Question 1

Determine the total value of the merchandise using net realizable value.? $$\begin{array} { | c | c | r | r | } 
\hline \text { Item } & \text { Quantity } & \text { Selling Price } & \text { Commission } \
\hline \text { Doll } & 10 & \$ 7 & \$ 2 \
\hline \text { Horse } & 5 & 9 & 3 \
\hline
\end{array}$$

Accepted Answer

? \[\begin{array} { | c | c | r | r | r

Question 2

Beginning inventory, purchases, and sales for an inventory item are as follows:? $\begin{array}{llllll}
\text { Sept. } &1 \text { Beginning inventory }&&24~ units& @  ~\$ 10\
&5 \text { Sale } &&17~ units\
&17 \text { Purchase } &&10 ~units& @  ~\$ 15\
&30 \text { Sale }&&~~8~ units
\end{array}$ Assuming a perpetual inventory system and the last-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 merchand

Question 3

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 ending inventory for the month of May using the LIFO inventory cost method.

Accepted Answer

A)  $324 
B)  $372 
C)  $320 
D)  $364 
A)  $324 
B)  $372 
C)  $320 
D)  $364

Question 4

Beginning inventory, purchases, and sales data for tennis rackets are as follows:? $$\begin{array} { | r | r | l | r | r | r | r | } 
\hline & \text { Apr. } 3 & \text { Inventory } & & 12 \text { units } & @ & \$ 45 \
\hline & 11 & \text { Purchase } & & 13 \text { units } & @ & \$ 47 \
\hline &14 & \text { Sale } & & 18 \text { units } & & \
\hline& 21 & \text { Purchase } & & 9 \text { units } & @ & \$ 60 \
\hline &25 & \text { Sale } & & 10 \text { units } & & \
\hline
\end{array}$$ Complete the inventory cost card assuming the business maintains a perpetual inventory system and calculates the cost of merchandise sold and ending inventory using FIFO.?

Accepted Answer

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

Question 5

Describe three inventory cost flow assumptions and how they impact the financial statements.

Accepted Answer

1. Cost flow is in the order in which co

Question 6

Merchandise inventory at the end of the year is overstated. Which of the following statements correctly states the effect of the error?

Accepted Answer

A)  Owner's equity is overstated. 
B)  Cost of merchandise sold is overstated. 
C)  Gross profit is understated. 
D)  Net income is understated. 
A)  Owner's equity is overstated. 
B)  Cost of merchandise sold is overstated. 
C)  Gross profit is understated. 
D)  Net income is understated.

Question 7

Match each description to the appropriate inventory system (a or b).​
-This system can be costly and time consuming if not computerized.

Accepted Answer

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

Question 8

Match each description to the appropriate inventory system (a or b).​
-When using this system, a physical inventory is necessary to determine cost of merchandise sold.

Accepted Answer

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

Question 9

A purchase order establishes an initial record of the receipt of the inventory.

Accepted Answer

A) True 
 B)False

Question 10

Match each description to the appropriate cost flow assumption (a-c).
-Produces the same cost of merchandise sold under both the periodic and the perpetual inventory systems

Accepted Answer

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

Question 11

Match each description to the appropriate cost flow assumption (a-d).
-Cost flow is assumed to be in the reverse order of costs 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 12

Three identical units of merchandise were purchased during May, as follows:?? $$\begin{array} { | c | l | c | r | } 
\hline & \text { Magnesium XP } & \text { Units } &  { \text { Cost } } \
\hline \text { May 3 } & \text { Purchase } & 1 & \$ 130 \
\hline 10 & \text { Purchase } & 1 & 136 \
\hline 19 & \text { Purchase } & \underline { 1 } & \underline { 142 } \
\hline \text { Total } & & \underline { \mathbf { 3 } } & \underline { \mathbf { \$ 4 0 8 } } \
\hline
\end{array}$$ Assume that two units are sold on May 23 for $313 total. Determine the gross profit for May and ending inventory on May 31 using 
(a) FIFO, 
(b) LIFO, and 
(c) average cost methods.

Accepted Answer

None

Question 13

A physical inventory should be taken at the end of every month.

Accepted Answer

A) True 
 B)False

Question 14

On the basis of the following data for Sanford Industries as of December 31, determine the value of the inventory at the lower of cost or market. Also, show how the merchandise inventory would appear on the balance sheet 
(assume that the cost was determined by the FIFO method). Apply lower of cost or market to each inventory item. $$\begin{array} { | c | c | c | c | } 
\hline \text { Commodity } & \text { Inventory Quantity } & \text { Cost per Unit } & \begin{array} { c } 
\text { Market Value per } \
\text { Unit }
\end{array} \
\hline \text { Size } 4 & 9 & \$ 17 & \$ 19 \
\hline \text { Size } 5 & 10 & 17 & 14 \
\hline \text { Size } 6 & 14 & 20 & 22 \
\hline \text { Size } 7 & 12 & 13 & 15 \
\hline
\end{array}$$

Accepted Answer

Inventory

Question 15

Match each situation to its impact (a-c) on the current year's net income.
-Beginning inventory was understated.

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 16

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 FIFO?

Accepted Answer

$805 × 240

Question 17

During a period of falling prices, which of the following inventory methods generally results in the lowest balance sheet amount for inventory?

Accepted Answer

A)  average cost method 
B)  LIFO method 
C)  FIFO method 
D)  cannot tell without more information 
A)  average cost method 
B)  LIFO method 
C)  FIFO method 
D)  cannot tell without more information

Question 18

Under the LIFO inventory costing method, the most recent costs are assigned to ending inventory.

Accepted Answer

A) True 
 B)False

Question 19

Match each situation to its impact (a-c) on the current year's net income.
-Purchased merchandise was shipped FOB shipping point on the last day of the year. The cost of the merchandise 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 20

Assume that three identical units of merchandise were purchased during October, as follows:?? $$\begin{array} { | l | c | c | c | r |} 
\hline & & & \text { Units } & \text { Cost } \
\hline \text { Oct. } & 5 & \text { Purchase } & 1 & \$ 5 \
\hline & 12 & \text { Purchase } & 1 & 13 \
\hline & 28 & \text { Purchase } & \underline { 1 } & \underline { 15 } \
\hline \text { Total } & & & \underline { \mathbf { 3 } } & \underline { \underline { \mathbf { 3 3 } } } \
\hline
\end{array}$$ Assume one unit is sold on October 31 for $28. Determine cost of merchandise sold, gross profit, and ending inventory under the average cost method.

Accepted Answer

\[\begin{array} { | l | c | } 
\hline &

Determine the total value of the merchandise using net realizable value.? Item Quantity Selling Price Commission Doll 10 \ 7 \ 2 Horse 5 9 3

Describe three inventory cost flow assumptions and how they impact the financial statements.

Merchandise inventory at the end of the year is overstated. Which of the following statements correctly states the effect of the error?

Match each description to the appropriate inventory system (a or b). -This system can be costly and time consuming if not computerized.

Match each description to the appropriate inventory system (a or b). -When using this system, a physical inventory is necessary to determine cost of merchandise sold.

A purchase order establishes an initial record of the receipt of the inventory.

Match each description to the appropriate cost flow assumption (a-c). -Produces the same cost of merchandise sold under both the periodic and the perpetual inventory systems

Match each description to the appropriate cost flow assumption (a-d). -Cost flow is assumed to be in the reverse order of costs incurred.

A physical inventory should be taken at the end of every month.

Match each situation to its impact (a-c) on the current year's net income. -Beginning inventory was understated.

During a period of falling prices, which of the following inventory methods generally results in the lowest balance sheet amount for inventory?

Under the LIFO inventory costing method, the most recent costs are assigned to ending inventory.

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

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

Determine the total value of the merchandise using net realizable value.? Item Quantity Selling Price Commission Doll 10 \ 7 \ 2 Horse 5 9 3

Describe three inventory cost flow assumptions and how they impact the financial statements.

Merchandise inventory at the end of the year is overstated. Which of the following statements correctly states the effect of the error?

Match each description to the appropriate inventory system (a or b).​ -This system can be costly and time consuming if not computerized.

Match each description to the appropriate inventory system (a or b).​ -When using this system, a physical inventory is necessary to determine cost of merchandise sold.

A purchase order establishes an initial record of the receipt of the inventory.

Match each description to the appropriate cost flow assumption (a-c). -Produces the same cost of merchandise sold under both the periodic and the perpetual inventory systems

Match each description to the appropriate cost flow assumption (a-d). -Cost flow is assumed to be in the reverse order of costs incurred.

A physical inventory should be taken at the end of every month.

Match each situation to its impact (a-c) on the current year's net income. -Beginning inventory was understated.

During a period of falling prices, which of the following inventory methods generally results in the lowest balance sheet amount for inventory?

Under the LIFO inventory costing method, the most recent costs are assigned to ending inventory.

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

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). -This system can be costly and time consuming if not computerized.

Match each description to the appropriate inventory system (a or b). -When using this system, a physical inventory is necessary to determine cost of merchandise sold.