Question 1

Finished goods are a classification of inventory for a manufacturer that are completed and ready for sale.

Accepted Answer

A) True 
 B)False

Question 2

Unitech has the following inventory information.
$\begin{array} { r r l r } \text { July } 1 & \text { Beginning Inventory } & 30 \text { units at } \$ 19 & \$ 570 \ 7 & \text { Purchases } & 105 \text { units at } \$ 20 & 2,100 \ 22 & \text { Purchases } & 15 \text { units at } \$ 22 &\underline { 330 }\&&& { \$ 3,000 } \end{array}$
A physical count of merchandise inventory on July 31 reveals that there are 45 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for July is

Accepted Answer

A)  $\$ 870$. 
B)  $\$ 930$. 
C)  $ \$ 2,070$. 
D)  $ \$ 2,130$. 
A)  $\$ 870$. 
B)  $\$ 930$. 
C)  $ \$ 2,070$. 
D)  $ \$ 2,130$.

Question 3

A company just starting business made the following four inventory purchases in June: $$\begin{array} { r r r r } 
\text { June } & 1 & 150 \text { units } & ¥ 5,200 \
\text { June } & 10 & 200 \text { units } & 7,800 \
\text { June } & 15 & 200 \text { units } & 8,400 \
\text { June } & 28 & 150 \text { units } &\underline{ 6,600} \
& & & \underline { ¥ 28,000 }
\end{array}$$ A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand.Using the FIFO inventory method, the amount allocated to cost of goods sold for June is

Accepted Answer

A)  $\quad ¥ 8,700$. 
B)  $\quad ¥ 16,960$. 
C)  $\quad ¥ 19,300$. 
D)  $\quad ¥ 20,850$. 
A)  $\quad ¥ 8,700$. 
B)  $\quad ¥ 16,960$. 
C)  $\quad ¥ 19,300$. 
D)  $\quad ¥ 20,850$.

Question 4

Chang Company took a physical inventory at December 31,2010 and determined that $ ¥ 3,750,000 $ of goods were on hand. Included in the count was inventory of $ ¥ 700,000 $ on consignment from Keiko Company. On December 30, Chang sold and shipped f.o.b. destination $ ¥ 820,000 $ morth of inventory. These goods arrived at the buyer's place of business on January 2, 2011. What amount should Chang report for inventory on its December 31,2010 statement of financial position?

Accepted Answer

A)  $ ¥ 3,750,000 $. 
B)  $ ¥ 3,870,000 $. 
C)  $ ¥ 3,170,000 $. 
D)  $ ¥ 4,570,000 $. 
A)  $ ¥ 3,750,000 $. 
B)  $ ¥ 3,870,000 $. 
C)  $ ¥ 3,170,000 $. 
D)  $ ¥ 4,570,000 $.

Question 5

Company uses the periodic inventory system. For February 2011 , the beginning inventory consisted of 100 units that cost CHF65 each. During the month, the company made two purchases: 400 units at CHF68 each and 150 units at $ \$ 72 $ each. Nolvo sold 500 units during the month of February at CHF 110 per unit. Using the average cost method, what is the amount of ending inventory at February 28, 2011?

Accepted Answer

A)  CHF10,800. 
B)  CHF10,500. 
C)  CHF 10,269. 
D)  CHF 9,750. 
A)  CHF10,800. 
B)  CHF10,500. 
C)  CHF 10,269. 
D)  CHF 9,750.

Question 6

If the unit price of inventory is increasing during a period, a company using the average-cost inventory method will show less gross profit for the period, than if it had used the FIFO inventory method.

Accepted Answer

A) True 
 B)False

Question 7

Shandy Shutters has the following inventory information.
$\begin{array} { r l l } \text { Nov. } 1 & \text { Inventory } & 15 \text { units } @ € 6.00 \ 8 & \text { Purchase } & 60 \text { units } @ € 6.45 \ 17 & \text { Purchase } & 30 \text { units } @  € 6.30 \ 25 & \text { Purchase } & 45 \text { units } @ € 6.60 \end{array}$
A physical count of merchandise inventory on November 30 reve als that there are 50 units on hand. Assume a periodic inventory system is used. Cost of goods sold under the average-cost method is

Accepted Answer

A)  $€ 646$. 
B)  $€ 642$. 
C)  $€ 634$. 
D)  $€ 600$. 
A)  $€ 646$. 
B)  $€ 642$. 
C)  $€ 634$. 
D)  $€ 600$.

Question 8

The lower-of-cost-or-net realizable value basis of valuing inventories is an example of

Accepted Answer

A) comparability. 
B) the cost principle. 
C) prudence. 
D) consistency. 
A) comparability. 
B) the cost principle. 
C) prudence. 
D) consistency.

Question 9

The lower-of-cost-or-net realizable value basis is an example of the accounting concept of prudence.

Accepted Answer

A) True 
 B)False

Question 10

Inventories are reported in the current assets section of the statement of financial position immediately before receivables.

Accepted Answer

A) True 
 B)False

Question 11

The more inventory a company has in stock, the greater the company's profit.

Accepted Answer

A) True 
 B)False

Question 12

Companies have the choice of physically counting inventory on hand at the end of the year or using the gross profit method to estimate the ending inventory.

Accepted Answer

A) True 
 B)False

Question 13

The pool of inventory costs consists of the beginning inventory plus the cost of goods purchased.

Accepted Answer

A) True 
 B)False

Question 14

Understating beginning inventory will understate

Accepted Answer

A) assets. 
B) cost of goods sold. 
C) net income. 
D) equity. 
A) assets. 
B) cost of goods sold. 
C) net income. 
D) equity.

Question 15

At December 31, 2011, Bosan Corporation has 3,500 units of model 63 and 2,500 units of model 64 in its ending inventory.Specific data with respect to each product follows: $\begin{array}{lrr}&\text { Model } 63&\text { Model } 64\
\hline \text { Historical cost } & \text { W7800 } & \text { W8700 } \
\text { Net realizable value } & 7700 & 8800
\end{array}$
What amount will be reported for inventory on Boson's statement of financial position after the company applies LCNRV?

Accepted Answer

A)  W54,250,000. 
B)  W49,300,000. 
C)  W48,950,000. 
D)  W48,700,000. 
A)  W54,250,000. 
B)  W49,300,000. 
C)  W48,950,000. 
D)  W48,700,000.

Question 16

Never Company developed the following information about its inventories in applying the lower-of-cost-or-net realizable value (LCNRV) basis in valuing inventories: 
$\begin{array}{rrr}\text { Product }&\text { Cost }&\text { NRV }\
\text { A } & \$ 114,000 & \$ 120,000 \
\text { B } & 80,000 & 76,000 \
\text { C } & 160,000 & 162,000
\end{array}$

If Never applies the LCNRV basis, the value of the inventory reported on the statement of financial position would be

Accepted Answer

A)  $ \$ 354,000 $. 
B)  $ \$ 358,000 $. 
C)  $ \$ 350,000 $. 
D)  $ \$ 362,000 $. 
A)  $ \$ 354,000 $. 
B)  $ \$ 358,000 $. 
C)  $ \$ 350,000 $. 
D)  $ \$ 362,000 $.

Question 17

Which of the following should be included in the physical inventory of a company

Accepted Answer

A) Goods held on consignment from another company. 
B) Goods in transit to another company shipped FOB shipping point. 
C) Goods in transit from another company shipped FOB shipping point. 
D) Both b and c above. 
A) Goods held on consignment from another company. 
B) Goods in transit to another company shipped FOB shipping point. 
C) Goods in transit from another company shipped FOB shipping point. 
D) Both b and c above.

Question 18

Henri Company uses the average-cost inventory method.Its 2010 ending inventory was €40,000, but it would have been €60,000 if FIFO had been used.Thus, if FIFO had been used, Henri's income before income taxes would have been

Accepted Answer

A) €20,000 greater. 
B) €20,000 less. 
C) the same. 
D) not determinable without the tax rate. 
A) €20,000 greater. 
B) €20,000 less. 
C) the same. 
D) not determinable without the tax rate.

Question 19

The selection of an appropriate inventory cost flow assumption for an individual company is made by

Accepted Answer

A) the external auditors. 
B) the IASB. 
C) the internal auditors. 
D) company management. 
A) the external auditors. 
B) the IASB. 
C) the internal auditors. 
D) company management.

Question 20

The specific identification method of costing inventories tracks the actual physical flow of the goods available for sale.

Accepted Answer

A) True 
 B)False

Finished goods are a classification of inventory for a manufacturer that are completed and ready for sale.

If the unit price of inventory is increasing during a period, a company using the average-cost inventory method will show less gross profit for the period, than if it had used the FIFO inventory method.

The lower-of-cost-or-net realizable value basis of valuing inventories is an example of

The lower-of-cost-or-net realizable value basis is an example of the accounting concept of prudence.

Inventories are reported in the current assets section of the statement of financial position immediately before receivables.

The more inventory a company has in stock, the greater the company's profit.

Companies have the choice of physically counting inventory on hand at the end of the year or using the gross profit method to estimate the ending inventory.

The pool of inventory costs consists of the beginning inventory plus the cost of goods purchased.

Understating beginning inventory will understate

Which of the following should be included in the physical inventory of a company

Henri Company uses the average-cost inventory method.Its 2010 ending inventory was €40,000, but it would have been €60,000 if FIFO had been used.Thus, if FIFO had been used, Henri's income before income taxes would have been

The selection of an appropriate inventory cost flow assumption for an individual company is made by

The specific identification method of costing inventories tracks the actual physical flow of the goods available for sale.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Share Transactions, Dividends,and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

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Exam 6: Inventories

Finished goods are a classification of inventory for a manufacturer that are completed and ready for sale.

If the unit price of inventory is increasing during a period, a company using the average-cost inventory method will show less gross profit for the period, than if it had used the FIFO inventory method.

The lower-of-cost-or-net realizable value basis of valuing inventories is an example of

The lower-of-cost-or-net realizable value basis is an example of the accounting concept of prudence.

Inventories are reported in the current assets section of the statement of financial position immediately before receivables.

The more inventory a company has in stock, the greater the company's profit.

Companies have the choice of physically counting inventory on hand at the end of the year or using the gross profit method to estimate the ending inventory.

The pool of inventory costs consists of the beginning inventory plus the cost of goods purchased.

Understating beginning inventory will understate

Which of the following should be included in the physical inventory of a company

Henri Company uses the average-cost inventory method.Its 2010 ending inventory was €40,000, but it would have been €60,000 if FIFO had been used.Thus, if FIFO had been used, Henri's income before income taxes would have been

The selection of an appropriate inventory cost flow assumption for an individual company is made by

The specific identification method of costing inventories tracks the actual physical flow of the goods available for sale.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Share Transactions, Dividends,and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Filters