Question 1

After the physical inventory is completed,

Accepted Answer

A)  quantities are listed on inventory summary sheets. 
B)  quantities are entered into various general ledger inventory accounts. 
C)  the accuracy of the inventory summary sheets is checked by the person listing the quantities on the sheets. 
D)  unit costs are determined by dividing the quantities on the summary sheets by the total inventory costs. 
A)  quantities are listed on inventory summary sheets. 
B)  quantities are entered into various general ledger inventory accounts. 
C)  the accuracy of the inventory summary sheets is checked by the person listing the quantities on the sheets. 
D)  unit costs are determined by dividing the quantities on the summary sheets by the total inventory costs.

Question 2

Radical Radials Company has the following inventory data:   A physical count of merchandise inventory on July 30 reveals that there are 32 units on hand. Using the LIFO inventory method, the amount allocated to ending inventory for July is

Accepted Answer

A)  $620 
B)  $608 
C)  $640 
D)  $704. 
A)  $620 
B)  $608 
C)  $640 
D)  $704.

Question 3

Trumpeting Trumpets has the following inventory data:   Assuming that a periodic inventory system is used, what is the cost of goods sold on a FIFO basis.

Accepted Answer

A)  $10,992 
B)  $11,022 
C)  $23,088. 
D)  $23,118 
A)  $10,992 
B)  $11,022 
C)  $23,088. 
D)  $23,118

Question 4

In a manufacturing company, there are three categories of inventory: they are _____________________, _________________, and _________________.

Accepted Answer

raw materials ,work

Question 5

Which of the following is an inventory costing method?

Accepted Answer

A)  Periodic 
B)  Specific identification 
C)  Perpetual 
D)  Lower of cost or market 
A)  Periodic 
B)  Specific identification 
C)  Perpetual 
D)  Lower of cost or market

Question 6

Manufacturers usually classify inventory into all the following general categories except:

Accepted Answer

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

Question 7

Burnham Company reported the following summarized annual data at the end of 2014: $\begin{array}{lr}
\text { Sales revenue } & \$ 1,600,000 \
\text { Cost of goods sold } & 900,000 \
\text { Gross margin } & 700,000 \
\text { Operating expenses } & 400,000 \
\text { Income before income taxes } & 300,000 \
\hline
\end{array}$ *Based on an ending FIFO inventory of $250,000.
The income tax rate is 30%. The controller of the company is considering a switch from FIFO to LIFO. He has determined that on a LIFO basis, the ending inventory would have been $205,000.
Instructions
(a) Restate the summary information on a LIFO basis.
(b) What effect, if any, would the proposed change have on Burnham's income tax expense, net income, and cash flows?
(c) If you were an owner of this business, what would your reaction be to this proposed change?

Accepted Answer

(a) 
  *Ending inventory would be $45000

Question 8

Hoover Company had beginning inventory of $15,000 at March 1, 2014. During the month, the company made purchases of $55,000. The inventory at the end of the month is $17,300. What is cost of goods sold for the month of March?

Accepted Answer

A)  $52,700 
B)  $55,000 
C)  $70,000 
D)  $72,300 
A)  $52,700 
B)  $55,000 
C)  $70,000 
D)  $72,300

Question 9

Dole Industries had the following inventory transactions occur during 2014:   The company sold 204 units at $126 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, and operating expenses of $2,000, what is the company's after-tax income using LIFO? (rounded to whole dollars)

Accepted Answer

A)  $4,176 
B)  $4,323 
C)  $3,349 
D)  $2,923 
A)  $4,176 
B)  $4,323 
C)  $3,349 
D)  $2,923

Question 10

Faster 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 55 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. Assume that the company uses the FIFO method. The value of the cost of goods sold at December 31 is $__________.

Accepted Answer

The answer of Faster Company uses the periodic inventory method...

Question 11

Which statement concerning lower of cost or market (LCM) is incorrect?

Accepted Answer

A)  LCM is an example of a company choosing the accounting method that will be least likely to overstate assets and income. 
B)  Under the LCM basis, market does not apply because assets are always recorded and maintained at cost. 
C)  The LCM basis uses current replacement cost because a decline in this cost usually leads to a decline in the selling price of the inventory item. 
D)  LCM is applied after one of the cost flow assumptions has been applied. 
A)  LCM is an example of a company choosing the accounting method that will be least likely to overstate assets and income. 
B)  Under the LCM basis, market does not apply because assets are always recorded and maintained at cost. 
C)  The LCM basis uses current replacement cost because a decline in this cost usually leads to a decline in the selling price of the inventory item. 
D)  LCM is applied after one of the cost flow assumptions has been applied.

Question 12

Which statement is false?

Accepted Answer

A)  Taking a physical inventory involves actually counting, weighing, or measuring each kind of inventory on hand. 
B)  No matter whether a periodic or perpetual inventory system is used, all companies need to determine inventory quantities at the end of each accounting period. 
C)  An inventory count is generally more accurate when goods are not being sold or received during the counting. 
D)  Companies that use a perpetual inventory system must take a physical inventory to determine inventory on hand on the balance sheet date and to determine cost of goods sold for the accounting period. 
A)  Taking a physical inventory involves actually counting, weighing, or measuring each kind of inventory on hand. 
B)  No matter whether a periodic or perpetual inventory system is used, all companies need to determine inventory quantities at the end of each accounting period. 
C)  An inventory count is generally more accurate when goods are not being sold or received during the counting. 
D)  Companies that use a perpetual inventory system must take a physical inventory to determine inventory on hand on the balance sheet date and to determine cost of goods sold for the accounting period.

Question 13

The lower-of-cost-or-market rule implies that it is unrealistic to carry inventory at a cost that is in excess of its market value.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following should not be included in the physical inventory of a company?

Accepted Answer

A)  Goods held on consignment from another company. 
B)  Goods in transit from another company shipped FOB shipping point. 
C)  Goods shipped on consignment to another company. 
D)  All of these answer choices should be included. 
A)  Goods held on consignment from another company. 
B)  Goods in transit from another company shipped FOB shipping point. 
C)  Goods shipped on consignment to another company. 
D)  All of these answer choices should be included.

Question 15

If the ownership of merchandise passes to the buyer when the seller ships the merchandise, the terms are stated as FOB destination.

Accepted Answer

A) True 
 B)False

Question 16

Jenks Company developed the following information about its inventories in applying the lower of cost or market (LCM) basis in valuing inventories:   If Jenks applies the LCM basis, the value of the inventory reported on the balance sheet would be

Accepted Answer

A)  $177,000. 
B)  $179,000. 
C)  $175,000. 
D)  $181,000. 
A)  $177,000. 
B)  $179,000. 
C)  $175,000. 
D)  $181,000.

Question 17

This information is available for Groneman, Inc. for 2013 and 2014.   Instructions
Calculate the inventory turnover, days in inventory, and gross profit rate for Groneman., Inc. for 2013 and 2014. Comment on any trends.

Accepted Answer

@#IMG-DLM& The inventory turnover decreased by app

Question 18

Independent internal verification of the physical inventory process occurs when

Accepted Answer

A)  the employee is required to count all items twice for sake of verification. 
B)  the items counted are compared to the inventory account balance. 
C)  a second employee counts the inventory and compares the result to the count made by the first employee. 
D)  all prenumbered inventory tags are accounted for. 
A)  the employee is required to count all items twice for sake of verification. 
B)  the items counted are compared to the inventory account balance. 
C)  a second employee counts the inventory and compares the result to the count made by the first employee. 
D)  all prenumbered inventory tags are accounted for.

Question 19

In a period of rising prices, which of the following inventory methods generally results in the lowest net income figure?

Accepted Answer

A)  Average cost method 
B)  LIFO method 
C)  FIFO method 
D)  Need more information to answer 
A)  Average cost method 
B)  LIFO method 
C)  FIFO method 
D)  Need more information to answer

Question 20

Inventory accounting under IFRS differs from GAAP in regard to

Accepted Answer

A)  neither the use of LIFO nor lower-of-cost-or-market. 
B)  the use of LIFO but not lower-of-cost-or-market. 
C)  the use of lower-of-cost-or-market but not LIFO. 
D)  the use of LIFO and lower-of-cost-or-market. 
A)  neither the use of LIFO nor lower-of-cost-or-market. 
B)  the use of LIFO but not lower-of-cost-or-market. 
C)  the use of lower-of-cost-or-market but not LIFO. 
D)  the use of LIFO and lower-of-cost-or-market.

After the physical inventory is completed,

Radical Radials Company has the following inventory data: A physical count of merchandise inventory on July 30 reveals that there are 32 units on hand. Using the LIFO inventory method, the amount allocated to ending inventory for July is

Trumpeting Trumpets has the following inventory data: Assuming that a periodic inventory system is used, what is the cost of goods sold on a FIFO basis.

In a manufacturing company, there are three categories of inventory: they are _____________, _, and _________.

Which of the following is an inventory costing method?

Manufacturers usually classify inventory into all the following general categories except:

Hoover Company had beginning inventory of $15,000 at March 1, 2014. During the month, the company made purchases of $55,000. The inventory at the end of the month is $17,300. What is cost of goods sold for the month of March?

Which statement concerning lower of cost or market (LCM) is incorrect?

Which statement is false?

The lower-of-cost-or-market rule implies that it is unrealistic to carry inventory at a cost that is in excess of its market value.

Which of the following should not be included in the physical inventory of a company?

If the ownership of merchandise passes to the buyer when the seller ships the merchandise, the terms are stated as FOB destination.

Jenks Company developed the following information about its inventories in applying the lower of cost or market (LCM) basis in valuing inventories: If Jenks applies the LCM basis, the value of the inventory reported on the balance sheet would be

This information is available for Groneman, Inc. for 2013 and 2014. Instructions Calculate the inventory turnover, days in inventory, and gross profit rate for Groneman., Inc. for 2013 and 2014. Comment on any trends.

Independent internal verification of the physical inventory process occurs when

In a period of rising prices, which of the following inventory methods generally results in the lowest net income figure?

Inventory accounting under IFRS differs from GAAP in regard to

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

After the physical inventory is completed,

Radical Radials Company has the following inventory data: A physical count of merchandise inventory on July 30 reveals that there are 32 units on hand. Using the LIFO inventory method, the amount allocated to ending inventory for July is

Trumpeting Trumpets has the following inventory data: Assuming that a periodic inventory system is used, what is the cost of goods sold on a FIFO basis.

In a manufacturing company, there are three categories of inventory: they are _____________________, _________________, and _________________.

Which of the following is an inventory costing method?

Manufacturers usually classify inventory into all the following general categories except:

Hoover Company had beginning inventory of $15,000 at March 1, 2014. During the month, the company made purchases of $55,000. The inventory at the end of the month is $17,300. What is cost of goods sold for the month of March?

Which statement concerning lower of cost or market (LCM) is incorrect?

Which statement is false?

The lower-of-cost-or-market rule implies that it is unrealistic to carry inventory at a cost that is in excess of its market value.

Which of the following should not be included in the physical inventory of a company?

If the ownership of merchandise passes to the buyer when the seller ships the merchandise, the terms are stated as FOB destination.

Jenks Company developed the following information about its inventories in applying the lower of cost or market (LCM) basis in valuing inventories: If Jenks applies the LCM basis, the value of the inventory reported on the balance sheet would be

This information is available for Groneman, Inc. for 2013 and 2014. Instructions Calculate the inventory turnover, days in inventory, and gross profit rate for Groneman., Inc. for 2013 and 2014. Comment on any trends.

Independent internal verification of the physical inventory process occurs when

In a period of rising prices, which of the following inventory methods generally results in the lowest net income figure?

Inventory accounting under IFRS differs from GAAP in regard to

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

In a manufacturing company, there are three categories of inventory: they are _____________, _, and _________.