 150 units at $70 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's after-tax income using LIFO? (rounded to whole dollars)

GAAP defines market for lower-of-cost-or market essentially as

In a period of rising prices, FIFO will have

The managers of Constantine Company receive performance bonuses based on the net income of the firm. Which inventory costing method are they likely to favor in periods of declining prices?

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

In a period of inflation, the cost flow method that results in the lowest income taxes is the

If a company changes its inventory valuation method, the effect of the change on net income should be disclosed in the financial statements.

IFRS defines market for lower-of-cost-or market as

The inventory turnover is computed by dividing cost of goods sold by

In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the

Langer Company has the following inventory information. Assuming that a perpetual inventory system is used, what is the ending inventory (round all calculations to nearest dollar) under the moving-average cost method?

Accountants believe that the write down from cost to market should not be made in the period in which the price decline occurs.

Transactions that affect inventories on hand have an effect on both the balance sheet and the income statement.

Items waiting to be used in production are considered to be

Inventoriable costs may be thought of as a pool of costs consisting of which two elements?

Which of the following items will increase inventoriable costs for the buyer of goods?

Under generally accepted accounting principles, management has the choice of physically counting inventory on hand at the end of the year or using the gross profit method to estimate the ending inventory.

The major IFRS requirements related to accounting for and reporting inventories are

Which of the following is not a common cost flow assumption used in costing inventory?

Which of the following statements is true regarding inventory cost flow assumptions?

Romanoff Industries had the following inventory transactions occur during 2015: The company sold 150 units at $70 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's after-tax income using LIFO? (rounded to whole dollars)

GAAP defines market for lower-of-cost-or market essentially as

In a period of rising prices, FIFO will have

The managers of Constantine Company receive performance bonuses based on the net income of the firm. Which inventory costing method are they likely to favor in periods of declining prices?

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