Question 1

The factor which determines whether or not goods should be included in a physical count of inventory is

Accepted Answer

A)  physical possession. 
B)  legal title. 
C)  management's judgment. 
D)  whether or not the purchase price has been paid. 
A)  physical possession. 
B)  legal title. 
C)  management's judgment. 
D)  whether or not the purchase price has been paid. B

Question 2

Use the following information for Boxter, Inc., Clifford Company, Danforth Industries, and Evans Services to answer the question "Using the LIFO reserve adjustment, which company would has the strongest liquidity position for 2014 as expressed by the current ratio?"

Accepted Answer

A)  Boxter 
B)  Clifford 
C)  Danforth 
D)  Evans 
A)  Boxter 
B)  Clifford 
C)  Danforth 
D)  Evans C

Question 3

Classic Floors has the following inventory data:   Assuming that a perpetual inventory system is used, what is the value of ending inventory on a LIFO basis for July?

Accepted Answer

A)  $465.60 
B)  $702.00 
C)  $354.00 
D)  $236.40 
A)  $465.60 
B)  $702.00 
C)  $354.00 
D)  $236.40 D

Question 4

Shellan Kamp Company identifies the following items for possible inclusion in the physical inventory. Indicate whether each item should be included or excluded from the inventory taking.
1. Goods shipped on consignment by Shellan Kamp to another company.
2. Goods in transit from a supplier shipped FOB destination.
3. Goods shipped via common carrier to a customer with terms FOB shipping point.
4. Goods held on consignment from another company.

Accepted Answer

1. Include

Question 5

The First-in, First-out (FIFO) inventory method results in an ending inventory valued at the most recent cost.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following items will increase inventoriable costs for the buyer of goods?

Accepted Answer

A)  Purchase returns and allowances granted by the seller 
B)  Purchase discounts taken by the purchaser 
C)  Freight charges paid by the seller 
D)  Freight charges paid by the purchaser 
A)  Purchase returns and allowances granted by the seller 
B)  Purchase discounts taken by the purchaser 
C)  Freight charges paid by the seller 
D)  Freight charges paid by the purchaser

Question 7

Hansen Company uses the periodic inventory method and had the following inventory information available:   A physical count of inventory on December 31 revealed that there were 380 units on hand.
Instructions
Answer the following independent questions and show computations supporting your answers.
1. Assume that the company uses the FIFO method. The value of the ending inventory at December 31 is $__________.
2. Assume that the company uses the average cost method. The value of the ending inventory on December 31 is $__________.
3. Assume that the company uses the LIFO method. The value of the ending inventory on December 31 is $__________.
4. Determine the difference in the amount of income that the company would have reported if it had used the FIFO method instead of the LIFO method. Would income have been greater or less?

Accepted Answer

@#IMG-DLM& Income would have b

Question 8

Johnson Company reports the following for the month of June.   (a) Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO, (2) LIFO, and (3) average cost.
(b) Which costing method gives the highest ending inventory? The highest cost of goods sold? Why?
(c) How do the average-cost values for ending inventory and cost of goods sold relate to ending inventory and cost of goods sold for FIFO and LIFO?

Accepted Answer

(a) (1) FIFO @#IMG-DLM& (2) LIFO @#IMG-DLM& @#IMG-DLM& (b) The FIFO me

Question 9

Inventory written down under lower-of-cost-or market may be written back up to original cost in a subsequent period under

Accepted Answer

The answer of Inventory written down under lower-of-cost-or market may...

Question 10

The LIFO inventory method agrees with the actual physical movement of goods in most businesses.

Accepted Answer

A) True 
 B)False

Question 11

When the market value of inventory is lower than its cost, the inventory is written down to its market value.

Accepted Answer

A) True 
 B)False

Question 12

A problem with the specific identification method is that

Accepted Answer

A)  inventories can be reported at actual costs. 
B)  management can manipulate income. 
C)  matching is not achieved. 
D)  the lower of cost or market basis cannot be applied. 
A)  inventories can be reported at actual costs. 
B)  management can manipulate income. 
C)  matching is not achieved. 
D)  the lower of cost or market basis cannot be applied.

Question 13

Which of the following terms best describes the assumption made in applying the four inventory methods?

Accepted Answer

A)  Goods flow 
B)  Cost flow 
C)  Asset flow 
D)  Physical flow 
A)  Goods flow 
B)  Cost flow 
C)  Asset flow 
D)  Physical flow

Question 14

If the unit cost of inventory has continuously increased, the ______________, first-out inventory valuation method will result in a higher valued ending inventory than if the ______________, first-out method had been used.

Accepted Answer

The answer of If the unit cost of inventory has...

Question 15

If prices never changed there would be no need for alternative inventory methods.

Accepted Answer

A) True 
 B)False

Question 16

Reeves Company is taking a physical inventory on March 31, the last day of its fiscal year. Which of the following must be included in this inventory count?

Accepted Answer

A)  Goods in transit to Reeves, FOB destination 
B)  Goods that Reeves is holding on consignment for Parker Company 
C)  Goods in transit that Reeves has sold to Smith Company, FOB shipping point 
D)  Goods that Reeves is holding in inventory on March 31 for which the related Accounts Payable is 15 days past due 
A)  Goods in transit to Reeves, FOB destination 
B)  Goods that Reeves is holding on consignment for Parker Company 
C)  Goods in transit that Reeves has sold to Smith Company, FOB shipping point 
D)  Goods that Reeves is holding in inventory on March 31 for which the related Accounts Payable is 15 days past due

Question 17

Butler Company reported ending inventory at December 31, 2014 of $1,200,000 under LIFO. It also reported a LIFO reserve of $210,000 at January 1, 2014, and $300,000 at December 31, 2014. Cost of goods sold for 2014 was $4,600,000. If Butler Company had used FIFO during 2014, its cost of goods sold for 2014 would have been

Accepted Answer

A)  $4,900,000. 
B)  $4,690,000. 
C)  $4,510,000. 
D)  $4,300,000. 
A)  $4,900,000. 
B)  $4,690,000. 
C)  $4,510,000. 
D)  $4,300,000.

Question 18

If companies have identical inventoriable costs but use different inventory flow assumptions when the price of goods have not been constant, then the

Accepted Answer

A)  cost of goods sold of the companies will be identical. 
B)  cost of goods purchased during the year will be identical. 
C)  ending inventory of the companies will be identical. 
D)  net income of the companies will be identical. 
A)  cost of goods sold of the companies will be identical. 
B)  cost of goods purchased during the year will be identical. 
C)  ending inventory of the companies will be identical. 
D)  net income of the companies will be identical.

Question 19

The LIFO inventory method assumes that the cost of the latest units purchased are

Accepted Answer

A)  the last to be allocated to cost of goods sold. 
B)  the first to be allocated to ending inventory. 
C)  the first to be allocated to cost of goods sold. 
D)  not allocated to cost of goods sold or ending inventory. 
A)  the last to be allocated to cost of goods sold. 
B)  the first to be allocated to ending inventory. 
C)  the first to be allocated to cost of goods sold. 
D)  not allocated to cost of goods sold or ending inventory.

Question 20

Given equal circumstances, which inventory method would probably be the most time consuming?

Accepted Answer

A)  FIFO 
B)  LIFO 
C)  Average cost 
D)  Specific identification. 
A)  FIFO 
B)  LIFO 
C)  Average cost 
D)  Specific identification.

The factor which determines whether or not goods should be included in a physical count of inventory is

Use the following information for Boxter, Inc., Clifford Company, Danforth Industries, and Evans Services to answer the question "Using the LIFO reserve adjustment, which company would has the strongest liquidity position for 2014 as expressed by the current ratio?"

Classic Floors has the following inventory data: Assuming that a perpetual inventory system is used, what is the value of ending inventory on a LIFO basis for July?

The First-in, First-out (FIFO) inventory method results in an ending inventory valued at the most recent cost.

Which of the following items will increase inventoriable costs for the buyer of goods?

Inventory written down under lower-of-cost-or market may be written back up to original cost in a subsequent period under

The LIFO inventory method agrees with the actual physical movement of goods in most businesses.

When the market value of inventory is lower than its cost, the inventory is written down to its market value.

A problem with the specific identification method is that

Which of the following terms best describes the assumption made in applying the four inventory methods?

If the unit cost of inventory has continuously increased, the , first-out inventory valuation method will result in a higher valued ending inventory than if the , first-out method had been used.

If prices never changed there would be no need for alternative inventory methods.

Reeves Company is taking a physical inventory on March 31, the last day of its fiscal year. Which of the following must be included in this inventory count?

If companies have identical inventoriable costs but use different inventory flow assumptions when the price of goods have not been constant, then the

The LIFO inventory method assumes that the cost of the latest units purchased are

Given equal circumstances, which inventory method would probably be the most time consuming?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments and Acquisitions in Accounting

Filters

Exam 6: Reporting and Analyzing Inventory

The factor which determines whether or not goods should be included in a physical count of inventory is

Use the following information for Boxter, Inc., Clifford Company, Danforth Industries, and Evans Services to answer the question "Using the LIFO reserve adjustment, which company would has the strongest liquidity position for 2014 as expressed by the current ratio?"

Classic Floors has the following inventory data: Assuming that a perpetual inventory system is used, what is the value of ending inventory on a LIFO basis for July?

The First-in, First-out (FIFO) inventory method results in an ending inventory valued at the most recent cost.

Which of the following items will increase inventoriable costs for the buyer of goods?

Inventory written down under lower-of-cost-or market may be written back up to original cost in a subsequent period under

The LIFO inventory method agrees with the actual physical movement of goods in most businesses.

When the market value of inventory is lower than its cost, the inventory is written down to its market value.

A problem with the specific identification method is that

Which of the following terms best describes the assumption made in applying the four inventory methods?

If the unit cost of inventory has continuously increased, the ______________, first-out inventory valuation method will result in a higher valued ending inventory than if the ______________, first-out method had been used.

If prices never changed there would be no need for alternative inventory methods.

Reeves Company is taking a physical inventory on March 31, the last day of its fiscal year. Which of the following must be included in this inventory count?

If companies have identical inventoriable costs but use different inventory flow assumptions when the price of goods have not been constant, then the

The LIFO inventory method assumes that the cost of the latest units purchased are

Given equal circumstances, which inventory method would probably be the most time consuming?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments and Acquisitions in Accounting

Filters

If the unit cost of inventory has continuously increased, the , first-out inventory valuation method will result in a higher valued ending inventory than if the , first-out method had been used.