Question 1

IFRS defines market for lower-of-cost-or market as

Accepted Answer

A)  net realizable value. 
B)  estimated selling price in the ordinary course of business. 
C)  replacement cost. 
D)  replacement cost less costs of disposal. 
A)  net realizable value. 
B)  estimated selling price in the ordinary course of business. 
C)  replacement cost. 
D)  replacement cost less costs of disposal.

Question 2

Which of the following companies would most likely have the highest inventory turnover?

Accepted Answer

A)  An art gallery. 
B)  An automobile manufacturer. 
C)  A piano manufacturer. 
D)  A bakery. 
A)  An art gallery. 
B)  An automobile manufacturer. 
C)  A piano manufacturer. 
D)  A bakery.

Question 3

If a company has no beginning inventory and the unit cost of inventory items does not change during the year, the value assigned to the ending inventory will be the same under LIFO and average cost flow assumptions.

Accepted Answer

A) True 
 B)False

Question 4

The Entertainment Center accumulates the following cost and market data at December 31.   What is the lower-of-cost-or-market value of the inventory?

Accepted Answer

The answer of The Entertainment Center accumulates the following cost...

Question 5

Management may choose any inventory costing method it desires as long as the cost flow assumption chosen is consistent with the physical movement of goods in the company.

Accepted Answer

A) True 
 B)False

Question 6

A survey of major U.S. companies revealed that 77% of those companies used either LIFO or FIFO cost flow methods, while 19% used average cost, and only 4% used other methods.
Requirement
Provide brief, yet concise responses to the following questions.
a. Why are LIFO and FIFO so popular?
b. Since computers and inventory management software are readily available, why aren't more companies using specific identification?

Accepted Answer

a. FIFO and LIFO are based on cost flow

Question 7

A major criticism of the FIFO inventory method is that it magnifies the effects of the business cycle on business income.

Accepted Answer

A) True 
 B)False

Question 8

The following information is available from the annual reports of Young and Olde:   Instructions
(a) Calculate the inventory turnover and days in inventory for both companies.
(b) Calculate Young's inventory turnover after adjusting for the LIFO reserve. Young uses the LIFO inventory method.
(c) What conclusion concerning the management of inventory can be drawn from these data?

Accepted Answer

@#IMG-DLM& @#IMG-DLM& (c) Olde's inventory turnover ratio is

Question 9

Snug-As-A-Bug Blankets has the following inventory data:   Assuming that a perpetual inventory system is used, what is ending inventory (rounded) under the average cost method for July?

Accepted Answer

A)  $2,750 
B)  $2,784 
C)  $2,406. 
D)  $2,772 
A)  $2,750 
B)  $2,784 
C)  $2,406. 
D)  $2,772

Question 10

Which inventory costing method should a gasoline retailer use?

Accepted Answer

A)  Average cost 
B)  LIFO 
C)  FIFO 
D)  Either LIFO or FIFO. 
A)  Average cost 
B)  LIFO 
C)  FIFO 
D)  Either LIFO or FIFO.

Question 11

A manufacturer's inventory consists of raw materials, work in process, and finished goods.

Accepted Answer

A) True 
 B)False

Question 12

The lower of cost or market basis of valuing inventories is an example of

Accepted Answer

A)  comparability. 
B)  the historical cost principle. 
C)  conservatism. 
D)  consistency. 
A)  comparability. 
B)  the historical cost principle. 
C)  conservatism. 
D)  consistency.

Question 13

Hanlin Company uses the periodic inventory system to account for inventories. Information related to Hanlin Company's inventory at January 31 is given below:   Instructions
1. Show computations to value the ending inventory using the FIFO cost assumption if 600 units remain on hand at January 31.
2. Show computations to value the ending inventory using the weighted-average cost method if 600 units remain on hand at January 31.
3. Show computations to value the ending inventory using the LIFO cost assumption if 600 units remain on hand at January 31.

Accepted Answer

1. 600 units in ending inventory.
Under

Question 14

In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the

Accepted Answer

A)  FIFO method. 
B)  LIFO method. 
C)  average-cost method. 
D)  tax method. 
A)  FIFO method. 
B)  LIFO method. 
C)  average-cost method. 
D)  tax method.

Question 15

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, what is the company's gross profit using FIFO? (rounded to whole dollars)

Accepted Answer

A)  $19,528 
B)  $18,920 
C)  $6,784 
D)  $6,176 
A)  $19,528 
B)  $18,920 
C)  $6,784 
D)  $6,176

Question 16

The consistent application of an inventory costing method enhances

Accepted Answer

A)  conservatism. 
B)  accuracy. 
C)  comparability. 
D)  efficiency. 
A)  conservatism. 
B)  accuracy. 
C)  comparability. 
D)  efficiency.

Question 17

Noise Makers Inc has the following inventory data:   A physical count of merchandise inventory on July 30 reveals that there are 32 units on hand. Using the average cost method, the value of ending inventory is

Accepted Answer

A)  $620. 
B)  $640. 
C)  $651. 
D)  $660. 
A)  $620. 
B)  $640. 
C)  $651. 
D)  $660.

Question 18

Bonkers Bananas has the following inventory data:   A physical count of merchandise inventory on July 30 reveals that there are 25 units on hand. Using the LIFO inventory method, the amount allocated to ending inventory for July is

Accepted Answer

A)  $550 
B)  $505 
C)  $535 
D)  $500. 
A)  $550 
B)  $505 
C)  $535 
D)  $500.

Question 19

An assumption about cost flow is necessary

Accepted Answer

A)  because it is required by the income tax regulation. 
B)  even when there is no change in the purchase price on inventory. 
C)  only when the flow of goods cannot be determined. 
D)  because prices usually change, and tracking which units have been sold is difficult. 
A)  because it is required by the income tax regulation. 
B)  even when there is no change in the purchase price on inventory. 
C)  only when the flow of goods cannot be determined. 
D)  because prices usually change, and tracking which units have been sold is difficult.

Question 20

The management of Otto Corp. is considering the effects of various inventory costing methods on its financial statements and its income tax expense. Assuming that the price the company pays for inventory is increasing, which method will:
1. result in the lowest income tax expense?
2. provide the highest net income?
3. provide the highest ending inventory?
4. result in the most stable earnings over a number of years?

Accepted Answer

1. In times of rising costs the LIFO met

IFRS defines market for lower-of-cost-or market as

Which of the following companies would most likely have the highest inventory turnover?

If a company has no beginning inventory and the unit cost of inventory items does not change during the year, the value assigned to the ending inventory will be the same under LIFO and average cost flow assumptions.

The Entertainment Center accumulates the following cost and market data at December 31. What is the lower-of-cost-or-market value of the inventory?

Management may choose any inventory costing method it desires as long as the cost flow assumption chosen is consistent with the physical movement of goods in the company.

A major criticism of the FIFO inventory method is that it magnifies the effects of the business cycle on business income.

Snug-As-A-Bug Blankets has the following inventory data: Assuming that a perpetual inventory system is used, what is ending inventory (rounded) under the average cost method for July?

Which inventory costing method should a gasoline retailer use?

A manufacturer's inventory consists of raw materials, work in process, and finished goods.

The lower of cost or market basis of valuing inventories is an example of

In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the

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, what is the company's gross profit using FIFO? (rounded to whole dollars)

The consistent application of an inventory costing method enhances

Noise Makers Inc has the following inventory data: A physical count of merchandise inventory on July 30 reveals that there are 32 units on hand. Using the average cost method, the value of ending inventory is

Bonkers Bananas has the following inventory data: A physical count of merchandise inventory on July 30 reveals that there are 25 units on hand. Using the LIFO inventory method, the amount allocated to ending inventory for July is

An assumption about cost flow is necessary

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

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Exam 6: Reporting and Analyzing Inventory

IFRS defines market for lower-of-cost-or market as

Which of the following companies would most likely have the highest inventory turnover?

If a company has no beginning inventory and the unit cost of inventory items does not change during the year, the value assigned to the ending inventory will be the same under LIFO and average cost flow assumptions.

The Entertainment Center accumulates the following cost and market data at December 31. What is the lower-of-cost-or-market value of the inventory?

Management may choose any inventory costing method it desires as long as the cost flow assumption chosen is consistent with the physical movement of goods in the company.

A major criticism of the FIFO inventory method is that it magnifies the effects of the business cycle on business income.

Snug-As-A-Bug Blankets has the following inventory data: Assuming that a perpetual inventory system is used, what is ending inventory (rounded) under the average cost method for July?

Which inventory costing method should a gasoline retailer use?

A manufacturer's inventory consists of raw materials, work in process, and finished goods.

The lower of cost or market basis of valuing inventories is an example of

In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the

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, what is the company's gross profit using FIFO? (rounded to whole dollars)

The consistent application of an inventory costing method enhances

Noise Makers Inc has the following inventory data: A physical count of merchandise inventory on July 30 reveals that there are 32 units on hand. Using the average cost method, the value of ending inventory is

Bonkers Bananas has the following inventory data: A physical count of merchandise inventory on July 30 reveals that there are 25 units on hand. Using the LIFO inventory method, the amount allocated to ending inventory for July is

An assumption about cost flow is necessary

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