Question 1

The LCM rule is usually applied to groups of similar items.

Accepted Answer

A) True 
 B)False  False

Question 2

If prices were rising and a Canadian company wanted to report a smaller amount of profit for tax purposes, they should use the weighted-average cost formula.

Accepted Answer

A) True 
 B)False  True

Question 3

Use the following information for questions 49-52.
A company had the following inventory activity during January:  
-If the company is using a perpetual system and the FIFO cost formula, what is the cost of goods sold closest to?

Accepted Answer

A)  $25,700 
B)  $25,500 
C)  $25,200 
D)  $25,930 
A)  $25,700 
B)  $25,500 
C)  $25,200 
D)  $25,930 B

Question 4

The following amounts are always known under which inventory costing system? Current inventory Cost of goods sold Inventory shrinkage

Accepted Answer

A)  Periodic Periodic Perpetual 
B)  Perpetual Perpetual Periodic 
C)  Perpetual Perpetual Perpetual 
D)  Periodic Periodic Periodic 
A)  Periodic Periodic Perpetual 
B)  Perpetual Perpetual Periodic 
C)  Perpetual Perpetual Perpetual 
D)  Periodic Periodic Periodic

Question 5

Use the following information for questions 62-64.
A company had the following inventory activity during May:  
-If the company uses a perpetual system and the weighted-average cost formula, what is the gross margin on the May 5 sale closest to?

Accepted Answer

A)  $6,100 
B)  $8,100 
C)  $8,190 
D)  $8,550 
A)  $6,100 
B)  $8,100 
C)  $8,190 
D)  $8,550

Question 6

Use the following information to answer questions 59-60.
Hannibal Inc. values its inventory on an LCM basis. The following data came from the 2017 inventory, which consisted of two items:  
-The appropriate carrying value for the entire inventory when applying the LCM rule using net realizable value to the inventory as a whole would be

Accepted Answer

A)  $25,000. 
B)  $26,000. 
C)  $27,000. 
D)  $28,000. 
A)  $25,000. 
B)  $26,000. 
C)  $27,000. 
D)  $28,000.

Question 7

Raw materials are all items required to make a product.

Accepted Answer

A) True 
 B)False

Question 8

COGS is equal to the inventory purchased for a given time period.

Accepted Answer

A) True 
 B)False

Question 9

Periodic inventory systems provide more relevant and timely information to managers for decision making purposes than perpetual inventory systems do.

Accepted Answer

A) True 
 B)False

Question 10

Use the following information for questions 46-48.
Birken Bark Industries had the following activity with one of its inventory items during the current period:  
-Using a perpetual inventory system and the FIFO cost formula, the ending inventory was valued at

Accepted Answer

A)  $500. 
B)  $625. 
C)  $720. 
D)  $825. 
A)  $500. 
B)  $625. 
C)  $720. 
D)  $825.

Question 11

Which of the following should be included in the cost of inventory?

Accepted Answer

A)  the cost of keeping the inventory records 
B)  depreciation on the inventory warehouse 
C)  the salesperson's commission. 
D)  receiving and inspection costs 
A)  the cost of keeping the inventory records 
B)  depreciation on the inventory warehouse 
C)  the salesperson's commission. 
D)  receiving and inspection costs

Question 12

An inventory of grocery items where the shelves are stocked from the back would be similar to which cost formula?

Accepted Answer

A)  FIFO 
B)  specific identification 
C)  weighted-average 
D)  none of the above 
A)  FIFO 
B)  specific identification 
C)  weighted-average 
D)  none of the above

Question 13

Which of the following statements about the weighted-average cost formula is true?

Accepted Answer

A)  If prices are rising, companies prefer it because it lowers their tax liability. 
B)  It is the most popular method in Canada. 
C)  In times of rising prices, weighted-average will produce a higher net income than FIFO. 
D)  In time of rising prices, weighted-average produces an inventory cost per unit that is higher than the cost per unit of cost of goods sold. 
A)  If prices are rising, companies prefer it because it lowers their tax liability. 
B)  It is the most popular method in Canada. 
C)  In times of rising prices, weighted-average will produce a higher net income than FIFO. 
D)  In time of rising prices, weighted-average produces an inventory cost per unit that is higher than the cost per unit of cost of goods sold.

Question 14

The cost formula used by a firm must match the physical flow of units through the firm.

Accepted Answer

A) True 
 B)False

Question 15

Use the following information for questions 62-64.
A company had the following inventory activity during May:  
-If the company uses a perpetual system and the FIFO cost formula, what is the gross margin for the month closest to?

Accepted Answer

A)  $12,100 
B)  $16,200 
C)  $16,300 
D)  $17.100 
A)  $12,100 
B)  $16,200 
C)  $16,300 
D)  $17.100

Question 16

Use the following information to answer questions 59-60.
Hannibal Inc. values its inventory on an LCM basis. The following data came from the 2017 inventory, which consisted of two items:  
-The appropriate carrying value for the entire inventory when applying the LCM rule using net realizable value on an item-by-item basis would be

Accepted Answer

A)  $25,000. 
B)  $26,000. 
C)  $27,000. 
D)  $28,000. 
A)  $25,000. 
B)  $26,000. 
C)  $27,000. 
D)  $28,000.

Question 17

Use the following information for questions 49-52.
A company had the following inventory activity during January:  
-If the company is using a perpetual system and the FIFO cost formula, what is the ending inventory closest to?

Accepted Answer

A)  $7,100 
B)  $7,350 
C)  $7,650 
D)  $7,920 
A)  $7,100 
B)  $7,350 
C)  $7,650 
D)  $7,920

Question 18

Tamarack Co. prepares its estimate of LCM using the net realizable value. Inventory item 101 cost $45 and its current replacement cost is $50. The item is currently selling in the market for $55 and selling costs are estimated to be $6. Tamarack expects to earn a profit of $4 on the sale of this item. In its year-end financial statements, Tamarack Co. should value this item at

Accepted Answer

A)  $50. 
B)  $45. 
C)  $49. 
D)  $55. 
A)  $50. 
B)  $45. 
C)  $49. 
D)  $55.

Question 19

Which of the following cost formulas would be most appropriate for costing an inventory of liquids stored in tanks?

Accepted Answer

A)  weighted-average 
B)  FIFO 
C)  periodic 
D)  perpetual 
A)  weighted-average 
B)  FIFO 
C)  periodic 
D)  perpetual

Question 20

Use the following information for questions 49-52.
A company had the following inventory activity during January:  
-Net realizable value is also known as the

Accepted Answer

A)  replacement cost. 
B)  wholesale price. 
C)  estimated selling price. 
D)  liquidated price. 
A)  replacement cost. 
B)  wholesale price. 
C)  estimated selling price. 
D)  liquidated price.

The LCM rule is usually applied to groups of similar items.

If prices were rising and a Canadian company wanted to report a smaller amount of profit for tax purposes, they should use the weighted-average cost formula.

Use the following information for questions 49-52. A company had the following inventory activity during January: -If the company is using a perpetual system and the FIFO cost formula, what is the cost of goods sold closest to?

The following amounts are always known under which inventory costing system? Current inventory Cost of goods sold Inventory shrinkage

Use the following information for questions 62-64. A company had the following inventory activity during May: -If the company uses a perpetual system and the weighted-average cost formula, what is the gross margin on the May 5 sale closest to?

Raw materials are all items required to make a product.

COGS is equal to the inventory purchased for a given time period.

Periodic inventory systems provide more relevant and timely information to managers for decision making purposes than perpetual inventory systems do.

Use the following information for questions 46-48. Birken Bark Industries had the following activity with one of its inventory items during the current period: -Using a perpetual inventory system and the FIFO cost formula, the ending inventory was valued at

Which of the following should be included in the cost of inventory?

An inventory of grocery items where the shelves are stocked from the back would be similar to which cost formula?

Which of the following statements about the weighted-average cost formula is true?

The cost formula used by a firm must match the physical flow of units through the firm.

Use the following information for questions 62-64. A company had the following inventory activity during May: -If the company uses a perpetual system and the FIFO cost formula, what is the gross margin for the month closest to?

Use the following information for questions 49-52. A company had the following inventory activity during January: -If the company is using a perpetual system and the FIFO cost formula, what is the ending inventory closest to?

Which of the following cost formulas would be most appropriate for costing an inventory of liquids stored in tanks?

Use the following information for questions 49-52. A company had the following inventory activity during January: -Net realizable value is also known as the

Overview of Corporate Financial Reporting

Nalyzing Transaction and Their Effect on Financial Statement

Double-Entry Accounting and the Accounting Cycle

Revenue Recognition and the Statement of Incom

Revenue Recognition and the Statement of Income

The Statement of Cash Flows

Inventory

Long-Term Assets

Long-Term Liabilities

Shareholders Equity

Financial Statement Analysis

Filters

Exam 7: Cash and Accounts

The LCM rule is usually applied to groups of similar items.

If prices were rising and a Canadian company wanted to report a smaller amount of profit for tax purposes, they should use the weighted-average cost formula.

Use the following information for questions 49-52. A company had the following inventory activity during January: -If the company is using a perpetual system and the FIFO cost formula, what is the cost of goods sold closest to?

The following amounts are always known under which inventory costing system? Current inventory Cost of goods sold Inventory shrinkage

Use the following information for questions 62-64. A company had the following inventory activity during May: -If the company uses a perpetual system and the weighted-average cost formula, what is the gross margin on the May 5 sale closest to?

Raw materials are all items required to make a product.

COGS is equal to the inventory purchased for a given time period.

Periodic inventory systems provide more relevant and timely information to managers for decision making purposes than perpetual inventory systems do.

Use the following information for questions 46-48. Birken Bark Industries had the following activity with one of its inventory items during the current period: -Using a perpetual inventory system and the FIFO cost formula, the ending inventory was valued at

Which of the following should be included in the cost of inventory?

An inventory of grocery items where the shelves are stocked from the back would be similar to which cost formula?

Which of the following statements about the weighted-average cost formula is true?

The cost formula used by a firm must match the physical flow of units through the firm.

Use the following information for questions 62-64. A company had the following inventory activity during May: -If the company uses a perpetual system and the FIFO cost formula, what is the gross margin for the month closest to?

Use the following information for questions 49-52. A company had the following inventory activity during January: -If the company is using a perpetual system and the FIFO cost formula, what is the ending inventory closest to?

Which of the following cost formulas would be most appropriate for costing an inventory of liquids stored in tanks?

Use the following information for questions 49-52. A company had the following inventory activity during January: -Net realizable value is also known as the

Overview of Corporate Financial Reporting

Nalyzing Transaction and Their Effect on Financial Statement

Double-Entry Accounting and the Accounting Cycle

Revenue Recognition and the Statement of Incom

Revenue Recognition and the Statement of Income

The Statement of Cash Flows

Inventory

Long-Term Assets

Long-Term Liabilities

Shareholders Equity

Financial Statement Analysis

Filters