Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is used to analyze the efficiency and effectiveness of inventory management?

Accepted Answer

A)  inventory turnover only 
B)  days' sales in inventory only 
C)  both inventory turnover and days' sales in inventory 
D)  neither inventory turnover nor days' sales in inventory 
A)  inventory turnover only 
B)  days' sales in inventory only 
C)  both inventory turnover and days' sales in inventory 
D)  neither inventory turnover nor days' sales in inventory

Question 3

​Which of the following will be the same amount regardless of the cost flow assumption adopted?

Accepted Answer

A)  ​number of items ordered 
B)  ​gross profit 
C)  ​cost of goods sold 
D)  ​ending merchandise inventory 
A)  ​number of items ordered 
B)  ​gross profit 
C)  ​cost of goods sold 
D)  ​ending merchandise inventory

Question 4

Match each description to the appropriate cost flow assumption (a-c).
-Assigns the same value to all inventory units

Accepted Answer

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

Question 5

Match each situation to its impact (a-c) on the current year's net income.
-Merchandise that was sold and shipped FOB destination on the last day of the year was not included in the seller's 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 6

Match each description to the appropriate cost flow assumption (a-c).
-Cost of the latest purchases are assigned to ending inventory

Accepted Answer

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

Question 7

Taking a physical count of inventory

Accepted Answer

A)  is not necessary when a periodic inventory system is used 
B)  should be done near year-end 
C)  has no internal control relevance 
D)  is not necessary when a perpetual inventory system is used 
A)  is not necessary when a periodic inventory system is used 
B)  should be done near year-end 
C)  has no internal control relevance 
D)  is not necessary when a perpetual inventory system is used

Question 8

Match each situation to its impact (a-c) on the current year's net income.
-Merchandise that was sold and shipped FOB shipping point on the last day of the year was not included in the seller's 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 9

Brutus Corporation, a newly formed corporation, has the following transactions during May, its first month of operations.?? May 1 Purchased 500 units $@ \$ 25.00$ each.
4 Purchased 300 units $@ \$ 24.00$ each.
6 Sold 400 units $@ \$ 38.00$ each.
8 Purchased 700 units $@ \$ 23.00$ each.
13 Sold 450 units $@ \$ 37.50$ each.
20 Purchased 250 units $@ \$ 25.25$ each.
22 Sold 275 units $@ \$ 36.00$ each.
27 Sold 300 units $@ 37.00$ each.
28 Purchased 550 units $@ \$ 26.00$ each.
30 Sold 100 units $@ \$ 39.00$ each. Calculate total sales, cost of merchandise sold, gross profit, and ending inventory using each of the following inventory methods:
1. FIFO perpetual
2. FIFO periodic
3. LIFO perpetual
4. LIFO periodic
5. Average cost periodic 
(round average to nearest cent)

Accepted Answer

Total sales 
(not dependent on inventory

Question 10

Generally, the lower the days' sales in inventory, the better.

Accepted Answer

A) True 
 B)False

Question 11

Based on the following information, compute 
(a) inventory turnover 
(b) average daily cost of merchandise sold using a 365-day year and 
(c) days' sales in inventory.?Cost of merchandise sold $195,640Inventory:Beginning 20,500Ending 18,628

Accepted Answer

(a) $195,640 ÷ [  ($20,500 + $

Question 12

Fill in the missing amounts from the chart below regarding the calculation of Bean Corporation's estimated inventory using the retail method of estimation.

Accepted Answer

The answer of Fill in the missing amounts from the...

Question 13

Addison, Inc. uses a perpetual inventory system. The following is information about one inventory item for the month of September:
$\begin{array} { r l l } \text { Sept. } 1 & \text { Inventory } & 20 \text { units at } \$ 20 \ 4 & \text { Sale } & 10 \text { units } \ 10 & \text { Purchase } & 30 \text { units at } \$ 25 \ 17 & \text { Sale } & 20 \text { units } \ 30 & \text { Purchase } & 10 \text { units at } \$ 30 \end{array}$
-The inventory data for an item for November are:
$$\begin{array} { r l l } 
\text { Nov. } 1 & \text { Inventory } & 20 \text { units at } \$ 19 \
4 & \text { Sale } & 10 \text { units } \
10 & \text { Purchase } & 30 \text { units at } \$ 20 \
17 & \text { Sale } & 20 \text { units } \
30 & \text { Purchase } & 10 \text { units at } \$ 21
\end{array}$$ 
  Using a perpetual system, what is the cost of merchandise sold for November if the company uses LIFO?

Accepted Answer

A)  $610 
B)  $600 
C)  $590 
D)  $580 
A)  $610 
B)  $600 
C)  $590 
D)  $580

Question 14

Match each description to the appropriate cost flow assumption (a-c).
-Never results in either the highest or lowest possible net income

Accepted Answer

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

Question 15

The units of Manganese Plus available for sale during the year were as follows:? $$\begin{array} { l l l l l } 
\text { Mar. 1 } & \text { Inventory } & 16 \text { units } & @ \$ 30 & \$ 480 \
\text { June } 16 & \text { Purchase } & 30 \text { units } & @ \$ 35 & 1,050 \
\text { Nov. } 28 & \text { Purchase } & \underline { 45 } \text { units } & @ \$ 39 & \underline { 1,755 } \
& & { \underline { \mathbf { 9 1 } } \text { units } } & & \underline { \mathbf { \$ 3 , 2 8 5 } }
\end{array}$$ There are 15 units of the product in the physical inventory at November 30. The periodic inventory system is used. Determine the inventory cost by the 
(a) FIFO, 
(b) LIFO, and 
(c) average cost methods.

Accepted Answer

(a) 15 units (a) @#LAT-DLM&
(b

Question 16

Match each description to the appropriate cost flow assumption (a-d).
-Cost flow is in the order in which the costs were incurred.

Accepted Answer

A) Weighted average 
B) First-in, first-out (FIFO) 
C) Last-in, first-out (LIFO) 
D) Specific identification 
A) Weighted average 
B) First-in, first-out (FIFO) 
C) Last-in, first-out (LIFO) 
D) Specific identification

Question 17

Which document establishes an initial record of the receipt of inventory?

Accepted Answer

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

Question 18

Use the information below to answer the following questions.
The following lots of a particular commodity were available for sale during the year:
?
 $\begin{array}{ll}
\text { Beginning inventory } & 10 \text { units at } \$ 30 \
\text { First purchase } & 25 \text { units at } \$ 32 \
\text { Second purchase } & 30 \text { units at } \$ 34 \
\text { Third purchase } & 10 \text { units at } \$ 35
\end{array}$ ?
-The firm uses the periodic system, and there are 20 units of the commodity on hand at the end of the year. What is the amount of inventory at the end of the year according to the FIFO method?

Accepted Answer

A)  $655 
B)  $620 
C)  $690 
D)  $659 
A)  $655 
B)  $620 
C)  $690 
D)  $659

Question 19

Use the information below to answer the following questions.
The following lots of a particular commodity were available for sale during the year:
?
 $\begin{array}{ll}
\text { Beginning inventory } & 10 \text { units at } \$ 30 \
\text { First purchase } & 25 \text { units at } \$ 32 \
\text { Second purchase } & 30 \text { units at } \$ 34 \
\text { Third purchase } & 10 \text { units at } \$ 35
\end{array}$ ?
-The firm uses the periodic system, and there are 20 units of the commodity on hand at the end of the year. What is the amount of inventory at the end of the year according to the LIFO method?

Accepted Answer

A)  $655 
B)  $620 
C)  $690 
D)  $659 
A)  $655 
B)  $620 
C)  $690 
D)  $659

Question 20

Which of the following measures the relationship between cost of merchandise sold and the amount of inventory carried during the period?

Accepted Answer

A)  inventory turnover 
B)  fixed asset turnover 
C)  retail method of inventory costing 
D)  gross profit method of inventory costing 
A)  inventory turnover 
B)  fixed asset turnover 
C)  retail method of inventory costing 
D)  gross profit method of inventory costing

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

Which of the following is used to analyze the efficiency and effectiveness of inventory management?

Which of the following will be the same amount regardless of the cost flow assumption adopted?

Match each description to the appropriate cost flow assumption (a-c). -Assigns the same value to all inventory units

Match each situation to its impact (a-c) on the current year's net income. -Merchandise that was sold and shipped FOB destination on the last day of the year was not included in the seller's ending inventory.

Match each description to the appropriate cost flow assumption (a-c). -Cost of the latest purchases are assigned to ending inventory

Taking a physical count of inventory

Match each situation to its impact (a-c) on the current year's net income. -Merchandise that was sold and shipped FOB shipping point on the last day of the year was not included in the seller's ending inventory.

Generally, the lower the days' sales in inventory, the better.

Based on the following information, compute (a) inventory turnover (b) average daily cost of merchandise sold using a 365-day year and (c) days' sales in inventory.?Cost of merchandise sold $195,640Inventory:Beginning 20,500Ending 18,628

Fill in the missing amounts from the chart below regarding the calculation of Bean Corporation's estimated inventory using the retail method of estimation.

Match each description to the appropriate cost flow assumption (a-c). -Never results in either the highest or lowest possible net income

Match each description to the appropriate cost flow assumption (a-d). -Cost flow is in the order in which the costs were incurred.

Which document establishes an initial record of the receipt of inventory?

Which of the following measures the relationship between cost of merchandise sold and the amount of inventory carried during the period?

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

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

Which of the following is used to analyze the efficiency and effectiveness of inventory management?

​Which of the following will be the same amount regardless of the cost flow assumption adopted?

Match each description to the appropriate cost flow assumption (a-c). -Assigns the same value to all inventory units

Match each situation to its impact (a-c) on the current year's net income. -Merchandise that was sold and shipped FOB destination on the last day of the year was not included in the seller's ending inventory.

Match each description to the appropriate cost flow assumption (a-c). -Cost of the latest purchases are assigned to ending inventory

Taking a physical count of inventory

Match each situation to its impact (a-c) on the current year's net income. -Merchandise that was sold and shipped FOB shipping point on the last day of the year was not included in the seller's ending inventory.

Generally, the lower the days' sales in inventory, the better.

Based on the following information, compute (a) inventory turnover (b) average daily cost of merchandise sold using a 365-day year and (c) days' sales in inventory.?Cost of merchandise sold $195,640Inventory:Beginning 20,500Ending 18,628

Fill in the missing amounts from the chart below regarding the calculation of Bean Corporation's estimated inventory using the retail method of estimation.

Match each description to the appropriate cost flow assumption (a-c). -Never results in either the highest or lowest possible net income

Match each description to the appropriate cost flow assumption (a-d). -Cost flow is in the order in which the costs were incurred.

Which document establishes an initial record of the receipt of inventory?

Which of the following measures the relationship between cost of merchandise sold and the amount of inventory carried during the period?

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

Which of the following will be the same amount regardless of the cost flow assumption adopted?