Question 1

Where should raw materials be classified on the statement of financial position?

Accepted Answer

A) Prepaid expenses. 
B) Inventory. 
C) Equipment. 
D) Not on the statement of financial position. 
A) Prepaid expenses. 
B) Inventory. 
C) Equipment. 
D) Not on the statement of financial position.

Question 2

Checkers uses the periodic inventory system.For the current month, the beginning inventory consisted of 1,200 units that cost $12 each.During the month, the company made two purchases: 500 units at $13 each and 2,000 units at $13.50 each.Checkers also sold 2,150 units during the month.Using the LIFO method, what is the ending inventory?

Accepted Answer

A) $20,073. 
B) $18,600. 
C) $20,925. 
D) $18,950. 
A) $20,073. 
B) $18,600. 
C) $20,925. 
D) $18,950.

Question 3

Which of the following inventories carried by a manufacturer is similar to the merchandise inventory of a retailer?

Accepted Answer

A) Raw materials. 
B) Work-in-process. 
C) Finished goods. 
D) Supplies. 
A) Raw materials. 
B) Work-in-process. 
C) Finished goods. 
D) Supplies.

Question 4

Many companies use LIFO for both tax and internal reporting purposes.

Accepted Answer

A) True 
 B)False

Question 5

Tanner Corporation's inventory cost on its statement of financial position was lower using first-in, first-out than it would have been using average cost.Assuming no beginning inventory, in what direction did the cost of purchases move during the period?

Accepted Answer

A) Up 
B) Down 
C) Steady 
D) Cannot be determined 
A) Up 
B) Down 
C) Steady 
D) Cannot be determined

Question 6

In a period of falling prices, which inventory method generally provides the lowest amount of net income?

Accepted Answer

A) Average cost. 
B) Moving average. 
C) FIFO. 
D) Specific identification. 
A) Average cost. 
B) Moving average. 
C) FIFO. 
D) Specific identification.

Question 7

What is a LIFO reserve?

Accepted Answer

A) The difference between the LIFO inventory and the amount used for internal reporting purposes. 
B) The tax savings attributed to using the LIFO method. 
C) The current effect of using LIFO on net income. 
D) Change in the LIFO inventory during the year. 
A) The difference between the LIFO inventory and the amount used for internal reporting purposes. 
B) The tax savings attributed to using the LIFO method. 
C) The current effect of using LIFO on net income. 
D) Change in the LIFO inventory during the year.

Question 8

Freight costs incurred by the seller to ship merchandise to the purchaser are accounted for by the seller as part of inventory on the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 9

An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the ending inventory valuation is

Accepted Answer

A) FIFO. 
B) LIFO. 
C) specific identification. 
D) weighted-average. 
A) FIFO. 
B) LIFO. 
C) specific identification. 
D) weighted-average.

Question 10

Use the following information for questions.
Gross Corporation adopted the dollar-value LIFO method of inventory valuation on December 31, 2009.Its inventory at that date was $220,000 and the relevant price index was 100.Information regarding inventory for subsequent years is as follows:  
-What is the cost of the ending inventory at December 31, 2010 under dollar-value LIFO?

Accepted Answer

A) $240,000. 
B) $256,800. 
C) $241,400. 
D) $235,400. 
A) $240,000. 
B) $256,800. 
C) $241,400. 
D) $235,400.

Question 11

A disadvantage of LIFO is that it does not match more recent costs against current revenues as well as FIFO.

Accepted Answer

A) True 
 B)False

Question 12

Culver Company purchases the majority of its inventory from three primary suppliers for re-sale to customers around the world.Culver Company's statement of financial position will include

Accepted Answer

A) Finished goods inventory. 
B) Work-in-process inventory. 
C) Merchandise inventory. 
D) All of the choices are correct. 
A) Finished goods inventory. 
B) Work-in-process inventory. 
C) Merchandise inventory. 
D) All of the choices are correct.

Question 13

A trade discount that is granted as an incentive for a first-time customer or as a reward for large order should be accounted for by the purchaser as revenue.

Accepted Answer

A) True 
 B)False

Question 14

Amazon.com (USA) and other e-tailers account for certain selling costs--fulfillment costs related to inventory shipping and warehousing--as part of administrative expenses, instead of as cost of goods sold.Which of the following is incorrect regarding this treatment?

Accepted Answer

A) IFRS allows this treatment as long as it's applied consistently and adequately disclosed. 
B) The practice does not affect the bottom line. 
C) The practice does not affect gross margins. 
D) U.S.GAAP allows this treatment as long as it's applied consistently and adequately disclosed. 
A) IFRS allows this treatment as long as it's applied consistently and adequately disclosed. 
B) The practice does not affect the bottom line. 
C) The practice does not affect gross margins. 
D) U.S.GAAP allows this treatment as long as it's applied consistently and adequately disclosed.

Question 15

The following information applied to Howe, Inc.for 2010:   Howe's 2010 inventoriable cost was

Accepted Answer

A) $300,000. 
B) $303,000. 
C) $306,000. 
D) $311,000. 
A) $300,000. 
B) $303,000. 
C) $306,000. 
D) $311,000.

Question 16

When the double extension approach to the dollar-value LIFO inventory cost flow method is used, the inventory layer added in the current year is multiplied by an index number.How would the following be used in the calculation of this index number?

Accepted Answer

The answer of When the double extension approach to the...

Where should raw materials be classified on the statement of financial position?

Which of the following inventories carried by a manufacturer is similar to the merchandise inventory of a retailer?

Many companies use LIFO for both tax and internal reporting purposes.

Tanner Corporation's inventory cost on its statement of financial position was lower using first-in, first-out than it would have been using average cost.Assuming no beginning inventory, in what direction did the cost of purchases move during the period?

In a period of falling prices, which inventory method generally provides the lowest amount of net income?

What is a LIFO reserve?

Freight costs incurred by the seller to ship merchandise to the purchaser are accounted for by the seller as part of inventory on the statement of financial position.

An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the ending inventory valuation is

A disadvantage of LIFO is that it does not match more recent costs against current revenues as well as FIFO.

Culver Company purchases the majority of its inventory from three primary suppliers for re-sale to customers around the world.Culver Company's statement of financial position will include

A trade discount that is granted as an incentive for a first-time customer or as a reward for large order should be accounted for by the purchaser as revenue.

Amazon.com (USA) and other e-tailers account for certain selling costs--fulfillment costs related to inventory shipping and warehousing--as part of administrative expenses, instead of as cost of goods sold.Which of the following is incorrect regarding this treatment?

The following information applied to Howe, Inc.for 2010: Howe's 2010 inventoriable cost was

When the double extension approach to the dollar-value LIFO inventory cost flow method is used, the inventory layer added in the current year is multiplied by an index number.How would the following be used in the calculation of this index number?

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

Inventories: Additional Valuation Issues

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

Exam 8: Valuation of Inventories: a Cost-Basis Approach

Where should raw materials be classified on the statement of financial position?

Which of the following inventories carried by a manufacturer is similar to the merchandise inventory of a retailer?

Many companies use LIFO for both tax and internal reporting purposes.

Tanner Corporation's inventory cost on its statement of financial position was lower using first-in, first-out than it would have been using average cost.Assuming no beginning inventory, in what direction did the cost of purchases move during the period?

In a period of falling prices, which inventory method generally provides the lowest amount of net income?

What is a LIFO reserve?

Freight costs incurred by the seller to ship merchandise to the purchaser are accounted for by the seller as part of inventory on the statement of financial position.

An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the ending inventory valuation is

A disadvantage of LIFO is that it does not match more recent costs against current revenues as well as FIFO.

Culver Company purchases the majority of its inventory from three primary suppliers for re-sale to customers around the world.Culver Company's statement of financial position will include

A trade discount that is granted as an incentive for a first-time customer or as a reward for large order should be accounted for by the purchaser as revenue.

Amazon.com (USA) and other e-tailers account for certain selling costs--fulfillment costs related to inventory shipping and warehousing--as part of administrative expenses, instead of as cost of goods sold.Which of the following is incorrect regarding this treatment?

The following information applied to Howe, Inc.for 2010: Howe's 2010 inventoriable cost was

When the double extension approach to the dollar-value LIFO inventory cost flow method is used, the inventory layer added in the current year is multiplied by an index number.How would the following be used in the calculation of this index number?

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

Inventories: Additional Valuation Issues

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