Question 1

Match each description to the appropriate cost flow assumption (a-c).
-Produces results that are similar to the specific identification method

Accepted Answer

A) FIFO 
B) LIFO 
C) Weighted average 
A) FIFO 
B) LIFO 
C) Weighted average A

Question 2

Of the three widely used inventory costing methods 
(FIFO, LIFO, and average cost), the LIFO method of costing inventory assumes costs are charged based on the most recent purchases first.

Accepted Answer

A) True 
 B)False  True

Question 3

During times of rising prices, which of the following is not an accurate statement?

Accepted Answer

A)  Average costing will yield results that are between those of FIFO and LIFO. 
B)  LIFO will result in a higher cost of merchandise sold than FIFO. 
C)  FIFO will result in a higher net income than LIFO. 
D)  LIFO will result in higher income taxes than FIFO. 
A)  Average costing will yield results that are between those of FIFO and LIFO. 
B)  LIFO will result in a higher cost of merchandise sold than FIFO. 
C)  FIFO will result in a higher net income than LIFO. 
D)  LIFO will result in higher income taxes than FIFO. D

Question 4

The units of an item available for sale during the year were as follows:? $$\begin{array} { | l l | l | l | } 
\hline \text { January } & 10 & \text { Inventory } & 27 \text { units } @ \$ 90 \
\hline \text { February } & 27 & \text { Purchase } & 54 \text { units } @ \$ 98 \
\hline \text { July } & 11 & \text { Purchase } & 63 \text { units } @ \$ 106 \
\hline \text { November } & 13 & \text { Purchase } & 36 \text { units } @ \$ 115 \
\hline
\end{array}$$ There are 50 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the ending inventory cost by 
(a) the first-in, first-out method, 
(b) the last-in, first-out method, and 
(c) the average cost method. Show your work.

Accepted Answer

(a) @#LAT-DLM& ( 36 units at @#LAT-DLM& units at @#LAT-DLM& )
(b) @#LAT-DLM& uni

Question 5

The average cost method will always yield results between FIFO and LIFO.

Accepted Answer

A) True 
 B)False

Question 6

Match each description to the appropriate cost flow assumption (a-c).
-Produces the highest ending inventory when costs are increasing

Accepted Answer

A) FIFO 
B) LIFO 
C) Weighted average 
A) FIFO 
B) LIFO 
C) Weighted average

Question 7

During periods of increasing costs, an advantage of the LIFO inventory cost method is that it matches more recent costs against current revenues.

Accepted Answer

A) True 
 B)False

Question 8

Use the information below to answer the following questions.
The following lots of a particular commodity were available for sale during the year:
 $\begin{array}{ll}
\text { Beginning inventory } & 10 \text { units at } \$ 60 \
\text { First purchase } & 25 \text { units at } \$ 65 \
\text { Second purchase } & 30 \text { units at } \$ 68 \
\text { Third purchase } & 15 \text { units at } \$ 75
\end{array}$ The firm uses the periodic system, and there are 25 units of the commodity on hand at the end of the year.
-What is the amount of inventory at the end of the year using the FIFO method??

Accepted Answer

A)  $1,685 
B)  $1,575 
C)  $1,805 
D)  $3,585 
A)  $1,685 
B)  $1,575 
C)  $1,805 
D)  $3,585

Question 9

All of the following are documents used for inventory control except a

Accepted Answer

A)  petty cash voucher 
B)  vendor's invoice 
C)  receiving report 
D)  purchase order 
A)  petty cash voucher 
B)  vendor's invoice 
C)  receiving report 
D)  purchase order

Question 10

Match each description to the appropriate document used for inventory control (a-c).
-Last document in the chain, use to compare all three for accuracy

Accepted Answer

A) Receiving report 
B) Vendor's invoice 
C) Purchase order 
A) Receiving report 
B) Vendor's invoice 
C) Purchase order

Question 11

The inventory method that assigns the most recent costs to cost of merchandise sold is

Accepted Answer

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

Question 12

While taking a physical inventory, a company counts its inventory as less than the actual amount on hand. How will this error affect the income statement?

Accepted Answer

Net income

Question 13

Basic inventory data for April 30 are presented below for a business that employs the lower-of-cost-or-market basis of inventory valuation to each category.? $\begin{array}{cccccccc}
& \text { Inventory }& \text { Cost per unit }& \text { Market value per unit}&& \text { Total }\
\text { Commodity } & \text { Ouantity } & \text { Unit } & \text { per Unit } & \text { Cost } & \text { Market } & \text { LCM } \
\hline \text { A } & 35 & \$ 52 & \$ 55 & \_\_\_\_\_\_\_& \_\_\_\_\_\_\_& \_\_\_\_\_\_\_ & \
\text { B } & 20 & 155 & 150 &  \_\_\_\_\_\_\_& \_\_\_\_\_\_\_& \_\_\_\_\_\_\_ & \
\text { C } & 25 & 82 & 85 & \_\_\_\_\_\_\_& \_\_\_\_\_\_\_& \_\_\_\_\_\_\_ & \
\text { D } & 40 & 58 & 55 & \_\_\_\_\_\_\_& \_\_\_\_\_\_\_& \_\_\_\_\_\_\_ & \
\end{array}$ (a)Complete the table.
(b)?Determine the amount of reduction in the inventory at April 30 attributable to market decline.

Accepted Answer

(a)? \[\begin{array}{l}

\begin{array} {

Question 14

Match each description to the appropriate inventory system (a or b).​
-Under this system, only revenue is recorded when sales are made.

Accepted Answer

A) Perpetual 
B) Periodic 
A) Perpetual 
B) Periodic

Question 15

On the basis of the following data, what is the estimated cost of the merchandise inventory on May 31 using the retail method?? $\begin{array}{llrr}&&\text { Cost } & \text { Retail } \
\text { May 1 } & \text { Merchandise inventory } & \$ 125,000 & \$ 166,667 \
\text { May 1-31 } & \text { Purchases } & 235,000 & 313,333 \
\text { May 1-31 } & \text { Sales } & & 230,000
\end{array}$

Accepted Answer

A)  $250,000 
B)  $360,000 
C)  $172,500 
D)  $187,500 
A)  $250,000 
B)  $360,000 
C)  $172,500 
D)  $187,500

Question 16

During periods of increasing costs, the use of the FIFO method of costing inventory will result in a greater amount of net income than would result from the use of the LIFO cost method.

Accepted Answer

A) True 
 B)False

Question 17

The units of an item available for sale during the year were as follows:? $\begin{array}{ccccc}
\text { Jan. } 1 & \text { Inventory } &\quad~~~~~~~~~~~~&& 10 \text { units at } \$ 25 \
\text { Apr. } 4 & \text { Purchase } &&& 15 \text { units at } \$ 24 \
\text { May } 20 & \text { Purchase } &&& 20 \text { units at } \$ 28 \
\text { Oct } 30 & \text { Purchase } &&& 18 \text { units at } \$ 30 \
\end{array}$ There are 19 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the ending inventory cost using LIFO.

Accepted Answer

$466  (10

Question 18

Use the information below to answer the following questions.
The following units of an inventory item were available for sale during the year:

$\begin{array}{ll}
\text { Beginning inventory } & 10 \text { units at } \$ 55 \
\text { First purchase } & 25 \text { units at } \$ 60 \
\text { Second purchase } & 30 \text { units at } \$ 65 \
\text { Third purchase } & 15 \text { units at } \$ 70
\end{array}$ The firm uses the periodic inventory system. During the year, 60 units of the item were sold.?
-The value of ending inventory using FIFO is?

Accepted Answer

A)  $1,250 
B)  $1,350 
C)  $1,375 
D)  $1,150 
A)  $1,250 
B)  $1,350 
C)  $1,375 
D)  $1,150

Question 19

Match each description to the appropriate cost flow assumption (a-c).
-Produces the highest gross profit when costs are decreasing

Accepted Answer

A) FIFO 
B) LIFO 
C) Weighted average 
A) FIFO 
B) LIFO 
C) Weighted average

Question 20

A company will most likely use an estimated method of determining inventory when

Accepted Answer

A)  the company decides not to do a physical inventory 
B)  a natural disaster has destroyed most of the inventory 
C)  the company has not kept up with its inventory records 
D)  the company is preparing annual financial statements 
A)  the company decides not to do a physical inventory 
B)  a natural disaster has destroyed most of the inventory 
C)  the company has not kept up with its inventory records 
D)  the company is preparing annual financial statements

Match each description to the appropriate cost flow assumption (a-c). -Produces results that are similar to the specific identification method

Of the three widely used inventory costing methods (FIFO, LIFO, and average cost), the LIFO method of costing inventory assumes costs are charged based on the most recent purchases first.

During times of rising prices, which of the following is not an accurate statement?

The average cost method will always yield results between FIFO and LIFO.

Match each description to the appropriate cost flow assumption (a-c). -Produces the highest ending inventory when costs are increasing

During periods of increasing costs, an advantage of the LIFO inventory cost method is that it matches more recent costs against current revenues.

All of the following are documents used for inventory control except a

Match each description to the appropriate document used for inventory control (a-c). -Last document in the chain, use to compare all three for accuracy

The inventory method that assigns the most recent costs to cost of merchandise sold is

While taking a physical inventory, a company counts its inventory as less than the actual amount on hand. How will this error affect the income statement?

Match each description to the appropriate inventory system (a or b). -Under this system, only revenue is recorded when sales are made.

On the basis of the following data, what is the estimated cost of the merchandise inventory on May 31 using the retail method?? Cost Retail May 1 Merchandise inventory \ 125,000 \ 166,667 May 1-31 Purchases 235,000 313,333 May 1-31 Sales 230,000

During periods of increasing costs, the use of the FIFO method of costing inventory will result in a greater amount of net income than would result from the use of the LIFO cost method.

Match each description to the appropriate cost flow assumption (a-c). -Produces the highest gross profit when costs are decreasing

A company will most likely use an estimated method of determining inventory when

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Cost-Volume-Profit Analysis

Evaluating Variances From Standard Costs

Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Filters

Exam 7: Inventories

Match each description to the appropriate cost flow assumption (a-c). -Produces results that are similar to the specific identification method

Of the three widely used inventory costing methods (FIFO, LIFO, and average cost), the LIFO method of costing inventory assumes costs are charged based on the most recent purchases first.

During times of rising prices, which of the following is not an accurate statement?

The average cost method will always yield results between FIFO and LIFO.

Match each description to the appropriate cost flow assumption (a-c). -Produces the highest ending inventory when costs are increasing

During periods of increasing costs, an advantage of the LIFO inventory cost method is that it matches more recent costs against current revenues.

All of the following are documents used for inventory control except a

Match each description to the appropriate document used for inventory control (a-c). -Last document in the chain, use to compare all three for accuracy

The inventory method that assigns the most recent costs to cost of merchandise sold is

While taking a physical inventory, a company counts its inventory as less than the actual amount on hand. How will this error affect the income statement?

Match each description to the appropriate inventory system (a or b).​ -Under this system, only revenue is recorded when sales are made.

On the basis of the following data, what is the estimated cost of the merchandise inventory on May 31 using the retail method?? Cost Retail May 1 Merchandise inventory \ 125,000 \ 166,667 May 1-31 Purchases 235,000 313,333 May 1-31 Sales 230,000

During periods of increasing costs, the use of the FIFO method of costing inventory will result in a greater amount of net income than would result from the use of the LIFO cost method.

Match each description to the appropriate cost flow assumption (a-c). -Produces the highest gross profit when costs are decreasing

A company will most likely use an estimated method of determining inventory when

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Cost-Volume-Profit Analysis

Evaluating Variances From Standard Costs

Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Filters

Match each description to the appropriate inventory system (a or b). -Under this system, only revenue is recorded when sales are made.