Question 1

Raw materials inventories are the goods that a manufacturer has completed and are ready to be sold to customers.

Accepted Answer

A) True 
 B)False

Question 2

At May 1, 2022, Mark Company had beginning inventory consisting of 200 units with a unit cost of $7. During May, the company purchased inventory as follows: 800 units at $7
500 units at $9
The company sold 500 units during the month for $12 per unit. Mark uses a periodic inventory system and the average cost method. The cost of Mark's inventory. To the nearest dollar, at May 31, 2022 is

Accepted Answer

A)  $6,400. 
B)  $7,667. 
C)  $5,600. 
D)  $4,333. 
A)  $6,400. 
B)  $7,667. 
C)  $5,600. 
D)  $4,333.

Question 3

Galena Pharmacy reported cost of goods sold as follows:   Jim Holt, the bookkeeper, made two errors:
(1) 2022 ending inventory was overstated by $7,000.
(2) 2023 ending inventory was understated by $16,000.
Instructions
Assuming the errors had not been corrected, indicate the dollar effect that the errors had on the items appearing on the financial statements listed below. Also indicate if the amounts are overstated (O) or understated (U).

Accepted Answer

The answer of Galena Pharmacy reported cost of goods sold...

Question 4

Under the FIFO method, the costs of the earliest units purchased are the first charged to cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 5

Two companies report the same cost of goods available for sale but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using

Accepted Answer

A)  LIFO will have the highest ending inventory. 
B)  FIFO will have the highest cost of goods sold. 
C)  FIFO will have the highest ending inventory. 
D)  LIFO will have the lowest cost of goods sold. 
A)  LIFO will have the highest ending inventory. 
B)  FIFO will have the highest cost of goods sold. 
C)  FIFO will have the highest ending inventory. 
D)  LIFO will have the lowest cost of goods sold.

Question 6

Freight terms of FOB shipping point mean that the

Accepted Answer

A)  seller must debit freight out. 
B)  buyer must bear the freight costs. 
C)  goods are placed free on board at the buyer's place of business. 
D)  seller must bear the freight costs. 
A)  seller must debit freight out. 
B)  buyer must bear the freight costs. 
C)  goods are placed free on board at the buyer's place of business. 
D)  seller must bear the freight costs.

Question 7

Cost of goods sold is computed from the following equation:

Accepted Answer

A)  beginning inventory - cost of goods purchased + ending inventory. 
B)  sales - cost of goods purchased + beginning inventory - ending inventory. 
C)  sales + gross profit - ending inventory + beginning inventory. 
D)  beginning inventory + cost of goods purchased - ending inventory. 
A)  beginning inventory - cost of goods purchased + ending inventory. 
B)  sales - cost of goods purchased + beginning inventory - ending inventory. 
C)  sales + gross profit - ending inventory + beginning inventory. 
D)  beginning inventory + cost of goods purchased - ending inventory.

Question 8

Barley Company developed the following information about its inventories in applying the LCNRV basis in valuing inventories:   If Barley applies the LCNRV basis, the amount of the inventory reported on the balance sheet would be

Accepted Answer

A)  $346,000. 
B)  $353,000. 
C)  $355,000. 
D)  $362,000. 
A)  $346,000. 
B)  $353,000. 
C)  $355,000. 
D)  $362,000.

Question 9

Storme Shutters has the following inventory information. $\begin{array}{rrr}
\text { Nov. }&1 & \text { Inventory } & 30 \text { units } @ \$ 8.00 \
&8 & \text { Purchase } & 120 \text { units } \$ 8.30 \
&17 & \text { Purchase } & 60 \text { units } \$ 8 .70 \
&25 & \text { Purchase } & 90 \text { units } \$ 8.80
\end{array}$ A physical count of merchandise inventory on November 30 reveals that there are 80 units on hand. Assume a periodic inventory system is used. Cost of goods sold (rounded to the nearest dollar) under the average-cost method is

Accepted Answer

A)  $1,758. 
B)  $1,870. 
C)  $1,859. 
D)  $1,812. 
A)  $1,758. 
B)  $1,870. 
C)  $1,859. 
D)  $1,812.

Question 10

Inventory is

Accepted Answer

A)  reported under the classification of Property, Plant, and Equipment on the balance sheet. 
B)  often reported as a miscellaneous expense on the income statement. 
C)  reported as a current asset on the balance sheet. 
D)  generally valued at the price for which the goods can be sold. 
A)  reported under the classification of Property, Plant, and Equipment on the balance sheet. 
B)  often reported as a miscellaneous expense on the income statement. 
C)  reported as a current asset on the balance sheet. 
D)  generally valued at the price for which the goods can be sold.

Question 11

The controller of Greene Yard Company is applying the LCNRV basis of valuing its ending inventory. The following information is available:   Instructions
Compute the value of the ending inventory by applying the LCNRV basis.

Accepted Answer

@#IMG-DLM& [Self-prop: (Cost);

Question 12

Ford Co. uses a periodic inventory system. Its records show the following for the month of May, in which 75 units were sold.   Instructions
Compute the ending inventory at May 31 and cost of goods sold using the FIFO and LIFO methods. Prove the amount allocated to cost of goods sold under each method.

Accepted Answer

@#IMG-DLM& [(Tot. no. units avail. for sale - No.

Question 13

During July, the following purchases and sales were made by Phast Company. There was no beginning inventory. Phast Company uses a perpetual inventory system.

Accepted Answer

The answer of During July, the following purchases and sales...

Question 14

In a period of increasing prices, which inventory cost flow method will result in the lowest gross profit?

Accepted Answer

A)  FIFO 
B)  LIFO 
C)  Average Cost 
D)  Gross profit for the period will be the same under all assumptions. 
A)  FIFO 
B)  LIFO 
C)  Average Cost 
D)  Gross profit for the period will be the same under all assumptions.

Question 15

The retail inventory method requires a company to value its inventory on the balance sheet at retail prices.

Accepted Answer

A) True 
 B)False

Question 16

In a period of inflation, the cost flow method that results in the lowest net income is the

Accepted Answer

A)  FIFO method. 
B)  LIFO method. 
C)  average-cost method. 
D)  gross profit method. 
A)  FIFO method. 
B)  LIFO method. 
C)  average-cost method. 
D)  gross profit method.

Question 17

The specific identification method of inventory costing

Accepted Answer

A)  always maximizes a company's gross profit. 
B)  always minimizes a company's gross profit. 
C)  has no effect on a company's gross profit. 
D)  may enable management to manipulate gross profit by picking which units to sell. 
A)  always maximizes a company's gross profit. 
B)  always minimizes a company's gross profit. 
C)  has no effect on a company's gross profit. 
D)  may enable management to manipulate gross profit by picking which units to sell.

Question 18

P. Didee has the following inventory information. $\begin{array}{rll}
\text { July } 1 & \text { Beginning Inventory } & 20 \text { units at } \$ 90 \
5 & \text { Purchases } & 120 \text { units at } \$ 92 \
14 & \text { Sale } & 90 \text { units } \
21 & \text { Purchases } & 60 \text { units at } \$ 95 \
30 & \text { Sale } & 58 \text { units }
\end{array}$ Assuming that a perpetual inventory system is used, what is the ending inventory on a FIFO basis?

Accepted Answer

A)  $4,744 
B)  $5,860 
C)  $4,940 
D)  $6,346 
A)  $4,744 
B)  $5,860 
C)  $4,940 
D)  $6,346

Question 19

Items waiting to be used in production are considered to be

Accepted Answer

A)  raw materials. 
B)  work in progress. 
C)  finished goods. 
D)  merchandise inventory. 
A)  raw materials. 
B)  work in progress. 
C)  finished goods. 
D)  merchandise inventory.

Question 20

Roseanne Company's periodic inventory records show the following data: $\begin{array}{llrr} 
& & \underline{\text { Units }} &  \underline{\text { Unit Cost }} \
\text { Inventory, } & \text { January } 1 & 10,000 & \$ 9.00 \
\text { Purchases: } & \text { June 18 } & 9,000 & 8.20 \
& \text { November } 8 & 6,000 & 7.25
\end{array}$ A physical inventory on December 31 shows 5,000 units on hand. Under the FIFO method, the December 31 inventory is

Accepted Answer

A)  $36,250. 
B)  $41,000. 
C)  $40,725. 
D)  $45,000. 
A)  $36,250. 
B)  $41,000. 
C)  $40,725. 
D)  $45,000.

Raw materials inventories are the goods that a manufacturer has completed and are ready to be sold to customers.

Under the FIFO method, the costs of the earliest units purchased are the first charged to cost of goods sold.

Two companies report the same cost of goods available for sale but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using

Freight terms of FOB shipping point mean that the

Cost of goods sold is computed from the following equation:

Barley Company developed the following information about its inventories in applying the LCNRV basis in valuing inventories: If Barley applies the LCNRV basis, the amount of the inventory reported on the balance sheet would be

Inventory is

The controller of Greene Yard Company is applying the LCNRV basis of valuing its ending inventory. The following information is available: Instructions Compute the value of the ending inventory by applying the LCNRV basis.

Ford Co. uses a periodic inventory system. Its records show the following for the month of May, in which 75 units were sold. Instructions Compute the ending inventory at May 31 and cost of goods sold using the FIFO and LIFO methods. Prove the amount allocated to cost of goods sold under each method.

During July, the following purchases and sales were made by Phast Company. There was no beginning inventory. Phast Company uses a perpetual inventory system.

In a period of increasing prices, which inventory cost flow method will result in the lowest gross profit?

The retail inventory method requires a company to value its inventory on the balance sheet at retail prices.

In a period of inflation, the cost flow method that results in the lowest net income is the

The specific identification method of inventory costing

P. Didee has the following inventory information. July 1 Beginning Inventory 20 units at \ 90 5 Purchases 120 units at \ 92 14 Sale 90 units 21 Purchases 60 units at \ 95 30 Sale 58 units Assuming that a perpetual inventory system is used, what is the ending inventory on a FIFO basis?

Items waiting to be used in production are considered to be

Roseanne Company's periodic inventory records show the following data: Inventory, January 1 10,000 \ 9.00 Purchases: June 18 9,000 8.20 November 8 6,000 7.25 A physical inventory on December 31 shows 5,000 units on hand. Under the FIFO method, the December 31 inventory is

Welcome to Accounting

The Accounting Equation and Transaction Analysis

The Recording Process: Debits and Credits

The Recording Process: the Journal, the Ledger, and the Trial Balance

Adjusting the Accounts and Preparing an Adjusted Trial Balance

Completing a Worksheet and Completing the Accounting Cycle

Merchandising Companies: Purchases Perpetual

Merchandising Companies: Sales Perpetual

Merchandising Companies: Worksheets and Financial Statements Perpetual

Special Journals

Cash, Banking, and Internal Controls

Payroll Accounting: Employee Taxes and Records

Payroll Accounting: Employer Taxes and Records

Filters

Exam 11: Inventory

Raw materials inventories are the goods that a manufacturer has completed and are ready to be sold to customers.

Under the FIFO method, the costs of the earliest units purchased are the first charged to cost of goods sold.

Two companies report the same cost of goods available for sale but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using

Freight terms of FOB shipping point mean that the

Cost of goods sold is computed from the following equation:

Barley Company developed the following information about its inventories in applying the LCNRV basis in valuing inventories: If Barley applies the LCNRV basis, the amount of the inventory reported on the balance sheet would be

Inventory is

The controller of Greene Yard Company is applying the LCNRV basis of valuing its ending inventory. The following information is available: Instructions Compute the value of the ending inventory by applying the LCNRV basis.

During July, the following purchases and sales were made by Phast Company. There was no beginning inventory. Phast Company uses a perpetual inventory system.

In a period of increasing prices, which inventory cost flow method will result in the lowest gross profit?

The retail inventory method requires a company to value its inventory on the balance sheet at retail prices.

In a period of inflation, the cost flow method that results in the lowest net income is the

The specific identification method of inventory costing

P. Didee has the following inventory information. July 1 Beginning Inventory 20 units at \ 90 5 Purchases 120 units at \ 92 14 Sale 90 units 21 Purchases 60 units at \ 95 30 Sale 58 units Assuming that a perpetual inventory system is used, what is the ending inventory on a FIFO basis?

Items waiting to be used in production are considered to be

Roseanne Company's periodic inventory records show the following data: Inventory, January 1 10,000 \ 9.00 Purchases: June 18 9,000 8.20 November 8 6,000 7.25 A physical inventory on December 31 shows 5,000 units on hand. Under the FIFO method, the December 31 inventory is

Welcome to Accounting

The Accounting Equation and Transaction Analysis

The Recording Process: Debits and Credits

The Recording Process: the Journal, the Ledger, and the Trial Balance

Adjusting the Accounts and Preparing an Adjusted Trial Balance

Completing a Worksheet and Completing the Accounting Cycle

Merchandising Companies: Purchases Perpetual

Merchandising Companies: Sales Perpetual

Merchandising Companies: Worksheets and Financial Statements Perpetual

Special Journals

Cash, Banking, and Internal Controls

Payroll Accounting: Employee Taxes and Records

Payroll Accounting: Employer Taxes and Records

Filters