Question 1

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 2

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 3

Wooderson 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. Wooderson Company uses the periodic inventory system.   Instructions
(a) Using the FIFO assumption, calculate the amount charged to cost of goods sold for March. (Show computations)
(b) Using the weighted-average method, calculate the amount assigned to the inventory on hand on March 31. (Show computations)
(c) Using the LIFO assumption, calculate the amount assigned to the inventory on hand on March 31. (Show computations)

Accepted Answer

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

Question 4

Use the following information for Boxter, Inc., Clifford Company, Danforth Industries, and Evans Services to answer the question "Using the LIFO adjustment, which company shows the greatest improvement in its current ratio from 2013 to 2014?"

Accepted Answer

A)  Boxter 
B)  Clifford 
C)  Danforth 
D)  Evans 
A)  Boxter 
B)  Clifford 
C)  Danforth 
D)  Evans

Question 5

Automobile Audio has the following inventory data:   A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand. Ending inventory under FIFO is

Accepted Answer

A)  $438 
B)  $846 
C)  $421 
D)  $863 
A)  $438 
B)  $846 
C)  $421 
D)  $863

Question 6

Piper Pipes has the following inventory data:   Assuming that a periodic inventory system is used, what is the cost of goods sold on a LIFO 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 7

If a company changes its inventory valuation method, the effect of the change on net income should be disclosed in the financial statements.

Accepted Answer

A) True 
 B)False

Question 8

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 9

Woodson 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. Woodson 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 LIFO assumption, calculate the amount assigned to the inventory on hand on March 31. (Show computations)

Accepted Answer

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

Question 10

(Communication)
Al Bodkin, a new employee of Crafter's Paradise, recorded $1,000 in consigned goods received as part of the firm's inventory. The goods were received one day after the end of the fiscal period, but Al reasoned that the goods should be included in inventory sooner because Crafter's paid the freight. The mistake was brought to his attention by the purchasing department who said the goods should not have been recorded as Crafter's inventory at all. Al told Sid Goza, the purchasing supervisor, that nobody needed to worry, because the mistake would cancel itself out the following month. In Al's opinion, there was no reason to get everyone excited over nothing, especially since it was monthly, and not annual, financial statements that were affected. Sid Goza has reported the problem to the accounting department.
Required:
You are Al's supervisor. Write a memo to Al explaining why the error should have been corrected.

Accepted Answer

The answer of (Communication)
Al Bodkin, a new employee of Crafter's...

Question 11

The inventory turnover is calculated as cost of goods sold divided by ending inventory.

Accepted Answer

A) True 
 B)False

Question 12

Ace Company is a retailer operating in an industry that experiences inflation (rising prices). Ace wants to maintain a high current ratio. Which inventory costing method should Ace consider using?

Accepted Answer

A)  LIFO 
B)  Average 
C)  FIFO 
D)  No inventory costing method directly affects the current ratio. 
A)  LIFO 
B)  Average 
C)  FIFO 
D)  No inventory costing method directly affects the current ratio.

Question 13

Snug-As-A-Bug Blankets has the following inventory data:   Assuming that a perpetual inventory system is used, what is the ending inventory on a LIFO basis for July?

Accepted Answer

A)  $2,748 
B)  $2,754 
C)  $2,772. 
D)  $5,796 
A)  $2,748 
B)  $2,754 
C)  $2,772. 
D)  $5,796

Question 14

The following information was available for Bowyer Company at December 31, 2014: beginning inventory $90,000; ending inventory $70,000; cost of goods sold $880,000; and sales $1,200,000. Bowyer's days in inventory in 2014 was

Accepted Answer

A)  24.3 days. 
B)  33.2 days. 
C)  29 days. 
D)  37.2 days. 
A)  24.3 days. 
B)  33.2 days. 
C)  29 days. 
D)  37.2 days.

Question 15

Use the following information regarding Black Company and Red Company to answer the question "Which of the following is Red Company's "cost of goods sold" for 2014 (to the closest dollar)?"

Accepted Answer

A)  $222,684 
B)  $235,125 
C)  $224,580 
D)  $214,035 
A)  $222,684 
B)  $235,125 
C)  $224,580 
D)  $214,035

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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 18

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 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

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.

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.

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

Use the following information for Boxter, Inc., Clifford Company, Danforth Industries, and Evans Services to answer the question "Using the LIFO adjustment, which company shows the greatest improvement in its current ratio from 2013 to 2014?"

Automobile Audio has the following inventory data: A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand. Ending inventory under FIFO is

Piper Pipes has the following inventory data: Assuming that a periodic inventory system is used, what is the cost of goods sold on a LIFO basis.

If a company changes its inventory valuation method, the effect of the change on net income should be disclosed in the financial statements.

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

The inventory turnover is calculated as cost of goods sold divided by ending inventory.

Ace Company is a retailer operating in an industry that experiences inflation (rising prices). Ace wants to maintain a high current ratio. Which inventory costing method should Ace consider using?

Snug-As-A-Bug Blankets has the following inventory data: Assuming that a perpetual inventory system is used, what is the ending inventory on a LIFO basis for July?

The following information was available for Bowyer Company at December 31, 2014: beginning inventory $90,000; ending inventory $70,000; cost of goods sold $880,000; and sales $1,200,000. Bowyer's days in inventory in 2014 was

Use the following information regarding Black Company and Red Company to answer the question "Which of the following is Red Company's "cost of goods sold" for 2014 (to the closest dollar)?"

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

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

Which of the following is an inventory costing method?

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

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

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

Time Value of Money

Filters

Exam 6: Reporting and Analyzing Inventory

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.

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

Use the following information for Boxter, Inc., Clifford Company, Danforth Industries, and Evans Services to answer the question "Using the LIFO adjustment, which company shows the greatest improvement in its current ratio from 2013 to 2014?"

Automobile Audio has the following inventory data: A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand. Ending inventory under FIFO is

Piper Pipes has the following inventory data: Assuming that a periodic inventory system is used, what is the cost of goods sold on a LIFO basis.

If a company changes its inventory valuation method, the effect of the change on net income should be disclosed in the financial statements.

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

The inventory turnover is calculated as cost of goods sold divided by ending inventory.

Ace Company is a retailer operating in an industry that experiences inflation (rising prices). Ace wants to maintain a high current ratio. Which inventory costing method should Ace consider using?

Snug-As-A-Bug Blankets has the following inventory data: Assuming that a perpetual inventory system is used, what is the ending inventory on a LIFO basis for July?

The following information was available for Bowyer Company at December 31, 2014: beginning inventory $90,000; ending inventory $70,000; cost of goods sold $880,000; and sales $1,200,000. Bowyer's days in inventory in 2014 was

Use the following information regarding Black Company and Red Company to answer the question "Which of the following is Red Company's "cost of goods sold" for 2014 (to the closest dollar)?"

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

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

Which of the following is an inventory costing method?

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

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

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

Time Value of Money

Filters