Question 1

When a buyer enters into a formal, noncancelable purchase contract, an asset and a liability are recorded at the inception of the contract.

Accepted Answer

A) True 
 B)False

Question 2

Use the following information for questions.
The following data concerning the retail inventory method are taken from the financial records of Welch Company.  
-The ending inventory at retail should be

Accepted Answer

A) $74,000. 
B) $60,000. 
C) $64,000. 
D) $42,000. 
A) $74,000. 
B) $60,000. 
C) $64,000. 
D) $42,000.

Question 3

Which of the following is not an acceptable method of applying the lower-of-cost-or-net realizable value method to inventory?

Accepted Answer

A) Inventory location. 
B) Groups of inventory items. 
C) Individual item. 
D) Total of the inventory. 
A) Inventory location. 
B) Groups of inventory items. 
C) Individual item. 
D) Total of the inventory.

Question 4

The sales price for a product provides a gross profit of 25% of sales price.What is the gross profit as a percentage of cost?

Accepted Answer

A) 25%. 
B) 20%. 
C) 33%. 
D) Not enough information is provided to determine. 
A) 25%. 
B) 20%. 
C) 33%. 
D) Not enough information is provided to determine.

Question 5

The unrealized gains and losses related to recording biological assets at their correct valuation are reported as part of other comprehensive income on the statement of comprehensive income.

Accepted Answer

A) True 
 B)False

Question 6

Under IFRS, LIFO is permitted for financial reporting purposes if the company's host country permits it for tax purposes.

Accepted Answer

A) True 
 B)False

Question 7

Lenny's Llamas purchased 1,000 llamas on January 1, 2011.These llamas will be sheared semiannually and their wool sold to specialty clothing manufacturers.The llamas were purchased for $222,000.During 2011 the change in fair value due to growth and price changes is $14,100, the wool harvested but not yet sold is valued at net realizable value of $27,000, and the change in fair value due to harvest is ($1,750).On Lenny's Llamas income statement for the year ending December 31, 2011, what amount of unrealized gain on biological assets will be reported?

Accepted Answer

A) $39,350 
B) $41,100 
C) $14,100 
D) $12,350 
A) $39,350 
B) $41,100 
C) $14,100 
D) $12,350

Question 8

At a lump-sum cost of $48,000, Pratt Company recently purchased the following items for resale:   The appropriate cost per unit of inventory is:

Accepted Answer

The answer of At a lump-sum cost of $48,000, Pratt...

Question 9

In most situations, the gross profit percentage is stated as a percentage of cost.

Accepted Answer

A) True 
 B)False

Question 10

The following information is available for October for Norton Company.   A fire destroyed Norton's October 31 inventory, leaving undamaged inventory with a cost of $6,000.Using the gross profit method, the estimated ending inventory destroyed by fire is

Accepted Answer

A) $34,000. 
B) $154,000. 
C) $160,000. 
D) $200,000. 
A) $34,000. 
B) $154,000. 
C) $160,000. 
D) $200,000.

Question 11

Use the following information for questions.
Miles Company, a wholesaler, budgeted the following sales for the indicated months:   
All merchandise is marked up to sell at its invoice cost plus 20%.Merchandise inventories at the beginning of each month are at 30% of that month's projected cost of goods sold.
-Merchandise purchases for July are anticipated to be

Accepted Answer

A) $1,632,000. 
B) $2,076,000. 
C) $1,700,000. 
D) $1,730,000. 
A) $1,632,000. 
B) $2,076,000. 
C) $1,700,000. 
D) $1,730,000.

Question 12

For 2010, cost of goods available for sale for Tate Corporation was $900,000.The gross profit rate was 20%.Sales for the year were $800,000.What was the amount of the ending inventory?

Accepted Answer

A) $0. 
B) $260,000. 
C) $180,000. 
D) $160,000. 
A) $0. 
B) $260,000. 
C) $180,000. 
D) $160,000.

Question 13

Under International Financial Reporting Standards (IFRS), separate reporting of reversals of inventory write-downs in the period of sale are required.

Accepted Answer

A) True 
 B)False

Question 14

An inventory method which is designed to approximate inventory valuation at the lower of cost or net realizable value is

Accepted Answer

A) last-in, first-out. 
B) first-in, first-out. 
C) conventional retail method. 
D) specific identification. 
A) last-in, first-out. 
B) first-in, first-out. 
C) conventional retail method. 
D) specific identification.

Question 15

Lower-of-cost-or-net realizable value as it applies to inventory is best described as the

Accepted Answer

A) reporting of a loss when there is a decrease in the future utility below the original cost. 
B) method of determining cost of goods sold. 
C) assumption to determine inventory flow. 
D) change in inventory value to net realizable value. 
A) reporting of a loss when there is a decrease in the future utility below the original cost. 
B) method of determining cost of goods sold. 
C) assumption to determine inventory flow. 
D) change in inventory value to net realizable value.

Question 16

On March 15, a fire destroyed Interlock Company's entire retail inventory.The inventory on hand as of January 1 totaled $1,650,000.From January 1 through the time of the fire, the company made purchases of $683,000, incurred freight-in of $78,000, and had sales of $1,210,000.Assuming the rate of gross profit to selling price is 30%, what is the approximate value of the inventory that was destroyed?

Accepted Answer

A) $2,048,000. 
B) $1,486,000. 
C) $1,564,000. 
D) $2,411,000. 
A) $2,048,000. 
B) $1,486,000. 
C) $1,564,000. 
D) $2,411,000.

Question 17

LF Corporation, a manufacturer of Mexican foods, contracted in 2010 to purchase 1,000 pounds of a spice mixture at $5.00 per pound, delivery to be made in spring of 2011.By 12\31\10, the price per pound of the spice mixture had dropped to $4.60 per pound.In 2010, LF should recognize

Accepted Answer

A)  a loss of $5,000. 
B) a loss of $400. 
C) no gain or loss. 
D) a gain of $400. 
A)  a loss of $5,000. 
B) a loss of $400. 
C) no gain or loss. 
D) a gain of $400.

Question 18

Biological assets, such as milking cows, are reported as non-current assets at fair value less costs to sale (net realizable value).

Accepted Answer

A) True 
 B)False

Question 19

Under International Financial Reporting Standards (IFRS), agricultural activity can result in the production of both agricultural produce and biological assets.

Accepted Answer

A) True 
 B)False

Question 20

Boxer Inc.uses the conventional retail method to determine its ending inventory at cost.Assume the beginning inventory at cost (retail) were $65,500 ($99,000), purchases during the current year at cost (retail) were $568,000 ($865,600), freight-in on these purchases totaled $26,500, sales during the current year totaled $811,000, and net markups were $69,000.What is the ending inventory value at cost?

Accepted Answer

A) $222,600. 
B) $174,366. 
C) $142,241. 
D) $152,308. 
A) $222,600. 
B) $174,366. 
C) $142,241. 
D) $152,308.

When a buyer enters into a formal, noncancelable purchase contract, an asset and a liability are recorded at the inception of the contract.

Use the following information for questions. The following data concerning the retail inventory method are taken from the financial records of Welch Company. -The ending inventory at retail should be

Which of the following is not an acceptable method of applying the lower-of-cost-or-net realizable value method to inventory?

The sales price for a product provides a gross profit of 25% of sales price.What is the gross profit as a percentage of cost?

The unrealized gains and losses related to recording biological assets at their correct valuation are reported as part of other comprehensive income on the statement of comprehensive income.

Under IFRS, LIFO is permitted for financial reporting purposes if the company's host country permits it for tax purposes.

At a lump-sum cost of $48,000, Pratt Company recently purchased the following items for resale: The appropriate cost per unit of inventory is:

In most situations, the gross profit percentage is stated as a percentage of cost.

The following information is available for October for Norton Company. A fire destroyed Norton's October 31 inventory, leaving undamaged inventory with a cost of $6,000.Using the gross profit method, the estimated ending inventory destroyed by fire is

For 2010, cost of goods available for sale for Tate Corporation was $900,000.The gross profit rate was 20%.Sales for the year were $800,000.What was the amount of the ending inventory?

Under International Financial Reporting Standards (IFRS), separate reporting of reversals of inventory write-downs in the period of sale are required.

An inventory method which is designed to approximate inventory valuation at the lower of cost or net realizable value is

Lower-of-cost-or-net realizable value as it applies to inventory is best described as the

LF Corporation, a manufacturer of Mexican foods, contracted in 2010 to purchase 1,000 pounds of a spice mixture at $5.00 per pound, delivery to be made in spring of 2011.By 12\31\10, the price per pound of the spice mixture had dropped to $4.60 per pound.In 2010, LF should recognize

Biological assets, such as milking cows, are reported as non-current assets at fair value less costs to sale (net realizable value).

Under International Financial Reporting Standards (IFRS), agricultural activity can result in the production of both agricultural produce and biological assets.

Financial Accounting and Accounting Standards

Conceptual Framework Underlying Financial Accounting

The Accounting Information System

Income Statement and Related Information

Statement of Financial Position and Statement of Cash Flows

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities, Provisions, and Contingencies

Non-Current Liabilities

Equity

Dilutive Securities and Earnings Per Share

Investments

Revenue

Accounting for Income Taxes

Accounting for Pensions and Postretirement Benefits

Accounting for Leases

Accounting Changes and Error Analysis

Statement of Cash Flows

Presentation and Disclosure in Financial Reporting

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Exam 9: Inventories: Additional Valuation Issues

When a buyer enters into a formal, noncancelable purchase contract, an asset and a liability are recorded at the inception of the contract.

Use the following information for questions. The following data concerning the retail inventory method are taken from the financial records of Welch Company. -The ending inventory at retail should be

Which of the following is not an acceptable method of applying the lower-of-cost-or-net realizable value method to inventory?

The sales price for a product provides a gross profit of 25% of sales price.What is the gross profit as a percentage of cost?

The unrealized gains and losses related to recording biological assets at their correct valuation are reported as part of other comprehensive income on the statement of comprehensive income.

Under IFRS, LIFO is permitted for financial reporting purposes if the company's host country permits it for tax purposes.

At a lump-sum cost of $48,000, Pratt Company recently purchased the following items for resale: The appropriate cost per unit of inventory is:

In most situations, the gross profit percentage is stated as a percentage of cost.

The following information is available for October for Norton Company. A fire destroyed Norton's October 31 inventory, leaving undamaged inventory with a cost of $6,000.Using the gross profit method, the estimated ending inventory destroyed by fire is

For 2010, cost of goods available for sale for Tate Corporation was $900,000.The gross profit rate was 20%.Sales for the year were $800,000.What was the amount of the ending inventory?

Under International Financial Reporting Standards (IFRS), separate reporting of reversals of inventory write-downs in the period of sale are required.

An inventory method which is designed to approximate inventory valuation at the lower of cost or net realizable value is

Lower-of-cost-or-net realizable value as it applies to inventory is best described as the

LF Corporation, a manufacturer of Mexican foods, contracted in 2010 to purchase 1,000 pounds of a spice mixture at $5.00 per pound, delivery to be made in spring of 2011.By 12\31\10, the price per pound of the spice mixture had dropped to $4.60 per pound.In 2010, LF should recognize

Biological assets, such as milking cows, are reported as non-current assets at fair value less costs to sale (net realizable value).

Under International Financial Reporting Standards (IFRS), agricultural activity can result in the production of both agricultural produce and biological assets.

Financial Accounting and Accounting Standards

Conceptual Framework Underlying Financial Accounting

The Accounting Information System

Income Statement and Related Information

Statement of Financial Position and Statement of Cash Flows

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities, Provisions, and Contingencies

Non-Current Liabilities

Equity

Dilutive Securities and Earnings Per Share

Investments

Revenue

Accounting for Income Taxes

Accounting for Pensions and Postretirement Benefits

Accounting for Leases

Accounting Changes and Error Analysis

Statement of Cash Flows

Presentation and Disclosure in Financial Reporting

Filters