Question 1

Dollar-value LIFO:

Accepted Answer

A)  Starts with ending inventory measured at current costs and re-creates LIFO layers for measuring inventory costs. 
B)  Increases the recordkeeping costs of LIFO. 
C)  Only is allowed for internal reporting purposes. 
D)  None of these answer choices are correct. 
A)  Starts with ending inventory measured at current costs and re-creates LIFO layers for measuring inventory costs. 
B)  Increases the recordkeeping costs of LIFO. 
C)  Only is allowed for internal reporting purposes. 
D)  None of these answer choices are correct. A

Question 2

-Required: Compute the January 31 ending inventory and cost of goods sold for January, assuming Denver uses LIFO and a periodic inventory system.

Accepted Answer

The answer of  
-Required: Compute the January 31 ending...

Question 3

During periods of falling prices, LIFO ending inventory will be less than FIFO ending inventory.

Accepted Answer

A) True 
 B)False  False

Question 4

Bettencourt Clothing Corporation uses a periodic inventory system and the LIFO cost method. The company began 2018 with the following inventory layers (listed in chronological order of acquisition):
5,000 units @ $10 $50,000
8,000 units @ $12 96,000
Beginning inventory $146,000
During 2018, 20,000 units were purchased for $15 per unit. Sales for the year totaled 30,000 units at various prices, leaving 3,000 units in ending inventory.
Required:
1. Calculate cost of goods sold for 2018.
2. Determine the amount of LIFO liquidation profit that the company must report in a disclosure note to its 2018 financial statements, assuming the amount is material. Assume an income tax rate of 40%.

Accepted Answer

1.
Beginning inventory $ 146,000
Purchas

Question 5

Listed below are 10 terms, followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term.
-Dollar-value LIFO

Accepted Answer

A) Goods are transferred to another company but title remains with transferor. 
B) Items sold are those acquired first. 
C) Items sold are those acquired last. 
D) Inventory is viewed as a quantity of value. 
E) Legal title passes when goods arrive at customer location.
F)Items sold come from a mixture of goods acquired during the period.
G)Continuously records changes in inventory.
H)Legal title passes when goods are delivered to common carrier.
I)Adjusts inventory at the end of the period.
J)If LIFO is used for income tax purposes, it must be used for financial reporting. 
A) Goods are transferred to another company but title remains with transferor. 
B) Items sold are those acquired first. 
C) Items sold are those acquired last. 
D) Inventory is viewed as a quantity of value. 
E) Legal title passes when goods arrive at customer location.
F)Items sold come from a mixture of goods acquired during the period.
G)Continuously records changes in inventory.
H)Legal title passes when goods are delivered to common carrier.
I)Adjusts inventory at the end of the period.
J)If LIFO is used for income tax purposes, it must be used for financial reporting.

Question 6

One difference between periodic and perpetual inventory systems is:

Accepted Answer

A)  Cost of goods sold is not recorded under a perpetual system until the end of the period. 
B)  Cost of goods sold is not recorded under a periodic system until the end of the period. 
C)  Cost of goods sold is always significantly higher under a perpetual system. 
D)  Cost of goods sold is always significantly higher under a periodic system. 
A)  Cost of goods sold is not recorded under a perpetual system until the end of the period. 
B)  Cost of goods sold is not recorded under a periodic system until the end of the period. 
C)  Cost of goods sold is always significantly higher under a perpetual system. 
D)  Cost of goods sold is always significantly higher under a periodic system.

Question 7

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Cost index

Accepted Answer

A) Method not feasible for most inventories. 
B) Most recent purchases will be included in cost of goods sold. 
C) The cost of components purchased from other manufacturers. 
D) Used to convert ending inventory at year-end cost to base year cost. 
E) Could be used instead of an internally generated index in dollar-value LIFO computations. 
A) Method not feasible for most inventories. 
B) Most recent purchases will be included in cost of goods sold. 
C) The cost of components purchased from other manufacturers. 
D) Used to convert ending inventory at year-end cost to base year cost. 
E) Could be used instead of an internally generated index in dollar-value LIFO computations.

Question 8

Bascomb Company purchased $420,000 in merchandise on account during the month of April, and merchandise costing $350,000 was sold on account for $425,000.
Required:
1. Prepare journal entries to record the purchases and sales assuming Bascomb uses a perpetual inventory system.
2. Prepare journal entries to record the purchases and sales assuming Bascomb uses a periodic inventory system.

Accepted Answer

The answer of Bascomb Company purchased $420,000 in merchandise on...

Question 9

-Required: Compute the January 31 ending inventory and cost of goods sold for January, assuming Random Creations uses average cost and a periodic inventory system.

Accepted Answer

Periodic A

Question 10

Which of the following is false regarding the FIFO inventory method?

Accepted Answer

A)  FIFO under a perpetual inventory system results in the same cost of goods sold as FIFO under a periodic inventory system. 
B)  A company can choose to account for the flow of inventory using the FIFO method even if this doesn't match the actual flow of its inventory. 
C)  Perishable goods often follow an actual physical flow that is consistent with the FIFO method assumptions. 
D)  All of the other answer choices are true. 
A)  FIFO under a perpetual inventory system results in the same cost of goods sold as FIFO under a periodic inventory system. 
B)  A company can choose to account for the flow of inventory using the FIFO method even if this doesn't match the actual flow of its inventory. 
C)  Perishable goods often follow an actual physical flow that is consistent with the FIFO method assumptions. 
D)  All of the other answer choices are true.

Question 11

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-LIFO

Accepted Answer

A) Items sold are assumed to come from a mixture of goods acquired during the period. 
B) Goods are transferred to another party but title remains with transferor. 
C) Cost of goods available for sale less ending inventory. 
D) Items sold are assumed to be those acquired first. 
E) Items sold are assumed to be those acquired last. 
A) Items sold are assumed to come from a mixture of goods acquired during the period. 
B) Goods are transferred to another party but title remains with transferor. 
C) Cost of goods available for sale less ending inventory. 
D) Items sold are assumed to be those acquired first. 
E) Items sold are assumed to be those acquired last.

Question 12

Company A is identical to Company B in every regard except that Company A uses FIFO and Company B uses LIFO. In an extended period of rising inventory costs, Company A's gross profit and inventory turnover ratio, compared to Company B's, would be:

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D

Question 13

Nueva Company reported the following pretax data for its first year of operations.  
- What is Nueva's gross profit ratio (rounded) if it elects FIFO?

Accepted Answer

A)  30%. 
B)  32%. 
C)  10.7%. 
D)  60%. 
A)  30%. 
B)  32%. 
C)  10.7%. 
D)  60%.

Question 14

Hazelton Corporation uses a periodic inventory system and the LIFO method to value its inventory. The company began 2018 with $59,000 in inventory of its only product. The beginning inventory consisted of the following layers:
 
During 2018, 6,000 units were purchased at $8 per unit and during 2019, 7,000 units were purchased at $9 per unit. Sales, in units, were 7,000 and 12,000 during 2018 and 2019, respectively.
Required:
1. Calculate cost of goods sold for 2018 and 2019.
2. Disregarding income tax, determine the LIFO liquidation profit or loss, if any, for 2018 and 2019.

Accepted Answer

1.
Cost of goods sold:
2018: 1,000 x $7

Question 15

Net purchases are reduced for discounts taken whether the net method is used or the gross method is used.

Accepted Answer

A) True 
 B)False

Question 16

CMN Inc. uses LIFO and has experienced increasing costs since its founding. CMN disclosed that the LIFO reserve (also known as the LIFO allowance) at the end of 2018 was $3 million. The balance sheet showed ending inventory of $17 million at the end of 2018. What would the ending inventory have been if CMN had always used FIFO?

Accepted Answer

A)  $20 million. 
B)  $17 million. 
C)  $14 million. 
D)  None of these answer choices are correct. 
A)  $20 million. 
B)  $17 million. 
C)  $14 million. 
D)  None of these answer choices are correct.

Question 17

The Foxworthy Corporation uses a periodic inventory system and the LIFO inventory cost method for its one product. Beginning inventory of 40,000 units consisted of the following, listed in chronological order of acquisition:
24,000 units at a cost of $6.00 per unit = $144,000
16,000 units at a cost of $7.00 per unit = 112,000

During 2018, inventory quantity declined by 18,000 units. All units purchased during 2018 cost $8.00 per unit.

Required:
Calculate the before-tax LIFO liquidation profit or loss that the company would report in a disclosure note assuming the amount determined is material.

Accepted Answer

Units liquidated 18,000
Units liquidated

Question 18

Ramen Inc. adopted dollar-value LIFO (DVL) as of January 1, 2018, when it had a cost inventory of $600,000. Its inventory as of December 31, 2018, was $667,800 at year-end costs and the cost index was 1.06. What was DVL inventory on December 31, 2018?

Accepted Answer

A)  $630,000. 
B)  $631,800. 
C)  $636,000. 
D)  None of these answer choices are correct. 
A)  $630,000. 
B)  $631,800. 
C)  $636,000. 
D)  None of these answer choices are correct.

Question 19

TNM Inc. uses LIFO and was founded in on January 1, 2017. At the end of 2017, TNM disclosed that the LIFO reserve was $1 million, indicating that the ending inventory balance would have been $1 million higher under FIFO. At the end of 2018, the LIFO reserve decreased to $0.5 million and inventory balances were relatively stable compared to 2017. Which of the following is true regarding TNM's costs?

Accepted Answer

A)  Costs have been increasing since TNM was founded because the LIFO reserve is greater than zero. 
B)  Costs have been decreasing since TNM was founded because the LIFO reserve is greater than zero. 
C)  Costs were increasing in 2018, but decreasing in 2017. 
D)  Costs were decreasing in 2018, but increasing in 2017. 
A)  Costs have been increasing since TNM was founded because the LIFO reserve is greater than zero. 
B)  Costs have been decreasing since TNM was founded because the LIFO reserve is greater than zero. 
C)  Costs were increasing in 2018, but decreasing in 2017. 
D)  Costs were decreasing in 2018, but increasing in 2017.

Question 20

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Raw materials

Accepted Answer

A) Method not feasible for most inventories. 
B) Most recent purchases will be included in cost of goods sold. 
C) The cost of components purchased from other manufacturers. 
D) Used to convert ending inventory at year-end cost to base year cost. 
E) Could be used instead of an internally generated index in dollar-value LIFO computations. 
A) Method not feasible for most inventories. 
B) Most recent purchases will be included in cost of goods sold. 
C) The cost of components purchased from other manufacturers. 
D) Used to convert ending inventory at year-end cost to base year cost. 
E) Could be used instead of an internally generated index in dollar-value LIFO computations.

Dollar-value LIFO:

-Required: Compute the January 31 ending inventory and cost of goods sold for January, assuming Denver uses LIFO and a periodic inventory system.

During periods of falling prices, LIFO ending inventory will be less than FIFO ending inventory.

Listed below are 10 terms, followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term. -Dollar-value LIFO

One difference between periodic and perpetual inventory systems is:

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Cost index

-Required: Compute the January 31 ending inventory and cost of goods sold for January, assuming Random Creations uses average cost and a periodic inventory system.

Which of the following is false regarding the FIFO inventory method?

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -LIFO

Company A is identical to Company B in every regard except that Company A uses FIFO and Company B uses LIFO. In an extended period of rising inventory costs, Company A's gross profit and inventory turnover ratio, compared to Company B's, would be:

Nueva Company reported the following pretax data for its first year of operations. - What is Nueva's gross profit ratio (rounded) if it elects FIFO?

Net purchases are reduced for discounts taken whether the net method is used or the gross method is used.

Ramen Inc. adopted dollar-value LIFO (DVL) as of January 1, 2018, when it had a cost inventory of $600,000. Its inventory as of December 31, 2018, was $667,800 at year-end costs and the cost index was 1.06. What was DVL inventory on December 31, 2018?

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Raw materials

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, Comprehensive Income, and the Statement of Cash Flows

Revenue Recognition

Time Value of Money Concepts

Cash and Receivables

Inventories: Additional Issues

Property, Plant, and Equipment and Intangible Assets: Acquisition

Property, Plant, and Equipment and Intangible Assets: Utilization and Disposition

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes and Error Corrections

The Statement of Cash Flows Revisited

Filters

Exam 8: Inventories: Measurement

Dollar-value LIFO:

-Required: Compute the January 31 ending inventory and cost of goods sold for January, assuming Denver uses LIFO and a periodic inventory system.

During periods of falling prices, LIFO ending inventory will be less than FIFO ending inventory.

Listed below are 10 terms, followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term. -Dollar-value LIFO

One difference between periodic and perpetual inventory systems is:

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Cost index

-Required: Compute the January 31 ending inventory and cost of goods sold for January, assuming Random Creations uses average cost and a periodic inventory system.

Which of the following is false regarding the FIFO inventory method?

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -LIFO

Company A is identical to Company B in every regard except that Company A uses FIFO and Company B uses LIFO. In an extended period of rising inventory costs, Company A's gross profit and inventory turnover ratio, compared to Company B's, would be:

Nueva Company reported the following pretax data for its first year of operations. - What is Nueva's gross profit ratio (rounded) if it elects FIFO?

Net purchases are reduced for discounts taken whether the net method is used or the gross method is used.

Ramen Inc. adopted dollar-value LIFO (DVL) as of January 1, 2018, when it had a cost inventory of $600,000. Its inventory as of December 31, 2018, was $667,800 at year-end costs and the cost index was 1.06. What was DVL inventory on December 31, 2018?

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Raw materials

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, Comprehensive Income, and the Statement of Cash Flows

Revenue Recognition

Time Value of Money Concepts

Cash and Receivables

Inventories: Additional Issues

Property, Plant, and Equipment and Intangible Assets: Acquisition

Property, Plant, and Equipment and Intangible Assets: Utilization and Disposition

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes and Error Corrections

The Statement of Cash Flows Revisited

Filters