Question 1

The three inventory costing methods will normally each yield different amounts of net income.

Accepted Answer

A) True 
 B)False  True

Question 2

Match each description to the appropriate inventory system (a or b).​
-Under this system, only revenue is recorded when sales are made.
A)Perpetual
B)Periodic

Accepted Answer

b

Question 3

Which document authorizes the purchase of the inventory from an approved vendor?

Accepted Answer

A) the purchase order 
B) the petty cash voucher 
C) the receiving report 
D) the vendor's invoice 
A) the purchase order 
B) the petty cash voucher 
C) the receiving report 
D) the vendor's invoice A

Question 4

Match each description to the appropriate inventory system (a or b).​
-Average cost is rarely used with this system.
A)Perpetual
B)Periodic

Accepted Answer

The answer of Match each description to the appropriate inventory...

Question 5

During a period of falling prices, which of the following inventory methods generally results in the lowest balance sheet amount for inventory?

Accepted Answer

A) average cost method 
B) LIFO method 
C) FIFO method 
D) cannot tell without more information 
A) average cost method 
B) LIFO method 
C) FIFO method 
D) cannot tell without more information

Question 6

Match each description to the appropriate cost flow assumption (a-c).
-Produces the highest ending inventory when costs are increasing
A)FIFO
B)LIFO
C)Weighted average

Accepted Answer

The answer of Match each description to the appropriate cost...

Question 7

Match each description to the appropriate cost flow assumption (a-c).
-Assigns the same value to all inventory units
A)FIFO
B)LIFO
C)Weighted average

Accepted Answer

The answer of Match each description to the appropriate cost...

Question 8

Addison, Inc. uses a perpetual inventory system. Below is information about one inventory item for the month of September. Use this information to answer the questions that follow.  
-The inventory data for an item for November are:   Using a perpetual system, what is the cost of the goods sold for November if the company uses LIFO?

Accepted Answer

A) $610 
B) $600 
C) $590 
D) $580 
A) $610 
B) $600 
C) $590 
D) $580

Question 9

On the basis of the following data, what is the estimated cost of the inventory on May 31 using the retail method?

Accepted Answer

A) $250,000 
B) $360,000 
C) $172,500 
D) $187,500 
A) $250,000 
B) $360,000 
C) $172,500 
D) $187,500

Question 10

If a fire destroys the inventory, the gross profit method can be used to estimate the cost of merchandise destroyed.

Accepted Answer

A) True 
 B)False

Question 11

Brutus Corporation, a newly formed corporation, has the following transactions during May, its first month of operations.  
-Using the table provided, calculate total sales, cost of goods sold, gross profit, and ending inventory using each of the FIFO perpetual inventory method.

Accepted Answer

A) Total sales: $56,975.00 Cost of goods sold: $36,431.25
Gross profit: $20,543.75
Ending inventory: $19,981.2 
B) Total sales: $56,975.00 Cost of goods sold: $36,587.50
Gross profit: $20,387.50
Ending inventory: $19,825.00 
C) Total sales: $56,975.00 Cost of goods sold: $37,312.50
Gross profit: $19,662.50
Ending inventory: $19,573.25 
D) Total sales: $56,975.00 Cost of goods sold: $37,401.75
Gross profit: $19,573.25
Ending inventory: $19,010.75 
A) Total sales: $56,975.00 Cost of goods sold: $36,431.25
Gross profit: $20,543.75
Ending inventory: $19,981.2 
B) Total sales: $56,975.00 Cost of goods sold: $36,587.50
Gross profit: $20,387.50
Ending inventory: $19,825.00 
C) Total sales: $56,975.00 Cost of goods sold: $37,312.50
Gross profit: $19,662.50
Ending inventory: $19,573.25 
D) Total sales: $56,975.00 Cost of goods sold: $37,401.75
Gross profit: $19,573.25
Ending inventory: $19,010.75

Question 12

Match each description to the appropriate document used for inventory control (a-c).
-authorizes the purchase of inventory from an approved vendor
A)Receiving report
B)Vendor's invoice
C)Purchase order

Accepted Answer

The answer of Match each description to the appropriate document...

Question 13

The inventory costing method that reports the most current prices in ending inventory is

Accepted Answer

A) FIFO 
B) specific identification 
C) LIFO 
D) average cost 
A) FIFO 
B) specific identification 
C) LIFO 
D) average cost

Question 14

If a company uses a periodic inventory system, the gross profit method can be used to estimate inventory for monthly or quarterly statements.

Accepted Answer

A) True 
 B)False

Question 15

The following lots of Commodity Z were available for sale during the year. Use this information to answer the questions that follow.  
-The firm uses the periodic system, and there are 20 units of the commodity on hand at the end of the year. What is the ending inventory balance at the end of the year according to the LIFO method?

Accepted Answer

A) $655 
B) $620 
C) $690 
D) $659 
A) $655 
B) $620 
C) $690 
D) $659

Question 16

The following lots of Commodity D were available for sale during the year. Use this information to answer the questions that follow.   The firm uses the periodic system, and there are 25 units of the commodity on hand at the end of the year.​
-What is the ending inventory balance at the end of the year using the FIFO method?

Accepted Answer

A) $1,685 
B) $1,575 
C) $1,805 
D) $3,585 
A) $1,685 
B) $1,575 
C) $1,805 
D) $3,585

Question 17

Inventory at the end of the year is overstated. Which of the following statements correctly states the effect of the error?

Accepted Answer

A) stockholders' equity is overstated 
B) cost of goods sold is overstated 
C) gross profit is understated 
D) net income is understated 
A) stockholders' equity is overstated 
B) cost of goods sold is overstated 
C) gross profit is understated 
D) net income is understated

Question 18

The units of an item available for sale during the year were as follows:   There are 19 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the ending inventory cost using LIFO.

Accepted Answer

$466 (10 u

Question 19

During the taking of its physical inventory on December 31, 2014, Barry's Bike Shop incorrectly counted its inventory as $350,000 instead of the correct amount of $280,000. What is the effect on the balance sheet and income statement?

Accepted Answer

Assets, retained ear

Question 20

Addison, Inc. uses a perpetual inventory system. Below is information about one inventory item for the month of September.  
-Use the information in the table to answer this question. If Addison uses the weighted average cost method, calculate the inventory balance at the end of September?

Accepted Answer

$1,375.00
The inventory data f

Exam 6: Inventories

The three inventory costing methods will normally each yield different amounts of net income.

Match each description to the appropriate inventory system (a or b).​ -Under this system, only revenue is recorded when sales are made. A)Perpetual B)Periodic

Which document authorizes the purchase of the inventory from an approved vendor?

Match each description to the appropriate inventory system (a or b).​ -Average cost is rarely used with this system. A)Perpetual B)Periodic

During a period of falling prices, which of the following inventory methods generally results in the lowest balance sheet amount for inventory?

Match each description to the appropriate cost flow assumption (a-c). -Produces the highest ending inventory when costs are increasing A)FIFO B)LIFO C)Weighted average

Match each description to the appropriate cost flow assumption (a-c). -Assigns the same value to all inventory units A)FIFO B)LIFO C)Weighted average

On the basis of the following data, what is the estimated cost of the inventory on May 31 using the retail method?

If a fire destroys the inventory, the gross profit method can be used to estimate the cost of merchandise destroyed.

Brutus Corporation, a newly formed corporation, has the following transactions during May, its first month of operations. -Using the table provided, calculate total sales, cost of goods sold, gross profit, and ending inventory using each of the FIFO perpetual inventory method.

Match each description to the appropriate document used for inventory control (a-c). -authorizes the purchase of inventory from an approved vendor A)Receiving report B)Vendor's invoice C)Purchase order

The inventory costing method that reports the most current prices in ending inventory is

If a company uses a periodic inventory system, the gross profit method can be used to estimate inventory for monthly or quarterly statements.

Inventory at the end of the year is overstated. Which of the following statements correctly states the effect of the error?

The units of an item available for sale during the year were as follows: There are 19 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the ending inventory cost using LIFO.

During the taking of its physical inventory on December 31, 2014, Barry's Bike Shop incorrectly counted its inventory as $350,000 instead of the correct amount of $280,000. What is the effect on the balance sheet and income statement?

Addison, Inc. uses a perpetual inventory system. Below is information about one inventory item for the month of September. -Use the information in the table to answer this question. If Addison uses the weighted average cost method, calculate the inventory balance at the end of September?

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

The Accounting Cycle

Accounting for Retail Businesses

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current, Installment Notes, and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, Stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity-Based Costing

Support Department and Joint Cost Allocation

Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

The Balanced Scorecard and Corporate Social Responsibility

Investments

Filters

Match each description to the appropriate inventory system (a or b). -Under this system, only revenue is recorded when sales are made. A)Perpetual B)Periodic

Match each description to the appropriate inventory system (a or b). -Average cost is rarely used with this system. A)Perpetual B)Periodic