Question 1

In a manufacturing process overhead costs are added to which inventory account?

Accepted Answer

A)  Raw Materials 
B)  Finished Goods 
C)  Work-in-Process 
D)  Cost of Goods Sold 
A)  Raw Materials 
B)  Finished Goods 
C)  Work-in-Process 
D)  Cost of Goods Sold C

Question 2

One way to estimate the cost of goods sold is to multiply the sales revenue for the period by the inventory turnover ratio.

Accepted Answer

A) True 
 B)False  False

Question 3

Meredith Ltd. uses the periodic inventory system, and has the following information about purchases and sales during the year:   Instructions
Calculate the cost to be assigned to ending inventory for each of the cost methods below:

Accepted Answer

(a) $1,350 ($2,700 /600 = $4.50 * 300)
(b) $1,500 (300 * $5)

Question 4

Management may use the cost formula decision tree when determining which cost formula to use. If goods are not interchangeable, management's options are

Accepted Answer

A)  weighted-average. 
B)  FIFO. 
C)  Just-in-time. 
D)  specific identification. 
A)  weighted-average. 
B)  FIFO. 
C)  Just-in-time. 
D)  specific identification.

Question 5

The cost of goods available for sale includes

Accepted Answer

A)  just beginning inventory. 
B)  beginning inventory less ending inventory. 
C)  beginning inventory plus purchases less ending inventory. 
D)  beginning inventory plus purchases. 
A)  just beginning inventory. 
B)  beginning inventory less ending inventory. 
C)  beginning inventory plus purchases less ending inventory. 
D)  beginning inventory plus purchases.

Question 6

Raw materials are the components or ingredients required to make a product.

Accepted Answer

A) True 
 B)False

Question 7

Hanuv Corporation counts its ending inventory incorrectly in year 1, assuming no other inventory errors in future period,

Accepted Answer

A)  the impact of the error effects the inventory account only. 
B)  the error effects profitability, net income and retained earnings for year 1 only. 
C)  the error extends in to future years indefinitely. 
D)  the error will self-correct by the end of year 2. 
A)  the impact of the error effects the inventory account only. 
B)  the error effects profitability, net income and retained earnings for year 1 only. 
C)  the error extends in to future years indefinitely. 
D)  the error will self-correct by the end of year 2.

Question 8

Which of the following is the correct flow of costs in a manufacturing operation?

Accepted Answer

A)  Raw materials to finished goods to COGS 
B)  Raw materials to COGS to finished goods to work-in-process 
C)  Raw materials to work-in-process to finished goods to COGS 
D)  Direct materials to work-in-process to finished goods to COGS 
A)  Raw materials to finished goods to COGS 
B)  Raw materials to COGS to finished goods to work-in-process 
C)  Raw materials to work-in-process to finished goods to COGS 
D)  Direct materials to work-in-process to finished goods to COGS

Question 9

Manchego Co. uses a periodic inventory system and had the following activity for a single inventory item:   Instructions
Determine the ending inventory and cost of goods sold using: 
a) FIFO
b) Weighted-average (round unit cost to nearest cent)

Accepted Answer

The answer of Manchego Co. uses a periodic inventory system...

Question 10

Which of the following statements about the weighted-average cost formula is true?

Accepted Answer

A)  If prices are rising, companies prefer it because it lowers their tax liability. 
B)  It is the most popular method in Canada. 
C)  In times of rising prices, weighted-average will produce a higher net income than FIFO. 
D)  In time of rising prices, weighted-average produces an inventory cost per unit that is higher than the cost per unit of cost of goods sold. 
A)  If prices are rising, companies prefer it because it lowers their tax liability. 
B)  It is the most popular method in Canada. 
C)  In times of rising prices, weighted-average will produce a higher net income than FIFO. 
D)  In time of rising prices, weighted-average produces an inventory cost per unit that is higher than the cost per unit of cost of goods sold.

Question 11

Aubergine Industries had beginning inventory of $10,000 and purchased $75,000 of merchandise during 2020. The company had sales of $90,000 and has traditionally had a cost-to-sales ratio of 75%. Using the gross margin estimation method, the company estimates its ending inventory to be

Accepted Answer

A)  $67,500. 
B)  $65,000. 
C)  $17,500. 
D)  $22,500. 
A)  $67,500. 
B)  $65,000. 
C)  $17,500. 
D)  $22,500.

Question 12

Companies that make products are known as retailers.

Accepted Answer

A) True 
 B)False

Question 13

Use the following information to answer questions 70-71.
Pal Distributers Inc. values its inventory on an LCM basis. The following data came from the 2020 inventory, which consisted of two items:  
-When applying the LCM, the following is true:

Accepted Answer

A)  the inventory account remains at its original value. 
B)  a contra account to inventory is used. 
C)  COGS rises when ending inventory is reduced to market value. 
D)  LCM can only be applied to individual items. 
A)  the inventory account remains at its original value. 
B)  a contra account to inventory is used. 
C)  COGS rises when ending inventory is reduced to market value. 
D)  LCM can only be applied to individual items.

Question 14

The inventory writedown that results from the application of the LCM rule is often hidden in the

Accepted Answer

A)  selling expense. 
B)  inventory account. 
C)  cost of goods sold. 
D)  loss due to market decline of inventory. 
A)  selling expense. 
B)  inventory account. 
C)  cost of goods sold. 
D)  loss due to market decline of inventory.

Question 15

If prices were rising and a Canadian company wanted to report a smaller amount of profit for tax purposes, they should use the weighted-average cost formula.

Accepted Answer

A) True 
 B)False

Question 16

The Finished Goods account collects all the costs incurred as a product is being made.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following would most likely use a perpetual inventory system?

Accepted Answer

A)  hardware store 
B)  shoe store 
C)  car dealership 
D)  bookstore 
A)  hardware store 
B)  shoe store 
C)  car dealership 
D)  bookstore

Question 18

When using the LCM rule in Canada, the market value is most commonly

Accepted Answer

A)  net present value. 
B)  selling price less profit margin. 
C)  replacement cost. 
D)  net realizable value. 
A)  net present value. 
B)  selling price less profit margin. 
C)  replacement cost. 
D)  net realizable value.

Question 19

The major difference between the periodic and perpetual inventory systems is that inventory must be physically counted in the periodic system to determine ending inventory.

Accepted Answer

A) True 
 B)False

Question 20

When a perpetual inventory system is used,

Accepted Answer

A)  a physical inventory count must be taken to determine cost of goods sold. 
B)  inventory shrinkage is difficult to determine. 
C)  it eliminates the need for frequent inventory counts. 
D)  the timeliness of data is sacrificed for lower costs of operation. 
A)  a physical inventory count must be taken to determine cost of goods sold. 
B)  inventory shrinkage is difficult to determine. 
C)  it eliminates the need for frequent inventory counts. 
D)  the timeliness of data is sacrificed for lower costs of operation.

In a manufacturing process overhead costs are added to which inventory account?

One way to estimate the cost of goods sold is to multiply the sales revenue for the period by the inventory turnover ratio.

Meredith Ltd. uses the periodic inventory system, and has the following information about purchases and sales during the year: Instructions Calculate the cost to be assigned to ending inventory for each of the cost methods below:

Management may use the cost formula decision tree when determining which cost formula to use. If goods are not interchangeable, management's options are

The cost of goods available for sale includes

Raw materials are the components or ingredients required to make a product.

Hanuv Corporation counts its ending inventory incorrectly in year 1, assuming no other inventory errors in future period,

Which of the following is the correct flow of costs in a manufacturing operation?

Manchego Co. uses a periodic inventory system and had the following activity for a single inventory item: Instructions Determine the ending inventory and cost of goods sold using: a) FIFO b) Weighted-average (round unit cost to nearest cent)

Which of the following statements about the weighted-average cost formula is true?

Aubergine Industries had beginning inventory of $10,000 and purchased $75,000 of merchandise during 2020. The company had sales of $90,000 and has traditionally had a cost-to-sales ratio of 75%. Using the gross margin estimation method, the company estimates its ending inventory to be

Companies that make products are known as retailers.

Use the following information to answer questions 70-71. Pal Distributers Inc. values its inventory on an LCM basis. The following data came from the 2020 inventory, which consisted of two items: -When applying the LCM, the following is true:

The inventory writedown that results from the application of the LCM rule is often hidden in the

If prices were rising and a Canadian company wanted to report a smaller amount of profit for tax purposes, they should use the weighted-average cost formula.

The Finished Goods account collects all the costs incurred as a product is being made.

Which of the following would most likely use a perpetual inventory system?

When using the LCM rule in Canada, the market value is most commonly

The major difference between the periodic and perpetual inventory systems is that inventory must be physically counted in the periodic system to determine ending inventory.

When a perpetual inventory system is used,

Overview of Corporate Financial Reporting

Analyzing Transaction and Their Effect on Financial Statement

Double-Entry Accounting and the Accounting Cycle

Revenue Recognition and the Statement of Income

The Statement of Cash Flows

Cash and Accounts

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Shareholders Equity

Financial Statement Analysis

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Exam 7: Inventory

In a manufacturing process overhead costs are added to which inventory account?

One way to estimate the cost of goods sold is to multiply the sales revenue for the period by the inventory turnover ratio.

Meredith Ltd. uses the periodic inventory system, and has the following information about purchases and sales during the year: Instructions Calculate the cost to be assigned to ending inventory for each of the cost methods below:

Management may use the cost formula decision tree when determining which cost formula to use. If goods are not interchangeable, management's options are

The cost of goods available for sale includes

Raw materials are the components or ingredients required to make a product.

Hanuv Corporation counts its ending inventory incorrectly in year 1, assuming no other inventory errors in future period,

Which of the following is the correct flow of costs in a manufacturing operation?

Manchego Co. uses a periodic inventory system and had the following activity for a single inventory item: Instructions Determine the ending inventory and cost of goods sold using: a) FIFO b) Weighted-average (round unit cost to nearest cent)

Which of the following statements about the weighted-average cost formula is true?

Aubergine Industries had beginning inventory of $10,000 and purchased $75,000 of merchandise during 2020. The company had sales of $90,000 and has traditionally had a cost-to-sales ratio of 75%. Using the gross margin estimation method, the company estimates its ending inventory to be

Companies that make products are known as retailers.

Use the following information to answer questions 70-71. Pal Distributers Inc. values its inventory on an LCM basis. The following data came from the 2020 inventory, which consisted of two items: -When applying the LCM, the following is true:

The inventory writedown that results from the application of the LCM rule is often hidden in the

If prices were rising and a Canadian company wanted to report a smaller amount of profit for tax purposes, they should use the weighted-average cost formula.

The Finished Goods account collects all the costs incurred as a product is being made.

Which of the following would most likely use a perpetual inventory system?

When using the LCM rule in Canada, the market value is most commonly

The major difference between the periodic and perpetual inventory systems is that inventory must be physically counted in the periodic system to determine ending inventory.

When a perpetual inventory system is used,

Overview of Corporate Financial Reporting

Analyzing Transaction and Their Effect on Financial Statement

Double-Entry Accounting and the Accounting Cycle

Revenue Recognition and the Statement of Income

The Statement of Cash Flows

Cash and Accounts

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Shareholders Equity

Financial Statement Analysis

Filters