Question 1

Which of the following is correct regarding vendor rebates?

Accepted Answer

A) Vendor rebates are generally recorded as a reduction from sales. 
B) The rebate is never recognized until it is actually received. 
C) If the rebate meets asset recognition criteria, the receivable is allocated to goods sold. 
D) Vendor rebates are generally recorded as a reduction in the purchase cost of inventory. 
A) Vendor rebates are generally recorded as a reduction from sales. 
B) The rebate is never recognized until it is actually received. 
C) If the rebate meets asset recognition criteria, the receivable is allocated to goods sold. 
D) Vendor rebates are generally recorded as a reduction in the purchase cost of inventory.

Question 2

The following information was derived from the 2017 accounting records of Jersey Co.:   Jersey's 2017 cost of sales was

Accepted Answer

A) $563,000. 
B) $558,000. 
C) $488,000. 
D) $460,000. 
A) $563,000. 
B) $558,000. 
C) $488,000. 
D) $460,000.

Question 3

The following information is available for Figment Ltd.for last year:   The cost of goods sold is equal to 300% of selling expenses.What is the cost of goods available for sale?

Accepted Answer

A) Cannot be determined from information given. 
B) $490,000 
C) $590,000 
D) $788,000 
A) Cannot be determined from information given. 
B) $490,000 
C) $590,000 
D) $788,000

Question 4

Maine Co.uses the retail inventory method to estimate its inventory for interim statement purposes.Data relating to the calculation of the inventory at July 31, 2017, are as follows:   Under the lower of average cost and market method, Maine's estimated inventory at July 31, 2017, is

Accepted Answer

A) $85,000. 
B) $119,000. 
C) $133,000. 
D) $136,000. 
A) $85,000. 
B) $119,000. 
C) $133,000. 
D) $136,000.

Question 5

Fred received merchandise on consignment from Dino.As of January 31, Fred included the goods in inventory, but did NOT record the transaction.The effect of this on Fred's financial statements for January 31 would be

Accepted Answer

A) net income, current assets, and retained earnings were understated. 
B) net income was correct and current assets were understated. 
C) net income, current assets, and retained earnings were overstated. 
D) net income and current assets were overstated and current liabilities were understated. 
A) net income, current assets, and retained earnings were understated. 
B) net income was correct and current assets were understated. 
C) net income, current assets, and retained earnings were overstated. 
D) net income and current assets were overstated and current liabilities were understated.

Question 6

For calendar 2017, the gross profit of Allan Corp.was $270,000; the cost of goods manufactured was $720,000; the beginning inventories of goods in process and finished goods were $67,000 and $114,000, respectively; and the ending inventories of goods in process and finished goods were $88,000 and $142,000, respectively.Allan Corp.'s sales for 2017 must have been

Accepted Answer

A) $692,000. 
B) $1,104,000. 
C) $990,000. 
D) $962,000. 
A) $692,000. 
B) $1,104,000. 
C) $990,000. 
D) $962,000.

Question 7

Use the following information for questions.
Transactions for Durham Ltd.for the month of June were:   Littlejohn uses the periodic inventory system.
-The ending inventory on a weighted average-cost basis, rounded to the nearest dollar, is

Accepted Answer

A) $1,956. 
B) $1,970. 
C) $1,980. 
D) $1,995. 
A) $1,956. 
B) $1,970. 
C) $1,980. 
D) $1,995.

Question 8

Ritz Ltd.has the following data related to an item of inventory:   If Ritz Ltd.uses FIFO, the value assigned to cost of goods sold is

Accepted Answer

A) $3,105. 
B) $3,187. 
C) $2,295. 
D) $1,369. 
A) $3,105. 
B) $3,187. 
C) $2,295. 
D) $1,369.

Question 9

On April 15 of the current year, a fire destroyed the entire inventory of Nourish, a retail store.The following data are available:   The amount of the inventory loss is estimated to be

Accepted Answer

A) $327,000. 
B) $67,000. 
C) $159,250. 
D) $53,600. 
A) $327,000. 
B) $67,000. 
C) $159,250. 
D) $53,600.

Question 10

For calendar 2017, Gomez Corporation reported pre-tax income of $70,000.A recount of the company's inventory revealed that 2017 ending inventory was overstated by $10,000.What is Gomez's corrected pre-tax income for 2017?

Accepted Answer

A) $60,000 
B) $80,000 
C) $70,000 
D) $75,000 
A) $60,000 
B) $80,000 
C) $70,000 
D) $75,000

Question 11

The gross profit method of inventory valuation

Accepted Answer

A) can be used as a substitute for the annual physical count of inventory. 
B) assumes past percentages are appropriate for the current period. 
C) uses markups but not markdowns. 
D) is designed to approximate inventory valuation at the lower of cost and net realizable value. 
A) can be used as a substitute for the annual physical count of inventory. 
B) assumes past percentages are appropriate for the current period. 
C) uses markups but not markdowns. 
D) is designed to approximate inventory valuation at the lower of cost and net realizable value.

Question 12

Which of the following criteria does NOT have to be met in order to be able to value inventory above cost?

Accepted Answer

A) The cost of disposal can be estimated. 
B) The sale is assured. 
C) There is an active market for the product. 
D) The sale must already have occurred. 
A) The cost of disposal can be estimated. 
B) The sale is assured. 
C) There is an active market for the product. 
D) The sale must already have occurred.

Question 13

Use the following information for questions.
Tehran Ltd.uses FIFO to cost its inventory.The following information is available for Tehran's inventory of product # 101:  
-Assuming Tehran uses the periodic inventory system, the entry to account for the March 1 purchase is

Accepted Answer

A) debit Inventory and credit Accounts Payable, $875. 
B) debit Purchases and credit Accounts Payable, $875. 
C) debit Accounts Payable and credit Purchases, $875. 
D) debit Accounts Payable and credit Inventory, $875. 
A) debit Inventory and credit Accounts Payable, $875. 
B) debit Purchases and credit Accounts Payable, $875. 
C) debit Accounts Payable and credit Purchases, $875. 
D) debit Accounts Payable and credit Inventory, $875.

Question 14

Which of the following statements regarding presentation and disclosure of inventories is.INCORRECT?

Accepted Answer

A) Major spare parts and standby equipment may be recognized as inventory if they are not expected to provide benefits beyond the current accounting period. 
B) Inventories are one of the most significant assest of manufacturing and merchandising companies. 
C) The classification of inventory seldom requires the exercise of professional judgement. 
D) Minor spare parts and servicing equipment are usually classified as inventory. 
A) Major spare parts and standby equipment may be recognized as inventory if they are not expected to provide benefits beyond the current accounting period. 
B) Inventories are one of the most significant assest of manufacturing and merchandising companies. 
C) The classification of inventory seldom requires the exercise of professional judgement. 
D) Minor spare parts and servicing equipment are usually classified as inventory.

Question 15

For last month, Perma Corp.'s cost of goods sold and ending inventory were $100,000 and $150,000 respectively.Assuming Perma had neither purchases nor returns during the month, what was the cost of its beginning inventory?

Accepted Answer

A) $50,000 
B) $150,000 
C) $250,000 
D) Cannot be determined from the information given. 
A) $50,000 
B) $150,000 
C) $250,000 
D) Cannot be determined from the information given.

Question 16

Borrowing costs

Accepted Answer

A) are never included in the costs of inventories. 
B) must only be included in inventory cost if they relate to inventories produced in large quantities and on a repetitive basis. 
C) are capitalized if incurred to finance activities that help bring inventories to a condition available for sale. 
D) none of the above 
A) are never included in the costs of inventories. 
B) must only be included in inventory cost if they relate to inventories produced in large quantities and on a repetitive basis. 
C) are capitalized if incurred to finance activities that help bring inventories to a condition available for sale. 
D) none of the above

Question 17

Use the following information for questions.
Shanti Inc.is a calendar-year corporation.Its financial statements for the years 2018 and 2017 contained errors as follows:  
-Assume that the proper correcting entries were made at December 31, 2017.By how much will 2018 income before taxes be overstated or understated?

Accepted Answer

A) $2,000 understated 
B) $2,000 overstated 
C) $4,000 overstated 
D) $10,000 overstated 
A) $2,000 understated 
B) $2,000 overstated 
C) $4,000 overstated 
D) $10,000 overstated

Question 18

The retail inventory method is NOT used

Accepted Answer

A) as a control measure to determine inventory shortages. 
B) to allow the calculation of net income without taking a physical inventory count. 
C) to control quantities of merchandise on hand. 
D) to calculate the gross profit percentage. 
A) as a control measure to determine inventory shortages. 
B) to allow the calculation of net income without taking a physical inventory count. 
C) to control quantities of merchandise on hand. 
D) to calculate the gross profit percentage.

Question 19

Use the following information for questions.
Transactions for Durham Ltd.for the month of June were:   Littlejohn uses the periodic inventory system.
-The ending inventory on a FIFO basis is

Accepted Answer

A) $2,100. 
B) $2,065. 
C) $1,920. 
D) $1,900. 
A) $2,100. 
B) $2,065. 
C) $1,920. 
D) $1,900.

Question 20

On December 27, Cloud Corp.accepted delivery of merchandise which it purchased on account.As of December 31, Cloud had recorded the transaction, but did not include the merchandise in its year-end inventory.The effect of this on its December 31 financial statements would be

Accepted Answer

A) net income, current assets, and retained earnings were understated. 
B) net income was correct and current assets were understated. 
C) net income was understated and current liabilities were overstated. 
D) net income was overstated and current assets were understated. 
A) net income, current assets, and retained earnings were understated. 
B) net income was correct and current assets were understated. 
C) net income was understated and current liabilities were overstated. 
D) net income was overstated and current assets were understated.

Exam 8: Inventory

Which of the following is correct regarding vendor rebates?

The following information was derived from the 2017 accounting records of Jersey Co.: Jersey's 2017 cost of sales was

The following information is available for Figment Ltd.for last year: The cost of goods sold is equal to 300% of selling expenses.What is the cost of goods available for sale?

Maine Co.uses the retail inventory method to estimate its inventory for interim statement purposes.Data relating to the calculation of the inventory at July 31, 2017, are as follows: Under the lower of average cost and market method, Maine's estimated inventory at July 31, 2017, is

Fred received merchandise on consignment from Dino.As of January 31, Fred included the goods in inventory, but did NOT record the transaction.The effect of this on Fred's financial statements for January 31 would be

Use the following information for questions. Transactions for Durham Ltd.for the month of June were: Littlejohn uses the periodic inventory system. -The ending inventory on a weighted average-cost basis, rounded to the nearest dollar, is

Ritz Ltd.has the following data related to an item of inventory: If Ritz Ltd.uses FIFO, the value assigned to cost of goods sold is

On April 15 of the current year, a fire destroyed the entire inventory of Nourish, a retail store.The following data are available: The amount of the inventory loss is estimated to be

For calendar 2017, Gomez Corporation reported pre-tax income of $70,000.A recount of the company's inventory revealed that 2017 ending inventory was overstated by $10,000.What is Gomez's corrected pre-tax income for 2017?

The gross profit method of inventory valuation

Which of the following criteria does NOT have to be met in order to be able to value inventory above cost?

Use the following information for questions. Tehran Ltd.uses FIFO to cost its inventory.The following information is available for Tehran's inventory of product # 101: -Assuming Tehran uses the periodic inventory system, the entry to account for the March 1 purchase is

Which of the following statements regarding presentation and disclosure of inventories is.INCORRECT?

For last month, Perma Corp.'s cost of goods sold and ending inventory were $100,000 and $150,000 respectively.Assuming Perma had neither purchases nor returns during the month, what was the cost of its beginning inventory?

Borrowing costs

The retail inventory method is NOT used

Use the following information for questions. Transactions for Durham Ltd.for the month of June were: Littlejohn uses the periodic inventory system. -The ending inventory on a FIFO basis is

On December 27, Cloud Corp.accepted delivery of merchandise which it purchased on account.As of December 31, Cloud had recorded the transaction, but did not include the merchandise in its year-end inventory.The effect of this on its December 31 financial statements would be

The Canadian Financial Reporting Environment

Conceptual Framework Underlying Financial Reporting

The Accounting Information System and Measurement Issues

Reporting Financial Performance

Financial Position and Cash Flows

Revenue Recognition

Cash and Receivables

Investments

Property, Plant, and Equipment: Accounting Model Basics

Depreciation, Impairment, and Disposition

Intangible Assets and Goodwill

Non-Financial Andcurrent Liabilities

Long-Term Financial Liabilities

Shareholders Equity

Complex Financial Instruments

Earnings Per Share

Income Taxes

Pensions and Other Employee Future Benefits

Leases

Accounting Changes and Error Analysis

Statement of Cash Flows

Other Measurement and Disclosure Issues

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