Exam 7: Inventory

Which of the following is NOT an inventory account in a manufacturing company?

Jolly Gyms Inc. 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)

Solve for the missing amounts:

Just-in-time inventory systems are designed to reduce the cost of inventory storage and increase the amount of cash on hand.

The following information is available from recent financial statements of Laurel Incorporated and Hardy Enterprises: Instructions a) Calculate the inventory turnover and days in inventory for both companies. b) What conclusions concerning the management of inventory can be drawn from these data?

The cost-to-sales ratio is a method used to estimate inventory instead of performing a physical count.

Compare and contrast a perpetual and a periodic inventory system. What factors should a company take into consideration when deciding which system to use?

Under the FIFO inventory formula, the cost of ending inventory and cost of goods sold will be the same under both the perpetual and periodic inventory systems.

A small local convenience store is opening in your neighborhood. Inventory is limited and keeping initial start-up costs low is a priority. What type of inventory system would you recommend?

The longer the inventory remains unsold, the higher the risk of

The LCM rule is usually applied to groups of similar items.

Propack Inc. purchases goods from a supplier FOB destination. This means that

In 2020 Borger Industries had beginning inventory of $106,000, purchases of $1,126,500, ending inventory of $116,000, accounts payable of $49,605, and sales of $2,147,250. Inventory turnover for 2017 was closest to

Which of the following is true under a periodic system?

Effective inventory management would have one person place the order for new inventory, a second person check it against the purchase order when it arrives, and a third person record the receipt of inventory in the accounting records. The purpose of this system is

McLaughlin Inc. began business in the current month. The bookkeeper received a report from an outside firm specializing in physical inventory counts that the ending inventory was $1,426.60. However, according to the bookkeeper's records, the inventory at month end was $1,517.50. The bookkeeper has rechecked his records several times and still comes up with the same amount. He believes that the difference between the two amounts must be due to inventory shrinkage. The company had no inventory at the beginning of the month and 70 units on hand per a physical inventory count at the end of the month. The company uses the periodic method. Listed below are the company's purchases for the month: Instructions Write an explanation for the bookkeeper on how the difference in amounts could occur. (Hint: use different cost formulas to calculate the ending inventory). Provide numerical support.