Question 1

A manufacturing company typically maintains the following inventory account(s):

Accepted Answer

A) Merchandise Inventory. 
B) Raw Materials and Work in Process only. 
C) Raw Materials, Work in Process and Finished Goods. 
D) Work in Process and Merchandise Inventory. 
A) Merchandise Inventory. 
B) Raw Materials and Work in Process only. 
C) Raw Materials, Work in Process and Finished Goods. 
D) Work in Process and Merchandise Inventory.

Question 2

Use the following information for questions.
The following information was available from the inventory records of Key Company for January:  
-Assuming that Key uses the perpetual inventory system, what should the inventory be at January 31, using the moving-average inventory method, rounded to the nearest dollar?

Accepted Answer

A) $10,237 
B) $10,260 
C) $10,360 
D) $10,505 
A) $10,237 
B) $10,260 
C) $10,360 
D) $10,505

Question 3

All of the following costs should be charged to expense in the period in which they are incurred EXCEPT for

Accepted Answer

A) manufacturing overhead costs for a product manufactured and sold in the same accounting period. 
B) costs which will not benefit any future period. 
C) costs from idle manufacturing capacity resulting from an unexpected plant shutdown. 
D) costs of normal shrinkage and scrap incurred for the manufacture of a product in ending inventory. 
A) manufacturing overhead costs for a product manufactured and sold in the same accounting period. 
B) costs which will not benefit any future period. 
C) costs from idle manufacturing capacity resulting from an unexpected plant shutdown. 
D) costs of normal shrinkage and scrap incurred for the manufacture of a product in ending inventory.

Question 4

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 no correcting entries were made at December 31, 2017.Ignoring income taxes, by how much will retained earnings at December 31, 2018 be overstated or understated?

Accepted Answer

A) $2,000 understated 
B) $18,000 understated 
C) $10,000 overstated 
D) $18,000 overstated 
A) $2,000 understated 
B) $18,000 understated 
C) $10,000 overstated 
D) $18,000 overstated

Question 5

Which of the following inventories may NOT be valued at fair value less costs to sell?

Accepted Answer

A) grain and livestock futures 
B) biological assets 
C) farm equipment 
D) agricultural produce 
A) grain and livestock futures 
B) biological assets 
C) farm equipment 
D) agricultural produce

Question 6

Use the following information for questions.
Giselle Ltd.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 pre-tax income be overstated or understated?

Accepted Answer

A) $2,000 understated 
B) $2,000 overstated 
C) $6,000 overstated 
D) $8,000 overstated 
A) $2,000 understated 
B) $2,000 overstated 
C) $6,000 overstated 
D) $8,000 overstated

Question 7

Portland Ltd.estimates the cost of its physical inventory at March 31 for use in interim financial statements.The rate of markup on cost is 25%.The following account balances are available:   What is the estimated dollar value of the inventory at March 31?

Accepted Answer

A) $18,000 
B) $175,000 
C) $81,000 
D) $368,000 
A) $18,000 
B) $175,000 
C) $81,000 
D) $368,000

Question 8

Under ASPE, agricultural produce, forest products, and mineral products inventories may be accounted for at net realizable value if

Accepted Answer

A) there is a well-established industry practice of doing so. 
B) arbitrary cost allocation would be too costly. 
C) costs to bring them to market are expected to be minimal. 
D) the company's financial results appear more favourable by doing so. 
A) there is a well-established industry practice of doing so. 
B) arbitrary cost allocation would be too costly. 
C) costs to bring them to market are expected to be minimal. 
D) the company's financial results appear more favourable by doing so.

Question 9

Tehran Ltd.uses FIFO to cost its inventory.The following information is available for Tehran's inventory of product # 101:
Beginning inventory: 120 units @ $3.14 per unit
March 1: Purchase of 250 units @ $3.50 per unit
April 10: Sale of 100 units @ $5.10 per unit
Assuming Tehran uses the perpetual inventory system, the second entry to account for the April 10 sale is

Accepted Answer

A) debit Cost of Goods Sold and credit Inventory, $350. 
B) debit Cost of Goods Sold and credit Purchases, $350. 
C) debit Cost of Goods Sold and credit Inventory, $314. 
D) debit Cost of Goods Sold and credit Purchases, $314. 
A) debit Cost of Goods Sold and credit Inventory, $350. 
B) debit Cost of Goods Sold and credit Purchases, $350. 
C) debit Cost of Goods Sold and credit Inventory, $314. 
D) debit Cost of Goods Sold and credit Purchases, $314.

Question 10

An inventory method which is designed to approximate inventory valuation at the lower of average cost and market is

Accepted Answer

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

Question 11

The following inventory transactions took place for NPR Corporation for the month of May:   The ending inventory balance for NPR Corporation, assuming the company uses a perpetual inventory system, and a first-in, first-out (FIFO)cost formula is

Accepted Answer

A) $15,000. 
B) $14,400. 
C) $12,850. 
D) $13,800. 
A) $15,000. 
B) $14,400. 
C) $12,850. 
D) $13,800.

Question 12

To produce an inventory valuation which approximates the lower of average cost and market using the conventional retail inventory method, the calculation of the ratio of cost to retail should

Accepted Answer

A) include markups but not markdowns. 
B) include markups and markdowns. 
C) ignore both markups and markdowns. 
D) include markdowns but not markups. 
A) include markups but not markdowns. 
B) include markups and markdowns. 
C) ignore both markups and markdowns. 
D) include markdowns but not markups.

Question 13

Which of the following does NOT correctly describe the concept of net realizable value (NRV)?

Accepted Answer

A) Estimates of NRV are based on the best evidence available at and shortly after the balance sheet date. 
B) NRV generally does not change over time. 
C) NRV generally changes over time. 
D) A new estimate of NRV is required at each balance sheet date. 
A) Estimates of NRV are based on the best evidence available at and shortly after the balance sheet date. 
B) NRV generally does not change over time. 
C) NRV generally changes over time. 
D) A new estimate of NRV is required at each balance sheet date.

Question 14

Washington Distribution Co.has determined its December 31, 2017 inventory on a FIFO basis at $240,000.Information pertaining to that inventory follows:   Washington records losses that result from applying the lower of cost and net realizable value rule.At December 31, 2017, the loss that Washington should recognize is

Accepted Answer

A) $0. 
B) $5,000. 
C) $15,000. 
D) $25,000. 
A) $0. 
B) $5,000. 
C) $15,000. 
D) $25,000.

Question 15

When using the moving-average cost formula with a perpetual system,

Accepted Answer

A) a weighted-average cost is calculated at year end. 
B) a new unit cost is calculated each time a sale is made. 
C) a new unit cost is calculated each time a purchase is made. 
D) a new unit cost is calculated both when a sale is made and when a purchase is made. 
A) a weighted-average cost is calculated at year end. 
B) a new unit cost is calculated each time a sale is made. 
C) a new unit cost is calculated each time a purchase is made. 
D) a new unit cost is calculated both when a sale is made and when a purchase is made.

Question 16

Conversion costs include

Accepted Answer

A) all materials plus direct labour. 
B) all materials plus variable overhead allocated. 
C) direct labour plus variable and fixed overhead allocated. 
D) direct labour plus fixed overhead allocated. 
A) all materials plus direct labour. 
B) all materials plus variable overhead allocated. 
C) direct labour plus variable and fixed overhead allocated. 
D) direct labour plus fixed overhead allocated.

Question 17

Tennessee Ltd.'s accounting records reported the following information:   A physical inventory taken on December 31, 2017 resulted in an ending inventory of $350,000.Tennessee's gross profit on sales has remained constant at 30% in recent years.Tennessee suspects some inventory may have been taken by a new employee.At December 31, 2017, what is the estimated cost of the missing inventory?

Accepted Answer

A) $400,000 
B) $100,000 
C) $75,000 
D) $50,000 
A) $400,000 
B) $100,000 
C) $75,000 
D) $50,000

Question 18

Which statement is NOT true about the gross profit method of inventory valuation?

Accepted Answer

A) It may be used to estimate inventories for interim statements. 
B) It may be used to estimate inventories for annual statements. 
C) It may be used by auditors. 
D) It may be used to provide a rough check on the accuracy of the physical inventory count. 
A) It may be used to estimate inventories for interim statements. 
B) It may be used to estimate inventories for annual statements. 
C) It may be used by auditors. 
D) It may be used to provide a rough check on the accuracy of the physical inventory count.

Question 19

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

Accepted Answer

A) FIFO. 
B) moving-average cost. 
C) LIFO. 
D) weighted average. 
A) FIFO. 
B) moving-average cost. 
C) LIFO. 
D) weighted average.

Question 20

The following information was reported by Montana Inc.for 2017:   Based on this data, Montana's 2017 inventoriable cost was

Accepted Answer

A) $113,000. 
B) $111,000. 
C) $105,000. 
D) $100,000. 
A) $113,000. 
B) $111,000. 
C) $105,000. 
D) $100,000.

A manufacturing company typically maintains the following inventory account(s):

All of the following costs should be charged to expense in the period in which they are incurred EXCEPT for

Which of the following inventories may NOT be valued at fair value less costs to sell?

Portland Ltd.estimates the cost of its physical inventory at March 31 for use in interim financial statements.The rate of markup on cost is 25%.The following account balances are available: What is the estimated dollar value of the inventory at March 31?

Under ASPE, agricultural produce, forest products, and mineral products inventories may be accounted for at net realizable value if

An inventory method which is designed to approximate inventory valuation at the lower of average cost and market is

The following inventory transactions took place for NPR Corporation for the month of May: The ending inventory balance for NPR Corporation, assuming the company uses a perpetual inventory system, and a first-in, first-out (FIFO)cost formula is

To produce an inventory valuation which approximates the lower of average cost and market using the conventional retail inventory method, the calculation of the ratio of cost to retail should

Which of the following does NOT correctly describe the concept of net realizable value (NRV)?

When using the moving-average cost formula with a perpetual system,

Conversion costs include

Which statement is NOT true about the gross profit method of inventory valuation?

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

The following information was reported by Montana Inc.for 2017: Based on this data, Montana's 2017 inventoriable cost was

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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Exam 8: Inventory

A manufacturing company typically maintains the following inventory account(s):

All of the following costs should be charged to expense in the period in which they are incurred EXCEPT for

Which of the following inventories may NOT be valued at fair value less costs to sell?

Portland Ltd.estimates the cost of its physical inventory at March 31 for use in interim financial statements.The rate of markup on cost is 25%.The following account balances are available: What is the estimated dollar value of the inventory at March 31?

Under ASPE, agricultural produce, forest products, and mineral products inventories may be accounted for at net realizable value if

An inventory method which is designed to approximate inventory valuation at the lower of average cost and market is

The following inventory transactions took place for NPR Corporation for the month of May: The ending inventory balance for NPR Corporation, assuming the company uses a perpetual inventory system, and a first-in, first-out (FIFO)cost formula is

To produce an inventory valuation which approximates the lower of average cost and market using the conventional retail inventory method, the calculation of the ratio of cost to retail should

Which of the following does NOT correctly describe the concept of net realizable value (NRV)?

When using the moving-average cost formula with a perpetual system,

Conversion costs include

Which statement is NOT true about the gross profit method of inventory valuation?

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

The following information was reported by Montana Inc.for 2017: Based on this data, Montana's 2017 inventoriable cost was

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

Filters