Question 1

The requirements for accounting for and reporting of inventories under IFRS, compared to GAAP, tend to be more

Accepted Answer

A) detailed. 
B) rules-based. 
C) principles-based. 
D) full of disclosure requirements. 
A) detailed. 
B) rules-based. 
C) principles-based. 
D) full of disclosure requirements.

Question 2

Cost of goods sold is computed from the following equation:

Accepted Answer

A) beginning inventory - cost of goods purchased + ending inventory. 
B) sales - cost of goods purchased + beginning inventory - ending inventory. 
C) sales + gross profit - ending inventory + beginning inventory. 
D) beginning inventory + cost of goods purchased - ending inventory. 
A) beginning inventory - cost of goods purchased + ending inventory. 
B) sales - cost of goods purchased + beginning inventory - ending inventory. 
C) sales + gross profit - ending inventory + beginning inventory. 
D) beginning inventory + cost of goods purchased - ending inventory.

Question 3

Othello Company understated its inventory by $20,000 at December 31, 2014. It did not correct the error in 2014 or 2015. As a result, Othello's stockholder's equity was:

Accepted Answer

A) understated at December 31, 2014, and overstated at December 31, 2015. 
B) understated at December 31, 2014, and properly stated at December 31, 2015. 
C) overstated at December 31, 2014, and overstated at December 31, 2015. 
D) understated at December 31, 2014, and understated at December 31, 2015. 
A) understated at December 31, 2014, and overstated at December 31, 2015. 
B) understated at December 31, 2014, and properly stated at December 31, 2015. 
C) overstated at December 31, 2014, and overstated at December 31, 2015. 
D) understated at December 31, 2014, and understated at December 31, 2015.

Question 4

Moroni Industries has the following inventory information.   Assuming that a periodic inventory system is used, what is the amount allocated to ending inventory on a FIFO basis?

Accepted Answer

A) $11,500 
B) $11,520 
C) $33,960 
D) $33,980 
A) $11,500 
B) $11,520 
C) $33,960 
D) $33,980

Question 5

Under the retail inventory method, the estimated cost of ending inventory is computed by multiplying the cost-to-retail ratio by

Accepted Answer

A) net sales. 
B) goods available for sale at retail. 
C) goods purchased at retail. 
D) ending inventory at retail. 
A) net sales. 
B) goods available for sale at retail. 
C) goods purchased at retail. 
D) ending inventory at retail.

Question 6

The lower-of-cost-or-market basis is an example of the accounting concept of conservatism.

Accepted Answer

A) True 
 B)False

Question 7

The specific identification method of costing inventories is used when the

Accepted Answer

A) physical flow of units cannot be determined. 
B) company sells large quantities of relatively low cost homogeneous items. 
C) company sells large quantities of relatively low cost heterogeneous items. 
D) company sells a limited quantity of high-unit cost items. 
A) physical flow of units cannot be determined. 
B) company sells large quantities of relatively low cost homogeneous items. 
C) company sells large quantities of relatively low cost heterogeneous items. 
D) company sells a limited quantity of high-unit cost items.

Question 8

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. The value of Kibbee's inventory at May 31, 2015 is

Accepted Answer

A) $3,000. 
B) $4,425. 
C) $4,500. 
D) $7,500. 
A) $3,000. 
B) $4,425. 
C) $4,500. 
D) $7,500.

Question 9

The selection of an appropriate inventory cost flow assumption for an individual company is made by

Accepted Answer

A) the external auditors. 
B) the SEC. 
C) the internal auditors. 
D) management. 
A) the external auditors. 
B) the SEC. 
C) the internal auditors. 
D) management.

Question 10

A company purchased inventory as follows:   The average unit cost for inventory is

Accepted Answer

A) $5.00. 
B) $5.50. 
C) $5.70. 
D) $6.00. 
A) $5.00. 
B) $5.50. 
C) $5.70. 
D) $6.00.

Question 11

Freight terms of FOB shipping point mean that the

Accepted Answer

A) seller must debit freight out. 
B) buyer must bear the freight costs. 
C) goods are placed free on board at the buyer's place of business. 
D) seller must bear the freight costs. 
A) seller must debit freight out. 
B) buyer must bear the freight costs. 
C) goods are placed free on board at the buyer's place of business. 
D) seller must bear the freight costs.

Question 12

Pappy's Staff Junkets has the following inventory information.   Assuming that a perpetual inventory system is used, what is the ending inventory on a LIFO basis?

Accepted Answer

A) $5,848 
B) $5,860 
C) $6,068 
D) $6,346 
A) $5,848 
B) $5,860 
C) $6,068 
D) $6,346

Question 13

If a company has no beginning inventory and the unit price of inventory is increasing during a period, the cost of goods available for sale during the period will be the same under the LIFO and FIFO inventory methods.

Accepted Answer

A) True 
 B)False

Question 14

Which one of the following inventory methods is often impractical to use?

Accepted Answer

A) Specific identification 
B) LIFO 
C) FIFO 
D) Average cost 
A) Specific identification 
B) LIFO 
C) FIFO 
D) Average cost

Question 15

Inventories affect

Accepted Answer

A) only the balance sheet. 
B) only the income statement. 
C) both the balance sheet and the income statement. 
D) neither the balance sheet nor the income statement. 
A) only the balance sheet. 
B) only the income statement. 
C) both the balance sheet and the income statement. 
D) neither the balance sheet nor the income statement.

Question 16

When valuing ending inventory under a perpetual inventory system, the

Accepted Answer

A) valuation using the LIFO assumption is the same as the valuation using the LIFO assumption under the periodic inventory system. 
B) moving average requires that a new average be computed after every sale. 
C) valuation using the FIFO assumption is the same as under the periodic inventory system. 
D) earliest units purchased during the period using the LIFO assumption are allocated to the cost of goods sold when units are sold. 
A) valuation using the LIFO assumption is the same as the valuation using the LIFO assumption under the periodic inventory system. 
B) moving average requires that a new average be computed after every sale. 
C) valuation using the FIFO assumption is the same as under the periodic inventory system. 
D) earliest units purchased during the period using the LIFO assumption are allocated to the cost of goods sold when units are sold.

Question 17

The following information was available for Pete Company at December 31, 2015: beginning inventory $90,000; ending inventory $70,000; cost of goods sold $984,000; and sales $1,350,000. Pete's inventory turnover in 2015 was

Accepted Answer

A) 10.9 times. 
B) 12.3 times. 
C) 14.1 times. 
D) 16.9 times. 
A) 10.9 times. 
B) 12.3 times. 
C) 14.1 times. 
D) 16.9 times.

Question 18

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 FIFO? (rounded to whole dollars)

Accepted Answer

A) $2,322 
B) $2,486 
C) $3,318 
D) $3,552 
A) $2,322 
B) $2,486 
C) $3,318 
D) $3,552

Question 19

Netta Shutters has the following inventory information.   A physical count of merchandise inventory on November 30 reveals that there are 90 units on hand. Assume a periodic inventory system is used. Assuming that the specific identification method is used and that ending inventory consists of 20 units from each of the three purchases and 30 units from the November 1 inventory, cost of goods sold is

Accepted Answer

A) $1,740. 
B) $1,772. 
C) $1,782. 
D) $1,794. 
A) $1,740. 
B) $1,772. 
C) $1,782. 
D) $1,794.

Question 20

The more inventory a company has in stock, the greater the company's profit.

Accepted Answer

A) True 
 B)False

The requirements for accounting for and reporting of inventories under IFRS, compared to GAAP, tend to be more

Cost of goods sold is computed from the following equation:

Othello Company understated its inventory by $20,000 at December 31, 2014. It did not correct the error in 2014 or 2015. As a result, Othello's stockholder's equity was:

Moroni Industries has the following inventory information. Assuming that a periodic inventory system is used, what is the amount allocated to ending inventory on a FIFO basis?

Under the retail inventory method, the estimated cost of ending inventory is computed by multiplying the cost-to-retail ratio by

The lower-of-cost-or-market basis is an example of the accounting concept of conservatism.

The specific identification method of costing inventories is used when the

The selection of an appropriate inventory cost flow assumption for an individual company is made by

A company purchased inventory as follows: The average unit cost for inventory is

Freight terms of FOB shipping point mean that the

Pappy's Staff Junkets has the following inventory information. Assuming that a perpetual inventory system is used, what is the ending inventory on a LIFO basis?

If a company has no beginning inventory and the unit price of inventory is increasing during a period, the cost of goods available for sale during the period will be the same under the LIFO and FIFO inventory methods.

Which one of the following inventory methods is often impractical to use?

Inventories affect

When valuing ending inventory under a perpetual inventory system, the

The following information was available for Pete Company at December 31, 2015: beginning inventory $90,000; ending inventory $70,000; cost of goods sold $984,000; and sales $1,350,000. Pete's inventory turnover in 2015 was

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 FIFO? (rounded to whole dollars)

The more inventory a company has in stock, the greater the company's profit.

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

Exam 6: Inventories

The requirements for accounting for and reporting of inventories under IFRS, compared to GAAP, tend to be more

Cost of goods sold is computed from the following equation:

Othello Company understated its inventory by $20,000 at December 31, 2014. It did not correct the error in 2014 or 2015. As a result, Othello's stockholder's equity was:

Moroni Industries has the following inventory information. Assuming that a periodic inventory system is used, what is the amount allocated to ending inventory on a FIFO basis?

Under the retail inventory method, the estimated cost of ending inventory is computed by multiplying the cost-to-retail ratio by

The lower-of-cost-or-market basis is an example of the accounting concept of conservatism.

The specific identification method of costing inventories is used when the

The selection of an appropriate inventory cost flow assumption for an individual company is made by

A company purchased inventory as follows: The average unit cost for inventory is

Freight terms of FOB shipping point mean that the

Pappy's Staff Junkets has the following inventory information. Assuming that a perpetual inventory system is used, what is the ending inventory on a LIFO basis?

If a company has no beginning inventory and the unit price of inventory is increasing during a period, the cost of goods available for sale during the period will be the same under the LIFO and FIFO inventory methods.

Which one of the following inventory methods is often impractical to use?

Inventories affect

When valuing ending inventory under a perpetual inventory system, the

The following information was available for Pete Company at December 31, 2015: beginning inventory $90,000; ending inventory $70,000; cost of goods sold $984,000; and sales $1,350,000. Pete's inventory turnover in 2015 was

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 FIFO? (rounded to whole dollars)

The more inventory a company has in stock, the greater the company's profit.

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