Question 1

What is the amount of cost of merchandise sold for the year according to the FIFO 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

In valuing merchandise for inventory purposes, net realizable value is the estimated selling price less any direct costs of disposal.

Accepted Answer

A) True 
 B)False

Question 3

Beginning inventory, purchases, and sales data for widgets are as follows:? $$\begin{array} { | r | r | l | l | l | r | r | } 
\hline & \text { Apr. } 3 & \text { Inventory } & & 15 \text { units } & @ & \$ 30 \
\hline & 11 & \text { Purchase } & & 12 \text { units } & @ & \$ 27 \
\hline & 14 & \text { Sale } & & 18 \text { units } & & \
\hline &21 & \text { Purchase } & & 7 \text { units } & @ & \$ 25 \
\hline &25 & \text { Sale } & & 10 \text { units } & & \
\hline
\end{array}$$ Complete the inventory cost card assuming the business maintains a perpetual inventory system and calculates the cost of merchandise sold and ending inventory using LIFO.

Accepted Answer

The answer of Beginning inventory, purchases, and sales data for...

Question 4

Damaged merchandise that can be sold only at prices below cost should be valued at

Accepted Answer

A)  net realizable value 
B)  LIFO 
C)  FIFO 
D)  average cost 
A)  net realizable value 
B)  LIFO 
C)  FIFO 
D)  average cost

Question 5

If a fire destroys the merchandise inventory, the gross profit method can be used to estimate the cost of merchandise destroyed.

Accepted Answer

A) True 
 B)False

Question 6

Match each situation to its impact (a-c) on the current year's net income.
-The beginning inventory was recorded as $10,000, when actual inventory on hand was $12,000.

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 7

Based on the following data, estimate the cost of ending merchandise inventory using the gross profit method. $\begin{array}{lr}
\text { Sales } & \$ 250,000 \
\text { Estimated gross profit rate } & 25 \%\
\text { Beginning merchandise inventory } & \$ 9,000 \
\text { Purchases (net) } & 211,000 \
\text { Merchandise available for sale } & \$ 220,000
\end{array}$

Accepted Answer

The answer of Based on the following data, estimate the...

Question 8

If ending inventory for the year is understated, net income for the year is overstated.

Accepted Answer

A) True 
 B)False

Question 9

Addison, Inc. uses a perpetual inventory system. The following is information about one inventory item for the month of September:
$\begin{array} { r l l } \text { Sept. } 1 & \text { Inventory } & 20 \text { units at } \$ 20 \ 4 & \text { Sale } & 10 \text { units } \ 10 & \text { Purchase } & 30 \text { units at } \$ 25 \ 17 & \text { Sale } & 20 \text { units } \ 30 & \text { Purchase } & 10 \text { units at } \$ 30 \end{array}$
-Under the _____ inventory method, accounting records maintain a continuously updated inventory value.

Accepted Answer

A)  retail 
B)  periodic 
C)  physical 
D)  perpetual 
A)  retail 
B)  periodic 
C)  physical 
D)  perpetual

Question 10

List the internal control objectives illustrated by the following:
(a)Keeping the inventory storeroom locked
(b)Counting the inventory at the end of the accounting period and comparing it with the inventory ledger clerk's records
(c)Using subsidiary ledgers and a perpetual inventory system

Accepted Answer

(a)Safeguarding the inventory from damag

Question 11

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 LIFO 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 12

The inventory costing method that reports the most current prices in ending inventory is

Accepted Answer

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

Question 13

If the perpetual inventory system is used, the merchandise inventory account is debited for purchases of merchandise.

Accepted Answer

A) True 
 B)False

Question 14

On the basis of the following data, determine the value of the inventory at the lower of cost or market. Apply lower of cost or market to each inventory item. Show your work. $$\begin{array} { | l | c | c | c | } 
\hline  { \text { Item } } & \text { Inventory Quantity } & \text { Unit Cost Price } & \text { Unit Market Price } \
\hline \text { Product C } & 300 & \$ 6 & \$ 5 \
\hline \text { Froduct D } & 420 & 12 & 14 \
\hline
\end{array}$$

Accepted Answer

The answer of On the basis of the following data,...

Question 15

Too much inventory on hand

Accepted Answer

A)  ties up funds that could be used to improve operations 
B)  increases the cost to safeguard the assets 
C)  increases the losses due to price declines 
D)  All of these choices 
A)  ties up funds that could be used to improve operations 
B)  increases the cost to safeguard the assets 
C)  increases the losses due to price declines 
D)  All of these choices

Question 16

The inventory costing method that reports the earliest costs in ending inventory is

Accepted Answer

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

Question 17

Hampton Co. took a physical count of its inventory on December 31. In addition, it had to decide whether or not the following items should be added to this count.
(a)Merchandise on hand had been sold earlier in the year but had been returned by customers for various warranty repairs.
(b)Hampton Co. sent merchandise on a consignment basis on December 31 just prior to the physical count.
(c)On December 22, Hampton Co. ordered merchandise on FOB destination terms. The merchandise was shipped by the supplier on December 30 but had not been received by December 31.
(d)On December 27, Hampton Co. ordered merchandise on FOB shipping point terms. The merchandise was shipped on December 29 but had not been received by December 31.
(e)Merchandise sold FOB shipping point on December 31 was picked up by the freight company just before closing on December 31.
(f)Merchandise shipped to a customer FOB destination was picked up by the freight company on December 28 but had not arrived at its destination as of December 31.​Answer "yes" or "no" to indicate which items should and should not be added to the December 31 inventory count.

Accepted Answer

The answer of Hampton Co. took a physical count of...

Question 18

Based on the following information compute 
(a) inventory turnover, 
(b) average daily cost of merchandise sold, and 
(c) days' sales in inventory for the current year. Use a 365-day year. 
(d) If an inventory turnover of 12 is average for the industry, how is this company doing? $\begin{array}{lrr}\text { Item }&\text { Prior Year } & \text { Current Year } \
\text { Cost of merchandise sold } & \$ 172,900 & \$ 215,000 \
\text { Inventory } & 18,000 & 12,000
\end{array}$

Accepted Answer

(a) @#LAT-DLM&
@#LAT-DLM& times
(b) @#LAT-DLM&
(c)

Question 19

Match each description to the appropriate inventory system (a or b).​
-Average cost is rarely used with this system.

Accepted Answer

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

Question 20

If merchandise inventory is being valued at cost and the purchase price is steadily falling, which method of costing will yield the largest net income?

Accepted Answer

A)  average cost 
B)  LIFO 
C)  FIFO 
D)  weighted average 
A)  average cost 
B)  LIFO 
C)  FIFO 
D)  weighted average

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

In valuing merchandise for inventory purposes, net realizable value is the estimated selling price less any direct costs of disposal.

Damaged merchandise that can be sold only at prices below cost should be valued at

If a fire destroys the merchandise inventory, the gross profit method can be used to estimate the cost of merchandise destroyed.

Match each situation to its impact (a-c) on the current year's net income. -The beginning inventory was recorded as $10,000, when actual inventory on hand was $12,000.

Based on the following data, estimate the cost of ending merchandise inventory using the gross profit method. Sales \ 250,000 Estimated gross profit rate 25\% Beginning merchandise inventory \ 9,000 Purchases (net) 211,000 Merchandise available for sale \ 220,000

If ending inventory for the year is understated, net income for the year is overstated.

List the internal control objectives illustrated by the following: (a)Keeping the inventory storeroom locked (b)Counting the inventory at the end of the accounting period and comparing it with the inventory ledger clerk's records (c)Using subsidiary ledgers and a perpetual inventory system

The inventory costing method that reports the most current prices in ending inventory is

If the perpetual inventory system is used, the merchandise inventory account is debited for purchases of merchandise.

On the basis of the following data, determine the value of the inventory at the lower of cost or market. Apply lower of cost or market to each inventory item. Show your work. Item Inventory Quantity Unit Cost Price Unit Market Price Product C 300 \ 6 \ 5 Froduct D 420 12 14

Too much inventory on hand

The inventory costing method that reports the earliest costs in ending inventory is

Match each description to the appropriate inventory system (a or b). -Average cost is rarely used with this system.

If merchandise inventory is being valued at cost and the purchase price is steadily falling, which method of costing will yield the largest net income?

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 FIFO method?

In valuing merchandise for inventory purposes, net realizable value is the estimated selling price less any direct costs of disposal.

Damaged merchandise that can be sold only at prices below cost should be valued at

If a fire destroys the merchandise inventory, the gross profit method can be used to estimate the cost of merchandise destroyed.

Match each situation to its impact (a-c) on the current year's net income. -The beginning inventory was recorded as $10,000, when actual inventory on hand was $12,000.

Based on the following data, estimate the cost of ending merchandise inventory using the gross profit method. Sales \ 250,000 Estimated gross profit rate 25\% Beginning merchandise inventory \ 9,000 Purchases (net) 211,000 Merchandise available for sale \ 220,000

If ending inventory for the year is understated, net income for the year is overstated.

List the internal control objectives illustrated by the following: (a)Keeping the inventory storeroom locked (b)Counting the inventory at the end of the accounting period and comparing it with the inventory ledger clerk's records (c)Using subsidiary ledgers and a perpetual inventory system

The inventory costing method that reports the most current prices in ending inventory is

If the perpetual inventory system is used, the merchandise inventory account is debited for purchases of merchandise.

On the basis of the following data, determine the value of the inventory at the lower of cost or market. Apply lower of cost or market to each inventory item. Show your work. Item Inventory Quantity Unit Cost Price Unit Market Price Product C 300 \ 6 \ 5 Froduct D 420 12 14

Too much inventory on hand

The inventory costing method that reports the earliest costs in ending inventory is

Match each description to the appropriate inventory system (a or b).​ -Average cost is rarely used with this system.

If merchandise inventory is being valued at cost and the purchase price is steadily falling, which method of costing will yield the largest net income?

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). -Average cost is rarely used with this system.