Question 1

What is the amount of cost of merchandise sold for the year according to the LIFO method?

Accepted Answer

A)  $1,380 
B)  $1,375 
C)  $1,510 
D)  $1,250 
A)  $1,380 
B)  $1,375 
C)  $1,510 
D)  $1,250

Question 2

If Beginning Inventory (BI) + Purchases (P) - Ending Inventory (EI) = Cost of Merchandise Sold (COMS), an equivalent equation can be written as?

Accepted Answer

A)  BI + P = COMS - EI 
B)  BI - P = COMS + EI 
C)  BI + P = COMS + EI 
D)  EI + P = COMS - BI 
A)  BI + P = COMS - EI 
B)  BI - P = COMS + EI 
C)  BI + P = COMS + EI 
D)  EI + P = COMS - BI

Question 3

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 rounded to the nearest dollar using the average cost method?

Accepted Answer

A)  $1,685 
B)  $1,575 
C)  $1,805 
D)  $3,705 
A)  $1,685 
B)  $1,575 
C)  $1,805 
D)  $3,705

Question 4

Which document authorizes the purchase of inventory from an approved vendor?

Accepted Answer

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

Question 5

The following data were taken from Castle, Inc. $\begin{array}{lr}
\text { Cost of merchandise sold } & \$ 894,000 \
\text { Inventory, end of year } & 78,000 \
\text { Inventory, beginning of the year } & 92,000
\end{array}$ Determine the inventory turnover ratio and the days' sales in inventory for Castle Inc. Round to two decimal places.

Accepted Answer

Inventory Turnover = Cost of Merchandise

Question 6

Use of the retail inventory method requires taking a physical count of inventory.

Accepted Answer

A) True 
 B)False

Question 7

Under a periodic inventory system

Accepted Answer

A)  accounting records continuously disclose the amount of inventory 
B)  a separate account for each type of merchandise is maintained in a subsidiary ledger 
C)  a physical inventory is taken at the end of the period 
D)  Merchandise Inventory is debited when goods are returned to vendors 
A)  accounting records continuously disclose the amount of inventory 
B)  a separate account for each type of merchandise is maintained in a subsidiary ledger 
C)  a physical inventory is taken at the end of the period 
D)  Merchandise Inventory is debited when goods are returned to vendors

Question 8

"Market" as used in the phrase "lower of cost or market" for valuing inventory, refers to the price at which the inventory is being offered for sale by its owner.

Accepted Answer

A) True 
 B)False

Question 9

The choice of an inventory costing method has no significant impact on the financial statements.

Accepted Answer

A) True 
 B)False

Question 10

Beginning inventory, purchases, and sales for an inventory item are as follows:?? $$\begin{array} { | l | l | } 
\hline \text { Beginning inventory } & 150 \text { units } @ \$ 755 \
\hline \text { Sale } & 120 \text { units } \
\hline \text { First purchase } & 400 \text { units } @ \$ 785 \
\hline \text { Sale } & 200 \text { units } \
\hline \text { Second purchase } & 300 \text { units } @ \$ 805 \
\hline \text { Sale } & 290 \text { units } \
\hline
\end{array}$$ The firm uses the perpetual inventory system and there are 240 units of the item on hand at the end of the year. What is the total cost of ending inventory according to LIFO?

Accepted Answer

($755 × 30 units) +

Question 11

Which of the following measures the length of time it takes to acquire, sell, and replace inventory?

Accepted Answer

A)  inventory turnover 
B)  days' sales in inventory 
C)  retail method of inventory costing 
D)  gross profit method of inventory costing 
A)  inventory turnover 
B)  days' sales in inventory 
C)  retail method of inventory costing 
D)  gross profit method of inventory costing

Question 12

Beginning inventory, purchases, and sales data for hammers are as follows:? $$\begin{array} { | l | c | l | l | } 
\hline & \text { Mar. } 3 & \text { Inventory } & 12 \text { units at } \$ 15 \
\hline & 11 & \text { Purchase } & 13 \text { units at } \$ 17 \
\hline & 14 & \text { Sale } & 18 \text { units } \
\hline & 21 & \text { Purchase } & 9 \text { units at } \$ 20 \
\hline & 25 & \text { Sale } & 10 \text { units } \
\hline
\end{array}$$ Assuming the business maintains a perpetual inventory system, complete the inventory cards and calculate the cost of merchandise sold and ending inventory under the following assumptions:
(a) First-in, first-out? $\begin{array}{|l|l|l|l|}
\hline ~\quad\quad\quad\quad&\quad~\quad\quad\quad\text { Purchases }\quad\quad\quad & \begin{array}{c}
\quad\quad~~\quad\text { Cost of } \quad\quad\quad\quad\
\text { Merchandise Sold }
\end{array} & \quad\quad\quad\quad\quad\text { Inventory }\quad\quad~ \

\end{array}$
$\begin{array}{|c|c|c|c|c|c|c|c|c|c|}
\hline \text { Date } & \text { Qty. } & \begin{array}{c}
\text { Unit } \
\text { Cost }
\end{array} & \begin{array}{c}
\text { Total } \
\text { Cost }
\end{array} & \text { Qty. } & \begin{array}{c}
\text { Unit } \
\text { Cost }
\end{array} & \begin{array}{c}
\text { Total } \
\text { Cost }
\end{array} & \text { Qty. } & \begin{array}{c}
\text { Unit } \
\text { Cost }
\end{array} & \begin{array}{c}
\text { Total } \
\text { Cost }
\end{array} \
\hline \text { Mar. 3 } & & & & & & & & & \
\hline 11 & & & & & & & & & \
\hline 14 & & & & & & & & & \
\hline 21 & & & & & & & & & \
\hline 25 & & & & & & & & & \
\hline \text { Balances } & & & & & & & & & \
\hline
\end{array}$ (b) Last-in, first-out $\begin{array}{|l|l|l|l|}
\hline ~\quad\quad\quad\quad&\quad~\quad\quad\quad\text { Purchases }\quad\quad\quad & \begin{array}{c}
\quad\quad~~\quad\text { Cost of } \quad\quad\quad\quad\
\text { Merchandise Sold }
\end{array} & \quad\quad\quad\quad\quad\text { Inventory }\quad\quad~ \

\end{array}$
$\begin{array}{|c|c|c|c|c|c|c|c|c|c|}
\hline \text { Date } & \text { Qty. } & \begin{array}{c}
\text { Unit } \
\text { Cost }
\end{array} & \begin{array}{c}
\text { Total } \
\text { Cost }
\end{array} & \text { Qty. } & \begin{array}{c}
\text { Unit } \
\text { Cost }
\end{array} & \begin{array}{c}
\text { Total } \
\text { Cost }
\end{array} & \text { Qty. } & \begin{array}{c}
\text { Unit } \
\text { Cost }
\end{array} & \begin{array}{c}
\text { Total } \
\text { Cost }
\end{array} \
\hline \text { Mar. 3 } & & & & & & & & & \
\hline 11 & & & & & & & & & \
\hline 14 & & & & & & & & & \
\hline 21 & & & & & & & & & \
\hline 25 & & & & & & & & & \
\hline \text { Balances } & & & & & & & & & \
\hline
\end{array}$

Accepted Answer

a. First-in, first-out? @#IMG-DLM& b. Last-in, fir

Question 13

Inventory controls start when the merchandise is shelved in the store area.

Accepted Answer

A) True 
 B)False

Question 14

The units of an item available for sale during the year were as follows:? $\begin{array}{lrl}
\text { Jan. } & 1 \text { Inventory } & 25 \text { units at } \$ 45 \
\text { Mar. } & 4 \text { Purchase } & 15 \text { units at } \$ 50 \
\text { June } & 7 \text { Purchase } & 35 \text { units at } \$ 58 \
\text { Nov. } & 15 \text { Purchase } & 20 \text { units at } \$ 65
\end{array}$ There are 30 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the ending inventory cost using FIFO.

Accepted Answer

$1,880  (2

Question 15

Beginning inventory, purchases, and sales for an inventory item are as follows:? $$\begin{array} { r r r r r } 
\text { Sept. } 1 & \text { Beginning~inventory } & 24 \text { units } & @ &\$ 15 \
5 & \text { Sale } & 17 \text { units } & \
17 & \text { Purchase } & 10 \text { units } & @ & \$ 20 \
30 & \text { Sale } & 8 \text { units } &
\end{array}$$  Assuming a perpetual inventory system and the first-in, first-out method, determine 
(a) the cost of the merchandise sold for the September 30 sale and 
(b) the inventory on September 30.

Accepted Answer

a) Cost of merchandi

Question 16

Which of the following is not an example of safeguarding inventory?

Accepted Answer

A)  storing inventory in restricted areas 
B)  physical devices such as two-way mirrors, cameras, and alarms 
C)  matching receiving documents, purchase orders, and vendor's invoice 
D)  returning inventory that is defective or broken 
A)  storing inventory in restricted areas 
B)  physical devices such as two-way mirrors, cameras, and alarms 
C)  matching receiving documents, purchase orders, and vendor's invoice 
D)  returning inventory that is defective or broken

Question 17

Match each situation to its impact (a-c) on the current year's net income.
-Merchandise was purchased FOB destination on the last day of the year. The cost of the merchandise purchased was not included in ending inventory.

Accepted Answer

A) Net income for the current year will be overstated. 
B) Net income for the current year will be understated. 
C) There will be no error effect on net income. 
A) Net income for the current year will be overstated. 
B) Net income for the current year will be understated. 
C) There will be no error effect on net income.

Question 18

Under the periodic inventory system, the merchandise inventory account continuously discloses the amount of inventory on hand.

Accepted Answer

A) True 
 B)False

Question 19

The primary objectives of control over inventory are

Accepted Answer

A)  safeguarding the inventory from damage and maintaining constant observation of the inventory 
B)  reporting inventory in the financial statements and taking a physical inventory 
C)  maintaining constant observation of the inventory and reporting inventory in the financial statements 
D)  safeguarding inventory from damage and reporting inventory in the financial statements 
A)  safeguarding the inventory from damage and maintaining constant observation of the inventory 
B)  reporting inventory in the financial statements and taking a physical inventory 
C)  maintaining constant observation of the inventory and reporting inventory in the financial statements 
D)  safeguarding inventory from damage and reporting inventory in the financial statements

Question 20

Use the information below to answer the following questions.

Boxwood Company sells blankets for $60 each.  The following was taken from the inventory records during May.  The company had no beginning inventory on May 1.
$$\begin{array} { | c | l | c | c | } 
\hline \text { Date } & { \text { Blankets } } & \text { Units } & \text { Cost } \
\hline \text { May } 3 & \text { Purchase } & 5 & \$ 20 \
\hline 10 & \text { Sale } & 3 & \
\hline 17 & \text { Purchase } & 10 & 24 \
\hline 20 & \text { Sale } & 6 & \
\hline 23 & \text { Sale } & 3 & 30 \
\hline 30 & \text { Purchase } & 10 & \
\hline
\end{array}$$ ?
-Assuming that the company uses the perpetual inventory system, determine the gross profit for the sale of May 23 using the FIFO inventory cost method.

Accepted Answer

A)  $108 
B)  $120 
C)  $72 
D)  $180 
A)  $108 
B)  $120 
C)  $72 
D)  $180

What is the amount of cost of merchandise sold for the year according to the LIFO method?

If Beginning Inventory (BI) + Purchases (P) - Ending Inventory (EI) = Cost of Merchandise Sold (COMS), an equivalent equation can be written as?

Which document authorizes the purchase of inventory from an approved vendor?

The following data were taken from Castle, Inc. Cost of merchandise sold \ 894,000 Inventory, end of year 78,000 Inventory, beginning of the year 92,000 Determine the inventory turnover ratio and the days' sales in inventory for Castle Inc. Round to two decimal places.

Use of the retail inventory method requires taking a physical count of inventory.

Under a periodic inventory system

"Market" as used in the phrase "lower of cost or market" for valuing inventory, refers to the price at which the inventory is being offered for sale by its owner.

The choice of an inventory costing method has no significant impact on the financial statements.

Which of the following measures the length of time it takes to acquire, sell, and replace inventory?

Inventory controls start when the merchandise is shelved in the store area.

Which of the following is not an example of safeguarding inventory?

Match each situation to its impact (a-c) on the current year's net income. -Merchandise was purchased FOB destination on the last day of the year. The cost of the merchandise purchased was not included in ending inventory.

Under the periodic inventory system, the merchandise inventory account continuously discloses the amount of inventory on hand.

The primary objectives of control over inventory are

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

What is the amount of cost of merchandise sold for the year according to the LIFO method?

If Beginning Inventory (BI) + Purchases (P) - Ending Inventory (EI) = Cost of Merchandise Sold (COMS), an equivalent equation can be written as?

Which document authorizes the purchase of inventory from an approved vendor?

The following data were taken from Castle, Inc. Cost of merchandise sold \ 894,000 Inventory, end of year 78,000 Inventory, beginning of the year 92,000 Determine the inventory turnover ratio and the days' sales in inventory for Castle Inc. Round to two decimal places.

Use of the retail inventory method requires taking a physical count of inventory.

Under a periodic inventory system

"Market" as used in the phrase "lower of cost or market" for valuing inventory, refers to the price at which the inventory is being offered for sale by its owner.

The choice of an inventory costing method has no significant impact on the financial statements.

Which of the following measures the length of time it takes to acquire, sell, and replace inventory?

Inventory controls start when the merchandise is shelved in the store area.

Which of the following is not an example of safeguarding inventory?

Match each situation to its impact (a-c) on the current year's net income. -Merchandise was purchased FOB destination on the last day of the year. The cost of the merchandise purchased was not included in ending inventory.

Under the periodic inventory system, the merchandise inventory account continuously discloses the amount of inventory on hand.

The primary objectives of control over inventory are

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