Question 1

Which of the following cannot be used as the current cost in dollar-value LIFO calculations?

Accepted Answer

A)  the cost of the first acquisitions in a year 
B)  the cost of the last acquisitions in a year 
C)  the cost of the acquisitions in the middle of a year 
D)  the average cost of all acquisitions in a year 
A)  the cost of the first acquisitions in a year 
B)  the cost of the last acquisitions in a year 
C)  the cost of the acquisitions in the middle of a year 
D)  the average cost of all acquisitions in a year C

Question 2

Which one of the following is not an advantage of using the FIFO cost flow assumption?

Accepted Answer

A)  produces lowest net income in periods of rising prices 
B)  provides a relevant ending inventory value 
C)  is not as susceptible to profit manipulation by management 
D)  does not produce unusual results when inventory liquidation occurs 
A)  produces lowest net income in periods of rising prices 
B)  provides a relevant ending inventory value 
C)  is not as susceptible to profit manipulation by management 
D)  does not produce unusual results when inventory liquidation occurs A

Question 3

A perpetual inventory system provides management with valuable tools with which to plan and control inventory levels because the amount of inventory is known at any point in time.

Accepted Answer

A) True 
 B)False  True

Question 4

Which of the following is a characteristic of a periodic inventory system?

Accepted Answer

A)  The system does not maintain a continuous record of the quantities of inventory on hand or inventory sold 
B)  The system reports how much inventory is on hand at all times. 
C)  The computer tracks inventory upon a sale, and the cost of goods and inventory are immediately updated. 
D)  Purchases of inventory are recorded to the inventory account. 
A)  The system does not maintain a continuous record of the quantities of inventory on hand or inventory sold 
B)  The system reports how much inventory is on hand at all times. 
C)  The computer tracks inventory upon a sale, and the cost of goods and inventory are immediately updated. 
D)  Purchases of inventory are recorded to the inventory account.

Question 5

What three difficulties does dollar-value LIFO overcome compared to applying simple LIFO?

Accepted Answer

1) Simplified record keeping
2) LIFO liq

Question 6

Which one of the following types of costs should be included in the cost of a manufactured inventory?

Accepted Answer

A)  abnormal spoilage 
B)  production supervisory salaries 
C)  interest costs 
D)  selling costs 
A)  abnormal spoilage 
B)  production supervisory salaries 
C)  interest costs 
D)  selling costs

Question 7

A perpetual inventory system

Accepted Answer

A)  only records the inventory on hand at the end of the year physical count 
B)  keeps a continuous record of the physical quantities of inventory on hand 
C)  does not maintain a continuous record of the physical quantities of inventory on hand 
D)  does not maintain a continuous record of the cost of inventory on hand 
A)  only records the inventory on hand at the end of the year physical count 
B)  keeps a continuous record of the physical quantities of inventory on hand 
C)  does not maintain a continuous record of the physical quantities of inventory on hand 
D)  does not maintain a continuous record of the cost of inventory on hand

Question 8

A manufacturing company typically has how many inventory accounts?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 9

A retail firm would normally use an inventory account titled

Accepted Answer

A)  finished goods inventory 
B)  merchandise inventory 
C)  goods in process inventory 
D)  raw materials inventory 
A)  finished goods inventory 
B)  merchandise inventory 
C)  goods in process inventory 
D)  raw materials inventory

Question 10

A manufacturing firm would not normally have an account titled

Accepted Answer

A)  goods in process inventory 
B)  raw materials inventory 
C)  merchandise inventory 
D)  finished goods inventory 
A)  goods in process inventory 
B)  raw materials inventory 
C)  merchandise inventory 
D)  finished goods inventory

Question 11

For the year in which prices rise, adoption of a "just-in-time" inventory system will most likely result in

Accepted Answer

A)  a permanent increase in the size of the inventory 
B)  a reduction in income taxes 
C)  an increase in total assets 
D)  an increase in income 
A)  a permanent increase in the size of the inventory 
B)  a reduction in income taxes 
C)  an increase in total assets 
D)  an increase in income

Question 12

La Grange, Inc. reported sales of $1,200 in October and a gross profit of $370. The company had an October 1 inventory of 60 units that had a total cost of $300. October purchases and sales were as follows:   La Grange, Inc., must use

Accepted Answer

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

Question 13

Trooper Company has provided the following inventory data for the year:   
Compute the cost of goods sold and the ending inventory using the periodic inventory system for each of the following cost flow assumptions: 
a. FIFO
b. LIFO
c. weighted average

Accepted Answer

a. FIFO cost of goods sold: 50 × $8) + 1

Question 14

In interim reporting, a LIFO liquidation requires the company to forecast the year-end

Accepted Answer

A)  cost of goods sold 
B)  ending inventory 
C)  LIFO reserve 
D)  tax liability 
A)  cost of goods sold 
B)  ending inventory 
C)  LIFO reserve 
D)  tax liability

Question 15

Which of the following inventory cost flow assumptions produces the same ending inventory values under both the periodic and perpetual systems?

Accepted Answer

A)  FIFO 
B)  LIFO 
C)  weighted average 
D)  dollar-value LIFO 
A)  FIFO 
B)  LIFO 
C)  weighted average 
D)  dollar-value LIFO

Question 16

The following information was obtained from the accounting records of Junie Company.

Accepted Answer

The answer of The following information was obtained from the...

Question 17

Use the following letters to represent items: P = Purchases net)
C = Cost of goods sold B = Beginning inventory E = Ending inventory
Which equation is correct?

Accepted Answer

A)  B − C + P = E 
B)  B − E = C + P 
C)  P − E = B + C 
D)  B = C − E + P 
A)  B − C + P = E 
B)  B − E = C + P 
C)  P − E = B + C 
D)  B = C − E + P

Question 18

Which of the following is included in the work in process account?

Accepted Answer

A)  manufacturing overhead 
B)  direct labor cost 
C)  cost of raw materials used in production 
D)  All of these answer choices are included in the work in process account. 
A)  manufacturing overhead 
B)  direct labor cost 
C)  cost of raw materials used in production 
D)  All of these answer choices are included in the work in process account.

Question 19

Richardson's Flower Depot uses FIFO for internal reporting purposes and LIFO for financial and income tax purposes. At the end of 2017, the following information was obtained from the inventory records:   1) Prepare the necessary entry to convert to LIFO at the end of 2017.
2) How much would Richardson's cost of goods sold differ in 2017 if it used FIFO for external reporting?

Accepted Answer

1) @#IMG-DLM& 2) If the company used FIF

Question 20

What is the cost of goods sold model for a merchandiser? What is the cost of goods sold model for a manufacturer?

Accepted Answer

The answer of What is the cost of goods sold...

Exam 7: Inventories: Cost Measurement and Flow Assumptions

Which of the following cannot be used as the current cost in dollar-value LIFO calculations?

Which one of the following is not an advantage of using the FIFO cost flow assumption?

A perpetual inventory system provides management with valuable tools with which to plan and control inventory levels because the amount of inventory is known at any point in time.

Which of the following is a characteristic of a periodic inventory system?

What three difficulties does dollar-value LIFO overcome compared to applying simple LIFO?

Which one of the following types of costs should be included in the cost of a manufactured inventory?

A perpetual inventory system

A manufacturing company typically has how many inventory accounts?

A retail firm would normally use an inventory account titled

A manufacturing firm would not normally have an account titled

For the year in which prices rise, adoption of a "just-in-time" inventory system will most likely result in

La Grange, Inc. reported sales of $1,200 in October and a gross profit of $370. The company had an October 1 inventory of 60 units that had a total cost of $300. October purchases and sales were as follows: La Grange, Inc., must use

Trooper Company has provided the following inventory data for the year: Compute the cost of goods sold and the ending inventory using the periodic inventory system for each of the following cost flow assumptions: a. FIFO b. LIFO c. weighted average

In interim reporting, a LIFO liquidation requires the company to forecast the year-end

Which of the following inventory cost flow assumptions produces the same ending inventory values under both the periodic and perpetual systems?

The following information was obtained from the accounting records of Junie Company.

Use the following letters to represent items: P = Purchases net) C = Cost of goods sold B = Beginning inventory E = Ending inventory Which equation is correct?

Which of the following is included in the work in process account?

What is the cost of goods sold model for a merchandiser? What is the cost of goods sold model for a manufacturer?

The Demand for and Supply of Financial Accounting Information

Financial Reporting: Its Conceptual Framework

Review of a Company S Accounting System

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows Time Value of Money Module

Cash and Receivables

Inventories: Special Valuation Issues

Current Liabilities and Contingent Obligations

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Intangibles

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Long-Term Notes Payable

Contributed Capital

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Post-Retirement Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Understanding Time Value of Money Formulas and Concepts

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