Question 1

The _____________ is a required disclosure for companies that use LIFO.

Accepted Answer

The answer of The _____________ is a required disclosure for...

Question 2

The FIFO reserve is a required disclosure for companies that use FIFO.

Accepted Answer

A) True 
 B)False

Question 3

A company purchased inventory as follows: 200 units at $5.00
300 units at $5.50
The average unit cost for inventory is

Accepted Answer

A)  $5.00. 
B)  $5.25. 
C)  $5.30. 
D)  $5.50. 
A)  $5.00. 
B)  $5.25. 
C)  $5.30. 
D)  $5.50.

Question 4

The manager of Weiser is given a bonus based on net income before taxes. The net income after taxes is $35,700 for FIFO and $29,400 for LIFO. The tax rate is 30%. The bonus rate is 20%. How much higher is the manager's bonus if FIFO is adopted instead of LIFO?

Accepted Answer

A)  $9,000 
B)  $12,600 
C)  $1,800 
D)  $6,300 
A)  $9,000 
B)  $12,600 
C)  $1,800 
D)  $6,300

Question 5

An aircraft company would most likely have a

Accepted Answer

A)  high inventory turnover. 
B)  low profit margin. 
C)  high volume. 
D)  low inventory turnover. 
A)  high inventory turnover. 
B)  low profit margin. 
C)  high volume. 
D)  low inventory turnover.

Question 6

An error in the ending inventory of the current period will have a similar effect on net income of the next accounting period.

Accepted Answer

A) True 
 B)False

Question 7

Arnold Pharmacy reported cost of goods sold as follows:   Arnold made two errors:
(1) 2013 ending inventory was overstated by $6,000.
(2) 2014 ending inventory was understated by $11,000.
Instructions
Assuming the errors had not been corrected, indicate the dollar effect that the errors had on the items appearing on the financial statements listed below. Also indicate if the amounts are overstated (O) or understated (U).

Accepted Answer

The answer of Arnold Pharmacy reported cost of goods sold...

Question 8

The selection of an appropriate inventory cost flow assumption for an individual company is made by

Accepted Answer

A)  the external auditors. 
B)  the SEC. 
C)  the internal auditors. 
D)  management. 
A)  the external auditors. 
B)  the SEC. 
C)  the internal auditors. 
D)  management.

Question 9

Specific Identification can be used for inventory valuation under

Accepted Answer

The answer of Specific Identification can be used for inventory...

Question 10

Which of these would cause the inventory turnover ratio to increase the most?

Accepted Answer

A)  Increasing the amount of inventory on hand. 
B)  Keeping the amount of inventory on hand constant but increasing sales. 
C)  Keeping the amount of inventory on hand constant but decreasing sales. 
D)  Decreasing the amount of inventory on hand and increasing sales. 
A)  Increasing the amount of inventory on hand. 
B)  Keeping the amount of inventory on hand constant but increasing sales. 
C)  Keeping the amount of inventory on hand constant but decreasing sales. 
D)  Decreasing the amount of inventory on hand and increasing sales.

Question 11

Certain agricultural and mineral products can be reported at net realizable value under

Accepted Answer

The answer of Certain agricultural and mineral products can be...

Question 12

A company 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 average-cost method, the amount allocated to the ending inventory on June 30 is

Accepted Answer

A)  $1,134. 
B)  $1,180. 
C)  $1,100. 
D)  $1,120. 
A)  $1,134. 
B)  $1,180. 
C)  $1,100. 
D)  $1,120.

Question 13

Laser Listening has the following inventory data:   A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand. Assuming that the specific identification method is used and that ending inventory consists of 30 units from each of the three purchases and 10 units from the November 1 inventory, cost of goods sold is

Accepted Answer

A)  $427. 
B)  $857. 
C)  $854. 
D)  $836. 
A)  $427. 
B)  $857. 
C)  $854. 
D)  $836.

Question 14

The convergence issue that will be most difficult to resolve in the area of inventory accounting is:

Accepted Answer

A)  FIFO. 
B)  LIFO. 
C)  ownership of goods. 
D)  costs to include in inventory. 
A)  FIFO. 
B)  LIFO. 
C)  ownership of goods. 
D)  costs to include in inventory.

Question 15

Under the LCM basis, market is defined as selling price, not current replacement cost.

Accepted Answer

A) True 
 B)False

Question 16

At May 1, 2014, Heineken Company had beginning inventory consisting of 200 units with a unit cost of $7. During May, the company purchased inventory as follows: 400 units at $7
600 units at $8
The company sold 1,000 units during the month for $12 per unit. Heineken uses the average cost method. Heineken's gross profit for the month of May is

Accepted Answer

A)  $4,500 
B)  $7,500 
C)  $9,000 
D)  $12,000 
A)  $4,500 
B)  $7,500 
C)  $9,000 
D)  $12,000

Question 17

Under the LCM basis, market is defined as current ______________ cost.

Accepted Answer

The answer of Under the LCM basis, market is defined...

Question 18

Use of the LIFO inventory valuation method enables a company to report paper or phantom profits.

Accepted Answer

A) True 
 B)False

Question 19

Specific Identification must be used for inventory valuation where the inventory items are not interchangeable under

Accepted Answer

The answer of Specific Identification must be used for inventory...

Question 20

Grayson Company sells many products. Gizmo is one of its popular items. Below is an analysis of the inventory purchases and sales of Gizmo for the month of March. Grayson Company uses the perpetual inventory system.   Instructions
(a) Using the FIFO assumption, calculate the amount charged to cost of goods sold for March. (Show computations)
(b) Using the FIFO assumption, calculate the value of ending inventory for March.
(c) Using the moving average cost method, calculate the amount assigned to the inventory on hand on March 31. (Show computations)
(d) Using the LIFO assumption, calculate the amount assigned to the inventory on hand on March 31. (Show computations)
(e) Using the LIFO assumption, calculate the amount charged to cost of goods sold for March. (Show computations)

Accepted Answer

@#IMG-DLM& (a) Using FIFO - the earliest

The _____________ is a required disclosure for companies that use LIFO.

The FIFO reserve is a required disclosure for companies that use FIFO.

A company purchased inventory as follows: 200 units at $5.00 300 units at $5.50 The average unit cost for inventory is

The manager of Weiser is given a bonus based on net income before taxes. The net income after taxes is $35,700 for FIFO and $29,400 for LIFO. The tax rate is 30%. The bonus rate is 20%. How much higher is the manager's bonus if FIFO is adopted instead of LIFO?

An aircraft company would most likely have a

An error in the ending inventory of the current period will have a similar effect on net income of the next accounting period.

The selection of an appropriate inventory cost flow assumption for an individual company is made by

Specific Identification can be used for inventory valuation under

Which of these would cause the inventory turnover ratio to increase the most?

Certain agricultural and mineral products can be reported at net realizable value under

A company 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 average-cost method, the amount allocated to the ending inventory on June 30 is

The convergence issue that will be most difficult to resolve in the area of inventory accounting is:

Under the LCM basis, market is defined as selling price, not current replacement cost.

Under the LCM basis, market is defined as current ______________ cost.

Use of the LIFO inventory valuation method enables a company to report paper or phantom profits.

Specific Identification must be used for inventory valuation where the inventory items are not interchangeable under

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 _____________ is a required disclosure for companies that use LIFO.

The FIFO reserve is a required disclosure for companies that use FIFO.

A company purchased inventory as follows: 200 units at $5.00 300 units at $5.50 The average unit cost for inventory is

The manager of Weiser is given a bonus based on net income before taxes. The net income after taxes is $35,700 for FIFO and $29,400 for LIFO. The tax rate is 30%. The bonus rate is 20%. How much higher is the manager's bonus if FIFO is adopted instead of LIFO?

An aircraft company would most likely have a

An error in the ending inventory of the current period will have a similar effect on net income of the next accounting period.

The selection of an appropriate inventory cost flow assumption for an individual company is made by

Specific Identification can be used for inventory valuation under

Which of these would cause the inventory turnover ratio to increase the most?

Certain agricultural and mineral products can be reported at net realizable value under

A company 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 average-cost method, the amount allocated to the ending inventory on June 30 is

The convergence issue that will be most difficult to resolve in the area of inventory accounting is:

Under the LCM basis, market is defined as selling price, not current replacement cost.

Under the LCM basis, market is defined as current ______________ cost.

Use of the LIFO inventory valuation method enables a company to report paper or phantom profits.

Specific Identification must be used for inventory valuation where the inventory items are not interchangeable under

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