Question 1

Costs included in the Merchandise Inventory account can include all of the following except:

Accepted Answer

A) Damaged inventory that cannot be sold. 
B) Storage. 
C) Invoice price minus any discount. 
D) Insurance. 
E) Transportation-in. 
A) Damaged inventory that cannot be sold. 
B) Storage. 
C) Invoice price minus any discount. 
D) Insurance. 
E) Transportation-in.

Question 2

The costs of goods purchased will vary under the different inventory methods of specific identification, FIFO, LIFO, and weighted average.

Accepted Answer

A) True 
 B)False

Question 3

Ulrich had cost of goods sold of $6.7 million, ending inventory of $2.2 million, and average inventory of $1.9 million. Its days' sales in inventory equals:

Accepted Answer

A) 104. 
B) 60. 
C) 35. 
D) 180. 
E) 120. 
A) 104. 
B) 60. 
C) 35. 
D) 180. 
E) 120.

Question 4

Days' sales in inventory:

Accepted Answer

A) Is calculated by dividing cost of goods sold by ending inventory. 
B) Is a substitute for the acid-test ratio. 
C) Focuses on average inventory rather than ending inventory. 
D) Is also called days' stock on hand. 
E) Is used to measure solvency. 
A) Is calculated by dividing cost of goods sold by ending inventory. 
B) Is a substitute for the acid-test ratio. 
C) Focuses on average inventory rather than ending inventory. 
D) Is also called days' stock on hand. 
E) Is used to measure solvency.

Question 5

Eastview Company uses a perpetual LIFO inventory system, and has the following purchases and sales: $$\begin{array} { | l | l | } 
\hline \text { January 1 } & 150 \text { units were purchased at } \$ 9 \text { per unit. } \
\hline \text { January } 17 & 120 \text { units were sold. } \
\hline \text { January 20 } & 160 \text { units were purchased at } \$ 11 \text { per unit. } \
\hline \text { January 29 } & 150 \text { units were sold. } \
\hline
\end{array}$$ What is the value of ending inventory?

Accepted Answer

A) $2,670. 
B) $2,750. 
C) $380. 
D) $2,730. 
E) $440. 
A) $2,670. 
B) $2,750. 
C) $380. 
D) $2,730. 
E) $440.

Question 6

Explain the reason a company might use gross profit inventory method for valuing inventory.

Accepted Answer

The gross profit method is often used wh

Question 7

A company's inventory records report the following: $$\begin{array} { | l | l | l | } 
\hline \text { August 1 } & \text { Beginning balance } & 15 \text { units } @ \$ 12 \
\hline \text { August } 5 & \text { Purchase } & 10 \text { units } @ \$ 13 \
\hline \text { August } 12 & \text { Purchase } & 20 \text { units } @ \$ 14 \
\hline
\end{array}$$ On August 15, it sold 30 units. Using the FIFO perpetual inventory method, what is the value of the inventory at August 15 after the sale?

Accepted Answer

A) $140 
B) $590 
C) $380 
D) $160 
E) $210 
A) $140 
B) $590 
C) $380 
D) $160 
E) $210

Question 8

Perfection Company had cost of goods sold of $853,000, ending inventory of $70,500, and average inventory of $71,600. Its inventory turnover equals:

Accepted Answer

A) 1.0. 
B) 6.0. 
C) 14.0. 
D) 30.6. 
E) 11.9. 
A) 1.0. 
B) 6.0. 
C) 14.0. 
D) 30.6. 
E) 11.9.

Question 9

Giorgio had cost of goods sold of $9,421 million, ending inventory of $2,089 million, and average inventory of $1,965 million. Its inventory turnover equals:

Accepted Answer

A) 0.21. 
B) 80.9 days. 
C) 4.51. 
D) 4.79. 
E) 76.1 days. 
A) 0.21. 
B) 80.9 days. 
C) 4.51. 
D) 4.79. 
E) 76.1 days.

Question 10

Discuss the important accounting features of a periodic inventory system including accounts and procedures used.

Accepted Answer

Each purchase of merchandise is debited

Question 11

A company's inventory records report the following in November of the current year: $$\begin{array} { | l | l | l | } 
\hline \text { Beginning } & \text { November 1 } & 5 \text { units } @ \$ 20 \
\hline \text { Purchase } & \text { November } 2 & 10 \text { units } @ \$ 22 \
\hline \text { Purchase } & \text { November 12 } & 6 \text { units } @ \$ 25 \
\hline
\end{array}$$ On November 8, it sold 12 units for $54 each. Using the LIFO perpetual inventory method, what was the amount recorded in the cost of goods sold account for the 12 units sold?

Accepted Answer

A) $210 
B) $188 
C) $282 
D) $260 
E) $254 
A) $210 
B) $188 
C) $282 
D) $260 
E) $254

Question 12

Salmone Company reported the following purchases and sales for its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to cost of goods sold using LIFO.
$$\begin{array} { | r | l | l | l | } 
\hline \multicolumn{1}{|c|} { \text { Date } } & \text { Activities } & \text { Units Acquired at Cost } & \text { Units Sold at Retail } \
\hline \text { May 1 } & \text { Beginning Inventory } & 150 \text { units } @ \$ 10.00 & \
\hline 5 & \text { Purchase } & 220 \text { units } @ \$ 12.00 & \
\hline 10 & \text { Sales } & & 140 \text { units } @ \$ 20.00 \
\hline 15 & \text { Purchase } & 100 \text { units } @ \$ 13.00 & \
\hline 24 & \text { Sales } & & 90 \text { units } @ \$ 21.00 \
\hline
\end{array}$$

Accepted Answer

A) $2,980 
B) $2,590 
C) $2,850 
D) $2,860 
E) $2,460 
A) $2,980 
B) $2,590 
C) $2,850 
D) $2,860 
E) $2,460

Question 13

Explain the effects of inventory valuation methods on the cost of ending inventory, income, and income taxes.

Accepted Answer

The specific identification method exact

Question 14

When costs to purchase inventory regularly decline, which method of inventory costing will yield the lowest cost of goods sold?

Accepted Answer

A) Weighted average. 
B) Specific identification. 
C) LIFO. 
D) Gross margin. 
E) FIFO. 
A) Weighted average. 
B) Specific identification. 
C) LIFO. 
D) Gross margin. 
E) FIFO.

Question 15

Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to ending inventory using LIFO.
$$\begin{array} { | r | l | l | l | } 
\hline \text { Date } & \text { Activities } & \text { Units Ac quired at Cost } & \text { Units Sold at Retail } \
\hline \text { May 1 } & \begin{array} { l } 
\text { Beginning } \
\text { Inventory }
\end{array} & 150 \text { units } @ \$ 10.00 & \
\hline 5 & \text { Purchase } & 220 \text { units } @ \$ 12.00 & \
\hline 10 & \text { Sales } & & 140 \text { units } @ \$ 20.00 \
\hline 15 & \text { Purchase } & 100 \text { units } @ \$ 13.00 & \
\hline 24 & \text { Sales } & & 90 \text { units } @ \$ 21.00 \
\hline
\end{array}$$

Accepted Answer

A) $2,980 
B) $2,590 
C) $2,460 
D) $5,440 
E) $2,860 
A) $2,980 
B) $2,590 
C) $2,460 
D) $5,440 
E) $2,860

Question 16

Oxford Packing Company reported net sales in November of the current year of $1,000,000. At the beginning of November, the company reported beginning inventory of $368,000. Cost of goods purchased during November amounted to $217,500. The company reported ending inventory at the end of November of $226,750. The company's gross profit rate for November of the current year was:

Accepted Answer

A) 81.2% 
B) 18.8% 
C) 58.6% 
D) 35.9% 
E) 64.1% 
A) 81.2% 
B) 18.8% 
C) 58.6% 
D) 35.9% 
E) 64.1%

Question 17

A company reports the following information regarding its inventory. Beginning inventory: cost is $80,000; retail is $130,000 Net purchases: cost is $65,000; retail is $120,000
Sales at retail: $145,000
The year-end inventory shows $135,000 worth of merchandise available at retail prices. What is the cost of the ending inventory calculated using the retail inventory method?

Accepted Answer

A) $78,300. 
B) $73,125. 
C) $135,000. 
D) $72,900. 
E) $105,000. 
A) $78,300. 
B) $73,125. 
C) $135,000. 
D) $72,900. 
E) $105,000.

Question 18

A merchandiser's ability to pay its short-term obligations depends on many factors including how quickly it sells its merchandise inventory.

Accepted Answer

A) True 
 B)False

Question 19

Accounting principles require that inventory be reported at the market value (cost)of replacing inventory when cost is lower than market value.

Accepted Answer

A) True 
 B)False

Question 20

Starlight Company has inventory of 8 units at a cost of $200 each on October 1. On October 2, it purchased 20 units at $205 each. 11 units are sold on October 4. Using the LIFO perpetual inventory method, what is the value of inventory after the October 4 sale?

Accepted Answer

A) $3,500. 
B) $3,485. 
C) $3,472. 
D) $3,445. 
E) $3,461. 
A) $3,500. 
B) $3,485. 
C) $3,472. 
D) $3,445. 
E) $3,461.

Costs included in the Merchandise Inventory account can include all of the following except:

The costs of goods purchased will vary under the different inventory methods of specific identification, FIFO, LIFO, and weighted average.

Ulrich had cost of goods sold of $6.7 million, ending inventory of $2.2 million, and average inventory of $1.9 million. Its days' sales in inventory equals:

Days' sales in inventory:

Explain the reason a company might use gross profit inventory method for valuing inventory.

A company's inventory records report the following: August 1 Beginning balance 15 units @\ 12 August 5 Purchase 10 units @\ 13 August 12 Purchase 20 units @\ 14 On August 15, it sold 30 units. Using the FIFO perpetual inventory method, what is the value of the inventory at August 15 after the sale?

Perfection Company had cost of goods sold of $853,000, ending inventory of $70,500, and average inventory of $71,600. Its inventory turnover equals:

Giorgio had cost of goods sold of $9,421 million, ending inventory of $2,089 million, and average inventory of $1,965 million. Its inventory turnover equals:

Discuss the important accounting features of a periodic inventory system including accounts and procedures used.

Explain the effects of inventory valuation methods on the cost of ending inventory, income, and income taxes.

When costs to purchase inventory regularly decline, which method of inventory costing will yield the lowest cost of goods sold?

A merchandiser's ability to pay its short-term obligations depends on many factors including how quickly it sells its merchandise inventory.

Accounting principles require that inventory be reported at the market value (cost)of replacing inventory when cost is lower than market value.

Starlight Company has inventory of 8 units at a cost of $200 each on October 1. On October 2, it purchased 20 units at $205 each. 11 units are sold on October 4. Using the LIFO perpetual inventory method, what is the value of inventory after the October 4 sale?

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Filters

Exam 6: Inventories and Cost of Sales

Costs included in the Merchandise Inventory account can include all of the following except:

The costs of goods purchased will vary under the different inventory methods of specific identification, FIFO, LIFO, and weighted average.

Ulrich had cost of goods sold of $6.7 million, ending inventory of $2.2 million, and average inventory of $1.9 million. Its days' sales in inventory equals:

Days' sales in inventory:

Explain the reason a company might use gross profit inventory method for valuing inventory.

A company's inventory records report the following: August 1 Beginning balance 15 units @\ 12 August 5 Purchase 10 units @\ 13 August 12 Purchase 20 units @\ 14 On August 15, it sold 30 units. Using the FIFO perpetual inventory method, what is the value of the inventory at August 15 after the sale?

Perfection Company had cost of goods sold of $853,000, ending inventory of $70,500, and average inventory of $71,600. Its inventory turnover equals:

Giorgio had cost of goods sold of $9,421 million, ending inventory of $2,089 million, and average inventory of $1,965 million. Its inventory turnover equals:

Discuss the important accounting features of a periodic inventory system including accounts and procedures used.

Explain the effects of inventory valuation methods on the cost of ending inventory, income, and income taxes.

When costs to purchase inventory regularly decline, which method of inventory costing will yield the lowest cost of goods sold?

A merchandiser's ability to pay its short-term obligations depends on many factors including how quickly it sells its merchandise inventory.

Accounting principles require that inventory be reported at the market value (cost)of replacing inventory when cost is lower than market value.

Starlight Company has inventory of 8 units at a cost of $200 each on October 1. On October 2, it purchased 20 units at $205 each. 11 units are sold on October 4. Using the LIFO perpetual inventory method, what is the value of inventory after the October 4 sale?

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Filters