Question 1

A low number of days in inventory may indicate all of the following except

Accepted Answer

A)  Sales opportunities may be lost because of inventory shortages. 
B)  There is less chance of having obsolete inventory items. 
C)  The company has fewer funds tied up in inventory. 
D)  Management has achieved the best balance between too much and too little inventory levels. 
A)  Sales opportunities may be lost because of inventory shortages. 
B)  There is less chance of having obsolete inventory items. 
C)  The company has fewer funds tied up in inventory. 
D)  Management has achieved the best balance between too much and too little inventory levels.

Question 2

Quiet Phones 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 cost of goods sold for July is

Accepted Answer

A)  $620. 
B)  $660. 
C)  $1,340. 
D)  $1,380. 
A)  $620. 
B)  $660. 
C)  $1,340. 
D)  $1,380.

Question 3

The average cost inventory method relies on a simple average calculation.

Accepted Answer

A) True 
 B)False

Question 4

Glenda Carson is studying for the next accounting midterm examination. What should Glenda know about (a) departing from the cost basis of accounting for inventories and (b) the meaning of "market" in the lower-of-cost-or-market method?

Accepted Answer

Glenda should know the following:
(a) A

Question 5

Wolf Camera Shop Inc. uses the lower-of-cost-or-market basis for its inventory. The following data are available at December 31.   Instructions
What amount should be reported on Wolf Camera Shop's financial statements, assuming the lower-of-cost-or-market rule is applied?

Accepted Answer

The answer of Wolf Camera Shop Inc. uses the lower-of-cost-or-market...

Question 6

Given equal circumstances and generally rising costs, which inventory method will increase the tax expense the most?

Accepted Answer

A)  FIFO 
B)  LIFO 
C)  Average cost 
D)  Income tax expense for the period will be the same under all assumptions. 
A)  FIFO 
B)  LIFO 
C)  Average cost 
D)  Income tax expense for the period will be the same under all assumptions.

Question 7

Nelson Corporation sells three different products. The following information is available on December 31:   When applying the lower of cost or market rule to each item, what will Nelson's total ending inventory balance be?

Accepted Answer

A)  $3,450 
B)  $3,225 
C)  $3,975 
D)  $3,300 
A)  $3,450 
B)  $3,225 
C)  $3,975 
D)  $3,300

Question 8

Computers has made the periodic inventory system more popular and easier to apply.

Accepted Answer

A) True 
 B)False

Question 9

Use the following information regarding Black Company and Red Company to answer the question "Which amount is equal to Black Company's "days in inventory" for 2014 (to the closest decimal place)?"

Accepted Answer

A)  35.1 days 
B)  34.1 days 
C)  82.5 days 
D)  29.5 days 
A)  35.1 days 
B)  34.1 days 
C)  82.5 days 
D)  29.5 days

Question 10

Ace Company is a retailer operating in an industry that experiences inflation (rising prices). Ace wants the most realistic ending inventory. Which inventory costing method should Ace consider using?

Accepted Answer

A)  Average because all inventory costs will then represent an average amount. 
B)  Specific identification is the most realistic method because it involves the actual costs. 
C)  LIFO because ending inventory represents the earliest costs. 
D)  FIFO because ending inventory represents the latest costs. 
A)  Average because all inventory costs will then represent an average amount. 
B)  Specific identification is the most realistic method because it involves the actual costs. 
C)  LIFO because ending inventory represents the earliest costs. 
D)  FIFO because ending inventory represents the latest costs.

Question 11

Cost of goods available for sale must be allocated between cost of goods ___________ and ______________.

Accepted Answer

sold, endi

Question 12

Quark Inc. just began business and made the following four inventory purchases in June:   A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for June is

Accepted Answer

A)  $1,105. 
B)  $1,100. 
C)  $1,170. 
D)  $1,180. 
A)  $1,105. 
B)  $1,100. 
C)  $1,170. 
D)  $1,180.

Question 13

The specific identification method of costing inventories tracks the actual physical flow of the goods available for sale.

Accepted Answer

A) True 
 B)False

Question 14

When the average cost method is applied to a perpetual inventory system, a moving average cost per unit is computed with each purchase.

Accepted Answer

A) True 
 B)False

Question 15

The following information was available for Camara Company at December 31, 2014: beginning inventory $80,000; ending inventory $120,000; cost of goods sold $560,000; and sales $800,000. Camara's days in inventory in 2014 was

Accepted Answer

A)  45.6 days. 
B)  54.5 days. 
C)  65.2 days. 
D)  77.7 days. 
A)  45.6 days. 
B)  54.5 days. 
C)  65.2 days. 
D)  77.7 days.

Question 16

Accountants believe that the write down from cost to market should not be made in the period in which the price decline occurs.

Accepted Answer

A) True 
 B)False

Question 17

In periods of inflation, phantom or paper profits may be reported as a result of using the

Accepted Answer

A)  perpetual inventory method. 
B)  FIFO costing assumption. 
C)  LIFO costing assumption. 
D)  periodic inventory method. 
A)  perpetual inventory method. 
B)  FIFO costing assumption. 
C)  LIFO costing assumption. 
D)  periodic inventory method.

Question 18

The expense recognition principle requires that the cost of goods sold be matched against the ending merchandise inventory in order to determine income.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is true regarding inventory cost flow assumptions?

Accepted Answer

A)  A company may use more than one costing method concurrently. 
B)  A company must comply with the method specified by industry standards. 
C)  A company must use the same method for domestic and foreign operations. 
D)  A company may never change its inventory costing method once it has chosen a method. 
A)  A company may use more than one costing method concurrently. 
B)  A company must comply with the method specified by industry standards. 
C)  A company must use the same method for domestic and foreign operations. 
D)  A company may never change its inventory costing method once it has chosen a method.

Question 20

Days in inventory is calculated by dividing 365 days by

Accepted Answer

A)  average inventory. 
B)  beginning inventory. 
C)  ending inventory. 
D)  the inventory turnover. 
A)  average inventory. 
B)  beginning inventory. 
C)  ending inventory. 
D)  the inventory turnover.

A low number of days in inventory may indicate all of the following except

Quiet Phones 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 cost of goods sold for July is

The average cost inventory method relies on a simple average calculation.

Glenda Carson is studying for the next accounting midterm examination. What should Glenda know about (a) departing from the cost basis of accounting for inventories and (b) the meaning of "market" in the lower-of-cost-or-market method?

Wolf Camera Shop Inc. uses the lower-of-cost-or-market basis for its inventory. The following data are available at December 31. Instructions What amount should be reported on Wolf Camera Shop's financial statements, assuming the lower-of-cost-or-market rule is applied?

Given equal circumstances and generally rising costs, which inventory method will increase the tax expense the most?

Nelson Corporation sells three different products. The following information is available on December 31: When applying the lower of cost or market rule to each item, what will Nelson's total ending inventory balance be?

Computers has made the periodic inventory system more popular and easier to apply.

Use the following information regarding Black Company and Red Company to answer the question "Which amount is equal to Black Company's "days in inventory" for 2014 (to the closest decimal place)?"

Ace Company is a retailer operating in an industry that experiences inflation (rising prices). Ace wants the most realistic ending inventory. Which inventory costing method should Ace consider using?

Cost of goods available for sale must be allocated between cost of goods _ and ____.

Quark Inc. just began business and made the following four inventory purchases in June: A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for June is

The specific identification method of costing inventories tracks the actual physical flow of the goods available for sale.

When the average cost method is applied to a perpetual inventory system, a moving average cost per unit is computed with each purchase.

The following information was available for Camara Company at December 31, 2014: beginning inventory $80,000; ending inventory $120,000; cost of goods sold $560,000; and sales $800,000. Camara's days in inventory in 2014 was

Accountants believe that the write down from cost to market should not be made in the period in which the price decline occurs.

In periods of inflation, phantom or paper profits may be reported as a result of using the

The expense recognition principle requires that the cost of goods sold be matched against the ending merchandise inventory in order to determine income.

Which of the following statements is true regarding inventory cost flow assumptions?

Days in inventory is calculated by dividing 365 days by

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

A low number of days in inventory may indicate all of the following except

Quiet Phones 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 cost of goods sold for July is

The average cost inventory method relies on a simple average calculation.

Glenda Carson is studying for the next accounting midterm examination. What should Glenda know about (a) departing from the cost basis of accounting for inventories and (b) the meaning of "market" in the lower-of-cost-or-market method?

Wolf Camera Shop Inc. uses the lower-of-cost-or-market basis for its inventory. The following data are available at December 31. Instructions What amount should be reported on Wolf Camera Shop's financial statements, assuming the lower-of-cost-or-market rule is applied?

Given equal circumstances and generally rising costs, which inventory method will increase the tax expense the most?

Nelson Corporation sells three different products. The following information is available on December 31: When applying the lower of cost or market rule to each item, what will Nelson's total ending inventory balance be?

Computers has made the periodic inventory system more popular and easier to apply.

Use the following information regarding Black Company and Red Company to answer the question "Which amount is equal to Black Company's "days in inventory" for 2014 (to the closest decimal place)?"

Ace Company is a retailer operating in an industry that experiences inflation (rising prices). Ace wants the most realistic ending inventory. Which inventory costing method should Ace consider using?

Cost of goods available for sale must be allocated between cost of goods ___________ and ______________.

Quark Inc. just began business and made the following four inventory purchases in June: A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for June is

The specific identification method of costing inventories tracks the actual physical flow of the goods available for sale.

When the average cost method is applied to a perpetual inventory system, a moving average cost per unit is computed with each purchase.

The following information was available for Camara Company at December 31, 2014: beginning inventory $80,000; ending inventory $120,000; cost of goods sold $560,000; and sales $800,000. Camara's days in inventory in 2014 was

Accountants believe that the write down from cost to market should not be made in the period in which the price decline occurs.

In periods of inflation, phantom or paper profits may be reported as a result of using the

The expense recognition principle requires that the cost of goods sold be matched against the ending merchandise inventory in order to determine income.

Which of the following statements is true regarding inventory cost flow assumptions?

Days in inventory is calculated by dividing 365 days by

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

Cost of goods available for sale must be allocated between cost of goods _ and ____.