Question 1

In the retail inventory method, the cost to retail ratio is equal to the cost of goods sold divided by the retail price of the goods sold.

Accepted Answer

A) True 
 B)False

Question 2

If the cost of an item of inventory is $60 and the current replacement cost is $75, the amount included in inventory according to the lower of cost or market is

Accepted Answer

A) $15 
B) $60 
C) $75 
D) $135 
A) $15 
B) $60 
C) $75 
D) $135

Question 3

Describe three inventory cost flow assumptions and how they impact the financial statements.

Accepted Answer

1. Cost flow is in the order in which co

Question 4

If the perpetual inventory system is used, the inventory account is debited for purchases of merchandise.

Accepted Answer

A) True 
 B)False

Question 5

Beginning inventory, purchases, and sales for an inventory item are as follows:   Assuming a perpetual inventory system and the last-in, first-out method, determine (a) the cost of the goods sold for the September 30 sale and (b) the inventory on September 30.

Accepted Answer

(a) Cost of goods sold:
8 unit

Question 6

On the basis of the following data for Sanford Industries as of December 31, determine the value of the inventory at the lower of cost or market. Also, show how the inventory would appear on the balance sheet (assume that the cost was determined by the FIFO method). Apply lower of cost or market to each inventory item.

Accepted Answer

Inventory

Question 7

Match each description to the appropriate inventory system (a or b).​
-When using this system, a physical inventory is necessary to determine cost of goods sold.
A)Perpetual
B)Periodic

Accepted Answer

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

Question 8

Which of the following measures the length of time it takes to acquire, sell, and replace inventory?

Accepted Answer

A) inventory turnover 
B) number of days' sales in inventory 
C) retail method of inventory costing 
D) gross profit method of inventory costing 
A) inventory turnover 
B) number of days' sales in inventory 
C) retail method of inventory costing 
D) gross profit method of inventory costing

Question 9

List the internal control objectives illustrated by the following:
(a)keeping the inventory storeroom locked
(b)counting the inventory at the end of the accounting period and comparing it with the inventory ledger clerk's records
(c)using subsidiary ledgers and a perpetual inventory system

Accepted Answer

(a)safeguarding the inventory from damag

Question 10

Match each description to the appropriate cost flow assumption (a-c).
-Does not follow the physical flow of goods in most cases
A)FIFO
B)LIFO
C)Weighted average

Accepted Answer

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

Question 11

FIFO is the inventory costing method that follows the physical flow of the goods.

Accepted Answer

A) True 
 B)False

Question 12

The following lots of a Commodity P 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 amount of cost of goods sold for the year according to the average cost method?

Accepted Answer

A) $1,380 
B) $1,375 
C) $1,510 
D) $1,250 
A) $1,380 
B) $1,375 
C) $1,510 
D) $1,250

Question 13

Which of the following is not an example for safeguarding inventory?

Accepted Answer

A) Storing inventory in restricted areas. 
B) Physical devices such as two-way mirrors, cameras, and alarms. 
C) Matching receiving documents, purchase orders, and vendor's invoice. 
D) Returning inventory that is defective or broken. 
A) Storing inventory in restricted areas. 
B) Physical devices such as two-way mirrors, cameras, and alarms. 
C) Matching receiving documents, purchase orders, and vendor's invoice. 
D) Returning inventory that is defective or broken.

Question 14

Excess inventory results in all of the following except

Accepted Answer

A) tied-up funds that could be used to improve operations 
B) lost sales 
C) increased storage expense 
D) increased risk of loss due to damage 
A) tied-up funds that could be used to improve operations 
B) lost sales 
C) increased storage expense 
D) increased risk of loss due to damage

Question 15

Applying the lower of cost or market to each item of inventory, what should the total inventory value be for the following items?

Accepted Answer

The answer of Applying the lower of cost or market...

Question 16

During times of rising prices, which of the following is not an accurate statement?

Accepted Answer

A) Average costing will yield results that are between those of FIFO and LIFO. 
B) LIFO will result in a higher cost of goods sold than FIFO. 
C) FIFO will result in a higher net income than LIFO. 
D) LIFO will result in higher income taxes than FIFO. 
A) Average costing will yield results that are between those of FIFO and LIFO. 
B) LIFO will result in a higher cost of goods sold than FIFO. 
C) FIFO will result in a higher net income than LIFO. 
D) LIFO will result in higher income taxes than FIFO.

Question 17

Beginning inventory, purchases, and sales data for widgets are as follows:   Complete the inventory cost card assuming the business maintains a perpetual inventory system and determine the cost of goods sold and ending inventory using FIFO.

Accepted Answer

The answer of Beginning inventory, purchases, and sales data for...

Question 18

Generally, the lower the number of days' sales in inventory, the better.

Accepted Answer

A) True 
 B)False

Question 19

Match each description to the appropriate inventory system (a or b).​
-This system can be costly and time consuming if not computerized.
A)Perpetual
B)Periodic

Accepted Answer

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

Question 20

During the taking of its physical inventory on December 31, Almond Supplies Company incorrectly counted its inventory as $545,000 instead of the correct amount of $554,000.(a) Indicate the effects of the misstatement on Almond Supplies Company's balance sheet and income statement for the year ended December 31.(b) If uncorrected, what would be the effects of the error on next year's balance sheet and income statement?

Accepted Answer

(a) @#IMG-DLM& (b) Effects on next year's balance

Exam 6: Inventories

In the retail inventory method, the cost to retail ratio is equal to the cost of goods sold divided by the retail price of the goods sold.

If the cost of an item of inventory is $60 and the current replacement cost is $75, the amount included in inventory according to the lower of cost or market is

Describe three inventory cost flow assumptions and how they impact the financial statements.

If the perpetual inventory system is used, the inventory account is debited for purchases of merchandise.

Beginning inventory, purchases, and sales for an inventory item are as follows: Assuming a perpetual inventory system and the last-in, first-out method, determine (a) the cost of the goods sold for the September 30 sale and (b) the inventory on September 30.

Match each description to the appropriate inventory system (a or b).​ -When using this system, a physical inventory is necessary to determine cost of goods sold. A)Perpetual B)Periodic

Which of the following measures the length of time it takes to acquire, sell, and replace inventory?

List the internal control objectives illustrated by the following: (a)keeping the inventory storeroom locked (b)counting the inventory at the end of the accounting period and comparing it with the inventory ledger clerk's records (c)using subsidiary ledgers and a perpetual inventory system

Match each description to the appropriate cost flow assumption (a-c). -Does not follow the physical flow of goods in most cases A)FIFO B)LIFO C)Weighted average

FIFO is the inventory costing method that follows the physical flow of the goods.

Which of the following is not an example for safeguarding inventory?

Excess inventory results in all of the following except

Applying the lower of cost or market to each item of inventory, what should the total inventory value be for the following items?

During times of rising prices, which of the following is not an accurate statement?

Beginning inventory, purchases, and sales data for widgets are as follows: Complete the inventory cost card assuming the business maintains a perpetual inventory system and determine the cost of goods sold and ending inventory using FIFO.

Generally, the lower the number of days' sales in inventory, the better.

Match each description to the appropriate inventory system (a or b).​ -This system can be costly and time consuming if not computerized. A)Perpetual B)Periodic

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). -When using this system, a physical inventory is necessary to determine cost of goods sold. A)Perpetual B)Periodic

Match each description to the appropriate inventory system (a or b). -This system can be costly and time consuming if not computerized. A)Perpetual B)Periodic