Question 1

The LCNRV basis of accounting for inventories should a201. Two widely used methods of estimating inventories are the ______________ method and the _____________ method.

Accepted Answer

net realiz

Question 2

Henri Company's inventory and purchases accounts show the following data: $\begin{array}{llrr}&&\text {Units }&\text {Unit Cost }\\hline
\text { Inventory, } & \text { January 1 } & 10,000 & \$ 9.20 \
\text { Purchases: } & \text { June 18 } & 9,000 & 8.00 \
& \text { Novermber 8 } & 6,000 & 7.25
\end{array}$ A physical inventory on December 31 shows 3,000 units on hand. Henri sells the units for $12 each. Henri uses the periodic inventory method. Under the FIFO method, the December 31 inventory is costed at

Accepted Answer

A)  $21,750. 
B)  $24,450. 
C)  $25,800. 
D)  $27,600. 
A)  $21,750. 
B)  $24,450. 
C)  $25,800. 
D)  $27,600.

Question 3

In a period of falling prices, the LIFO method results in a lower cost of goods sold than the FIFO method.

Accepted Answer

A) True 
 B)False

Question 4

Inventory items on an assembly line in various stages of production are classified as

Accepted Answer

A)  Finished goods. 
B)  Work in process. 
C)  Raw materials. 
D)  Merchandise inventory. 
A)  Finished goods. 
B)  Work in process. 
C)  Raw materials. 
D)  Merchandise inventory.

Question 5

If inventory is reported using the LIFO cost flow method, it should not be classified as a current asset on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 6

Companies adopt different cost flow methods for each of the following reasons except

Accepted Answer

A)  balance sheet effects. 
B)  cost effects. 
C)  income statements effects. 
D)  tax effects. 
A)  balance sheet effects. 
B)  cost effects. 
C)  income statements effects. 
D)  tax effects.

Question 7

If companies have identical inventoriable costs but use different inventory cost flow methods when the price of goods has not been constant, then the

Accepted Answer

A)  cost of goods sold of the companies will be identical. 
B)  cost of goods available for sale of the companies will be identical. 
C)  ending inventory of the companies will be identical. 
D)  net income of the companies will be identical. 
A)  cost of goods sold of the companies will be identical. 
B)  cost of goods available for sale of the companies will be identical. 
C)  ending inventory of the companies will be identical. 
D)  net income of the companies will be identical.

Question 8

Allen's Hardware Store prepared the following analysis of cost of goods sold for the previous three years:   Net income for the years 2021, 2022, and 2023 was $75,000, $60,000, and $57,000, respectively. Since net income was consistently declining, Mr. Allen hired a new accountant to investigate the cause(s) for the declines.
The accountant determined the following:
1. Purchases of $20,000 were not recorded in 2021.
2. The 2021 December 31 inventory should have been $26,000.
3. The 2022 ending inventory included inventory costing $8,000 that was purchased FOB destination and in transit at year-end.
4. The 2023 ending inventory did not include goods costing $4,000 that were shipped on December 29 to Wilson Plumbing Company, FOB shipping point. The goods were still in transit at the end of the year.
Instructions
Determine the correct net income for each year. (Show all computations.)

Accepted Answer

The answer of Allen's Hardware Store prepared the following analysis...

Question 9

In a perpetual inventory system, the cost of goods sold under the FIFO method is based on the cost of the latest goods purchased during the period.

Accepted Answer

A) True 
 B)False

Question 10

A company just starting business made the following four inventory purchases in June: $\begin{array}{lll}\text { June } 1 &150 \text { units } & \$390\
\text { June } 10 & 200 \text { units } & 598 \
\text { June } 15 & 200 \text { units } & 630 \
\text { June } 28 & 150 \text { units } & 510 \
&&\$2,128
\end{array}$ A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand. Using a periodic inventory system and the average-cost method, the amount allocated to the ending inventory on June 30 is

Accepted Answer

A)  $540. 
B)  $608. 
C)  $668. 
D)  $1,520. 
A)  $540. 
B)  $608. 
C)  $668. 
D)  $1,520.

Question 11

Accounting for inventories is important because inventories affect the ______________ section of the balance sheet and the ______________ on the income statement.

Accepted Answer

current as

Question 12

Transactions that affect inventories on hand have effects on both the balance sheet and the income statement.

Accepted Answer

A) True 
 B)False

Question 13

The inventory amount has no effect on net income.

Accepted Answer

A) True 
 B)False

Question 14

If a company has no beginning inventory and the unit cost of inventory is increasing during a period, the cost of goods available for sale during the period will be the same under the LIFO and FIFO inventory methods.

Accepted Answer

A) True 
 B)False

Question 15

Nicholas Industries had the following inventory transactions occur during 2022: $\begin{array}{llll}&&\text {Units}&\text { Cost/unit}\\hline
2 / 1 / 22 & \text { Purchase } & 54 & \$ 45 \
3 / 14 / 22 & \text { Purchase } & 93 & \$ 47 \
5 / 1 / 22 & \text { Purchase } & 66 & \$ 49
\end{array}$ The company sold 140 units at $65 each. Assuming that a periodic inventory system is used, what is the company's gross profit using LIFO?

Accepted Answer

A)  $2,388 
B)  $2,678 
C)  $6,472 
D)  $6,712 
A)  $2,388 
B)  $2,678 
C)  $6,472 
D)  $6,712

Question 16

Oscar Industries has the following inventory information. $\begin{array}{rll}
\text { July } 1 & \text { Beginning Inventory } & 40 \text { units at } \$ 110 \
5 & \text { Purchases } & 240 \text { units at } \$ 112 \
14 & \text { Sale } & 160 \text { units } \
21 & \text { Purchases } & 120 \text { units at } \$ 115 \
30 & \text { Sale } & 150 \text { units }
\end{array}$ Assuming that a periodic inventory system is used, what is the amount allocated to ending inventory on a FIFO basis?

Accepted Answer

A)  $10,350 
B)  $10,000 
C)  $35,080 
D)  $34,730 
A)  $10,350 
B)  $10,000 
C)  $35,080 
D)  $34,730

Question 17

Agler Company suffered a loss of its inventory on March 28 due to a fire in its warehouse. As a basis for filing a claim with its insurance company, Agler Company compiled the following information: $\begin{array}{lr}
\text { March net sales through March } 28 & \$ 350,000 \
\text { Beginning Inventory, March 1 } & 100,000 \
\text { Merchandise purchases through March } 28 & 180,000
\end{array}$ The company has experienced an average gross profit rate of 35% in the past and this rate appears to Instructions
Using the gross profit method, prepare an estimate of the cost of the inventory destroyed by fire on March 28. Show all computations in good form.

Accepted Answer

@#IMG-DLM& [(Net sales - (Net sales x GP

Question 18

Talkington Rae Company reports goods available for sale at cost, $76,800. Beginning inventory at retail is $40,000 and goods purchased during the period at retail were $80,000. Sales for the period amounted to $85,000.
Instructions
Determine the estimated cost of the ending inventory using the retail inventory method.

Accepted Answer

\(\begin{array}{lr}&\text {At Cost }&\te

Question 19

Tomas Company uses the perpetual inventory system and the moving-average method to cost inventories. On August 1, there were 10,000 units reported at $30,000 in the beginning inventory. On August 10, 20,000 units were purchased for $4.95 per unit. On August 15, 25,000 units were sold for $12 per unit. The amount charged to cost of goods sold on August 15 was

Accepted Answer

A)  $30,000. 
B)  $99,375. 
C)  $107,500. 
D)  $118,800. 
A)  $30,000. 
B)  $99,375. 
C)  $107,500. 
D)  $118,800.

Question 20

The specific identification method of costing inventories is used when the

Accepted Answer

A)  physical flow of units cannot be determined. 
B)  company sells large quantities of relatively low cost homogeneous items. 
C)  company sells large quantities of relatively low cost heterogeneous items. 
D)  company sells a limited quantity of high-unit cost items. 
A)  physical flow of units cannot be determined. 
B)  company sells large quantities of relatively low cost homogeneous items. 
C)  company sells large quantities of relatively low cost heterogeneous items. 
D)  company sells a limited quantity of high-unit cost items.

The LCNRV basis of accounting for inventories should a201. Two widely used methods of estimating inventories are the __ method and the _ method.

In a period of falling prices, the LIFO method results in a lower cost of goods sold than the FIFO method.

Inventory items on an assembly line in various stages of production are classified as

If inventory is reported using the LIFO cost flow method, it should not be classified as a current asset on the balance sheet.

Companies adopt different cost flow methods for each of the following reasons except

If companies have identical inventoriable costs but use different inventory cost flow methods when the price of goods has not been constant, then the

In a perpetual inventory system, the cost of goods sold under the FIFO method is based on the cost of the latest goods purchased during the period.

Accounting for inventories is important because inventories affect the section of the balance sheet and the on the income statement.

Transactions that affect inventories on hand have effects on both the balance sheet and the income statement.

The inventory amount has no effect on net income.

If a company has no beginning inventory and the unit cost of inventory is increasing during a period, the cost of goods available for sale during the period will be the same under the LIFO and FIFO inventory methods.

The specific identification method of costing inventories is used when the

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

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Exam 11: Inventory

The LCNRV basis of accounting for inventories should a201. Two widely used methods of estimating inventories are the ______________ method and the _____________ method.

In a period of falling prices, the LIFO method results in a lower cost of goods sold than the FIFO method.

Inventory items on an assembly line in various stages of production are classified as

If inventory is reported using the LIFO cost flow method, it should not be classified as a current asset on the balance sheet.

Companies adopt different cost flow methods for each of the following reasons except

If companies have identical inventoriable costs but use different inventory cost flow methods when the price of goods has not been constant, then the

In a perpetual inventory system, the cost of goods sold under the FIFO method is based on the cost of the latest goods purchased during the period.

Accounting for inventories is important because inventories affect the ______________ section of the balance sheet and the ______________ on the income statement.

Transactions that affect inventories on hand have effects on both the balance sheet and the income statement.

The inventory amount has no effect on net income.

If a company has no beginning inventory and the unit cost of inventory is increasing during a period, the cost of goods available for sale during the period will be the same under the LIFO and FIFO inventory methods.

The specific identification method of costing inventories is used when the

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

The LCNRV basis of accounting for inventories should a201. Two widely used methods of estimating inventories are the __ method and the _ method.

Accounting for inventories is important because inventories affect the section of the balance sheet and the on the income statement.