Question 1

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

Accepted Answer

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

Question 2

The cost formula a company chooses should correspond as closely as possible to the actual physical flow of goods.

Accepted Answer

A) True 
 B)False

Question 3

If goods in transit are shipped FOB destination,

Accepted Answer

A)  the seller has legal title to the goods until they are delivered. 
B)  the buyer has legal title to the goods during transit. 
C)  the transportation company has legal title to the goods while the goods are in transit. 
D)  no one has legal title to the goods until they are delivered. 
A)  the seller has legal title to the goods until they are delivered. 
B)  the buyer has legal title to the goods during transit. 
C)  the transportation company has legal title to the goods while the goods are in transit. 
D)  no one has legal title to the goods until they are delivered.

Question 4

An inventory writedown from cost to net realizable value should not be made in the period in which the price decline occurs.

Accepted Answer

A) True 
 B)False

Question 5

Explain the effects on the financial statements of choosing each of the inventory cost formulas.

Accepted Answer

The specific identification cost formula

Question 6

An overstatement of ending inventory in one period results in

Accepted Answer

A)  no effect on net income of the next period. 
B)  an overstatement of net income of the next period. 
C)  an understatement of net income of the next period. 
D)  an overstatement of the ending inventory of the next period. 
A)  no effect on net income of the next period. 
B)  an overstatement of net income of the next period. 
C)  an understatement of net income of the next period. 
D)  an overstatement of the ending inventory of the next period.

Question 7

Solve for the missing amounts:

Accepted Answer

The answer of Solve for the missing amounts:  ...

Question 8

Use the following information for the month of July for questions.  
-Ending inventory at July 31 is

Accepted Answer

A)  $2,330. 
B)  $720. 
C)  $680. 
D)  $550. 
A)  $2,330. 
B)  $720. 
C)  $680. 
D)  $550.

Question 9

The results under FIFO in a perpetual inventory system are the same as in a periodic inventory system.

Accepted Answer

A) True 
 B)False

Question 10

The managers of Winning Ways Ltd. receive performance bonuses based on the company's net income. Which inventory cost formula are they likely to favour in periods of declining prices?

Accepted Answer

A)  FIFO 
B)  average cost 
C)  They would have no preference. 
D)  Need more information to answer. 
A)  FIFO 
B)  average cost 
C)  They would have no preference. 
D)  Need more information to answer.

Question 11

A company may use more than one inventory cost formula if it has different types of inventory.

Accepted Answer

A) True 
 B)False

Question 12

In periods of falling prices

Accepted Answer

A)  FIFO will result in a higher ending inventory valuation than the average cost formula. 
B)  FIFO will result in a higher cost of goods sold than the average cost formula. 
C)  the average cost formula will result in a higher cost of goods sold than the FIFO cost formula. 
D)  the average cost formula will result in a lower ending inventory valuation than the FIFO cost formula. 
A)  FIFO will result in a higher ending inventory valuation than the average cost formula. 
B)  FIFO will result in a higher cost of goods sold than the average cost formula. 
C)  the average cost formula will result in a higher cost of goods sold than the FIFO cost formula. 
D)  the average cost formula will result in a lower ending inventory valuation than the FIFO cost formula.

Question 13

Use the following information for questions.
A company just starting its business made the following four inventory purchases in June:   On June 25, the company made its first sale when a local customer purchased 500 units for $3,500. The company uses a perpetual inventory system.
-Mandy Corp. purchased inventory as follows:March 3 500 units at $18March 4 300 units at $20March 7 200 units at $22On March 5, Mandy sold 600 units for $18 each. The average unit cost to be used for the cost of goods sold on March 5, in a perpetual inventory system, is

Accepted Answer

A)  $18.80. 
B)  $19.40. 
C)  $25.00. 
D)  $16.67. 
A)  $18.80. 
B)  $19.40. 
C)  $25.00. 
D)  $16.67.

Question 14

Apply the cost formulas using specific identification, FIFO, and average cost under a perpetual inventory system.

Accepted Answer

Costs are allocated to the Cost of Goods

Question 15

Westcom Corporation's goods in transit at December 31 include (1) sales made FOB destination, (2) sales made FOB shipping point, (3) purchases made FOB destination, and (4) purchases made FOB shipping point. Which items should be included in Westcom's inventory at December 31?

Accepted Answer

A)  (2) and (3) 
B)  (1) and (4) 
C)  (1) and (3) 
D)  (2) and (4) 
A)  (2) and (3) 
B)  (1) and (4) 
C)  (1) and (3) 
D)  (2) and (4)

Question 16

Which of the following statements regarding inventories is correct?

Accepted Answer

A)  FIFO assumes that the costs of the earliest goods acquired are the last to be sold. 
B)  It is generally good business management to sell the most recently acquired goods first. 
C)  Under FIFO, the ending inventory is based on the latest units purchased. 
D)  FIFO seldom coincides with the actual physical flow of inventory. 
A)  FIFO assumes that the costs of the earliest goods acquired are the last to be sold. 
B)  It is generally good business management to sell the most recently acquired goods first. 
C)  Under FIFO, the ending inventory is based on the latest units purchased. 
D)  FIFO seldom coincides with the actual physical flow of inventory.

Question 17

Use the following information for the month of July for questions.  
-The cost of goods sold for the July 8 sale was

Accepted Answer

A)  $950. 
B)  $980. 
C)  $989. 
D)  $1,000. 
A)  $950. 
B)  $980. 
C)  $989. 
D)  $1,000.

Question 18

During a period of inflation, using ___ will approximate a company's current cost of ending inventory.

Accepted Answer

A)  the average cost formula 
B)  FIFO 
C)  the lower of cost and net realizable value 
D)  both FIFO and the average cost formula 
A)  the average cost formula 
B)  FIFO 
C)  the lower of cost and net realizable value 
D)  both FIFO and the average cost formula

Question 19

When using the perpetual system, the average cost formula relies on a simple average calculation.

Accepted Answer

A) True 
 B)False

Question 20

Use the following information for the month of June for questions.
XYZ Inc. uses the average cost formula in a perpetual inventory system.
(Use unrounded numbers in your calculations but round to the nearest cent for presentation purposes in your answer.)   Jun 22 Sale 40 units
-Total cost of goods sold for the month of June is

Accepted Answer

A)  $2,914.65. 
B)  $2,934.96. 
C)  $2,946.24. 
D)  $2,994.80. 
A)  $2,914.65. 
B)  $2,934.96. 
C)  $2,946.24. 
D)  $2,994.80.

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

The cost formula a company chooses should correspond as closely as possible to the actual physical flow of goods.

If goods in transit are shipped FOB destination,

An inventory writedown from cost to net realizable value should not be made in the period in which the price decline occurs.

Explain the effects on the financial statements of choosing each of the inventory cost formulas.

An overstatement of ending inventory in one period results in

Solve for the missing amounts:

Use the following information for the month of July for questions. -Ending inventory at July 31 is

The results under FIFO in a perpetual inventory system are the same as in a periodic inventory system.

The managers of Winning Ways Ltd. receive performance bonuses based on the company's net income. Which inventory cost formula are they likely to favour in periods of declining prices?

A company may use more than one inventory cost formula if it has different types of inventory.

In periods of falling prices

Apply the cost formulas using specific identification, FIFO, and average cost under a perpetual inventory system.

Westcom Corporation's goods in transit at December 31 include (1) sales made FOB destination, (2) sales made FOB shipping point, (3) purchases made FOB destination, and (4) purchases made FOB shipping point. Which items should be included in Westcom's inventory at December 31?

Which of the following statements regarding inventories is correct?

Use the following information for the month of July for questions. -The cost of goods sold for the July 8 sale was

During a period of inflation, using ___ will approximate a company's current cost of ending inventory.

When using the perpetual system, the average cost formula relies on a simple average calculation.

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

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Exam 6: Reporting and Analyzing Inventory

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

The cost formula a company chooses should correspond as closely as possible to the actual physical flow of goods.

If goods in transit are shipped FOB destination,

An inventory writedown from cost to net realizable value should not be made in the period in which the price decline occurs.

Explain the effects on the financial statements of choosing each of the inventory cost formulas.

An overstatement of ending inventory in one period results in

Solve for the missing amounts:

Use the following information for the month of July for questions. -Ending inventory at July 31 is

The results under FIFO in a perpetual inventory system are the same as in a periodic inventory system.

The managers of Winning Ways Ltd. receive performance bonuses based on the company's net income. Which inventory cost formula are they likely to favour in periods of declining prices?

A company may use more than one inventory cost formula if it has different types of inventory.

In periods of falling prices

Apply the cost formulas using specific identification, FIFO, and average cost under a perpetual inventory system.

Westcom Corporation's goods in transit at December 31 include (1) sales made FOB destination, (2) sales made FOB shipping point, (3) purchases made FOB destination, and (4) purchases made FOB shipping point. Which items should be included in Westcom's inventory at December 31?

Which of the following statements regarding inventories is correct?

Use the following information for the month of July for questions. -The cost of goods sold for the July 8 sale was

During a period of inflation, using ___ will approximate a company's current cost of ending inventory.

When using the perpetual system, the average cost formula relies on a simple average calculation.

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters