Question 1

The use of LIFO in accounting for a firm's inventory:

Accepted Answer

A)  Usually matches the physical flow of goods through the business. 
B)  Is usually used for internal management purposes. 
C)  Usually provides a better match of expenses with revenues. 
D)  None of these answer choices are correct. 
A)  Usually matches the physical flow of goods through the business. 
B)  Is usually used for internal management purposes. 
C)  Usually provides a better match of expenses with revenues. 
D)  None of these answer choices are correct.

Question 2

Buckeye Corporation adopted dollar-value LIFO on January 1, 2018, when the inventory value was $500,000 and the cost index was 1.0. On December 31, 2018, the inventory value at year-end costs was $535,000 and the cost index was 1.06. Buckeye would report a LIFO inventory of:

Accepted Answer

A)  $504,717. 
B)  $530,000. 
C)  $505,000. 
D)  $533,019. 
A)  $504,717. 
B)  $530,000. 
C)  $505,000. 
D)  $533,019.

Question 3

Listed below are 10 terms, followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term.
-F.o.b. destination

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 4

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

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 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.
-LIFO conformity rule

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

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

Accepted Answer

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

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 flow assumption

Accepted Answer

A) Not feasible for many types of products. 
B) Not required to correspond to actual product flow. 
C) Legal title passes when goods are delivered to common carrier. 
D) Legal title passes when goods arrive at customer location. 
E) Making sure goods in transit are properly accounted for. 
A) Not feasible for many types of products. 
B) Not required to correspond to actual product flow. 
C) Legal title passes when goods are delivered to common carrier. 
D) Legal title passes when goods arrive at customer location. 
E) Making sure goods in transit are properly accounted for.

Question 8

Cinnamon Buns Co. (CBC) started 2018 with $52,000 of merchandise on hand. During 2018, $280,000 in merchandise was purchased on account with credit terms of 2/10, n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $9,000. Merchandise with an invoice amount of $4,000 was returned for credit. Cost of goods sold for the year was $316,000. CBC uses a perpetual inventory system.
- Assuming CBC uses the gross method to record purchases, ending inventory would be:

Accepted Answer

A)  $6,480. 
B)  $15,400. 
C)  $15,480. 
D)  $21,000. 
A)  $6,480. 
B)  $15,400. 
C)  $15,480. 
D)  $21,000.

Question 9

Briefly explain the advantages of dollar-value LIFO (DVL).

Accepted Answer

DVL is less costly to apply than unit LI

Question 10

Briefly explain how companies that use LIFO can both increase and decrease reported earnings by "managing" ending inventories.

Accepted Answer

A company that uses LIFO can manipulate

Question 11

Nu Company reported the following pretax data for its first year of operations.  
- What is Nu's gross profit ratio if it elects LIFO?

Accepted Answer

A)  80%. 
B)  49%. 
C)  40%. 
D)  5%. 
A)  80%. 
B)  49%. 
C)  40%. 
D)  5%.

Question 12

The Genworth Company adopted the dollar-value LIFO method on January 1, 2018 when the inventory value of its one inventory pool was $450,000. The company decided to use an external index, the Consumer Price Index (CPI), to adjust for changes in the cost level. On January 1, 2018, the CPI was 280. On December 31, 2018, inventory valued at year-end cost was $504,000 and the CPI was 294.
Required:
Calculate the inventory value at the end of 2018 using the dollar-value LIFO method.

Accepted Answer

Set the base year, 1

Question 13

Inventory costing methods are merely means by which costs are allocated between ending inventory and cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 14

In a perpetual average cost system:

Accepted Answer

A)  A new weighted-average unit cost is calculated each time additional units are purchased. 
B)  The cost allocated to ending inventory is generally the same as it would be in a periodic inventory system. 
C)  The moving-average unit cost is determined following each sale. 
D)  The average is determined by dividing the total number of units sold by the cost of units purchased during the period. 
A)  A new weighted-average unit cost is calculated each time additional units are purchased. 
B)  The cost allocated to ending inventory is generally the same as it would be in a periodic inventory system. 
C)  The moving-average unit cost is determined following each sale. 
D)  The average is determined by dividing the total number of units sold by the cost of units purchased during the period.

Question 15

In a periodic inventory system, the cost of purchases is debited to:

Accepted Answer

A)  Purchases. 
B)  Cost of goods sold. 
C)  Inventory. 
D)  Accounts payable. 
A)  Purchases. 
B)  Cost of goods sold. 
C)  Inventory. 
D)  Accounts payable.

Question 16

The following information is taken from the accounting records of Madeline Inc. for the year 2018. Missing information has been left blank. Inventory is the only supply that Madeline purchases on credit.

Required: Compute the missing amounts.

-

Accepted Answer

The answer of The following information is taken from the...

Question 17

Listed below are 10 terms, followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term.
-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 18

Inventory records for Herb's Chemicals revealed the following: March 1, 2018, inventory: 1,000 gallons @ $7.20 = $7,200  
- Ending inventory assuming LIFO in a periodic inventory system would be:

Accepted Answer

A)  $5,040. 
B)  $5,055. 
C)  $5,075. 
D)  $5,135. 
A)  $5,040. 
B)  $5,055. 
C)  $5,075. 
D)  $5,135.

Question 19

Spando Apparel uses the LIFO inventory method for external reporting and for income tax purposes but maintains its internal records using FIFO. The following disclosure note was included in a recent annual report:
 
The company's income statement reported cost of goods sold of $3,120 million for the fiscal year ended December 31, 2018.
Required:
1. Spando adjusts the LIFO reserve at the end of its fiscal year. Prepare the December 31, 2018, adjusting entry to record the cost of goods sold adjustment.
2. If Spando had used FIFO to value its inventories, what would cost of goods sold have been for the 2018 fiscal year?

Accepted Answer

The answer of Spando Apparel uses the LIFO inventory method...

Question 20

Cinnamon Buns Co. (CBC) started 2018 with $52,000 of merchandise on hand. During 2018, $280,000 in merchandise was purchased on account with credit terms of 2/10, n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $9,000. Merchandise with an invoice amount of $4,000 was returned for credit. Cost of goods sold for the year was $316,000. CBC uses a perpetual inventory system. 
-What is cost of goods available for sale, assuming CBC uses the gross method?

Accepted Answer

A)  $312,480. 
B)  $326,000. 
C)  $331,480. 
D)  $337,000. 
A)  $312,480. 
B)  $326,000. 
C)  $331,480. 
D)  $337,000.

The use of LIFO in accounting for a firm's inventory:

Buckeye Corporation adopted dollar-value LIFO on January 1, 2018, when the inventory value was $500,000 and the cost index was 1.0. On December 31, 2018, the inventory value at year-end costs was $535,000 and the cost index was 1.06. Buckeye would report a LIFO inventory of:

Listed below are 10 terms, followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term. -F.o.b. destination

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

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

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

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 flow assumption

Briefly explain the advantages of dollar-value LIFO (DVL).

Briefly explain how companies that use LIFO can both increase and decrease reported earnings by "managing" ending inventories.

Nu Company reported the following pretax data for its first year of operations. - What is Nu's gross profit ratio if it elects LIFO?

Inventory costing methods are merely means by which costs are allocated between ending inventory and cost of goods sold.

In a perpetual average cost system:

In a periodic inventory system, the cost of purchases is debited to:

The following information is taken from the accounting records of Madeline Inc. for the year 2018. Missing information has been left blank. Inventory is the only supply that Madeline purchases on credit. Required: Compute the missing amounts. -

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

Inventory records for Herb's Chemicals revealed the following: March 1, 2018, inventory: 1,000 gallons @ $7.20 = $7,200 - Ending inventory assuming LIFO in a periodic inventory system would be:

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

The use of LIFO in accounting for a firm's inventory:

Buckeye Corporation adopted dollar-value LIFO on January 1, 2018, when the inventory value was $500,000 and the cost index was 1.0. On December 31, 2018, the inventory value at year-end costs was $535,000 and the cost index was 1.06. Buckeye would report a LIFO inventory of:

Listed below are 10 terms, followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term. -F.o.b. destination

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

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

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

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 flow assumption

Briefly explain the advantages of dollar-value LIFO (DVL).

Briefly explain how companies that use LIFO can both increase and decrease reported earnings by "managing" ending inventories.

Nu Company reported the following pretax data for its first year of operations. - What is Nu's gross profit ratio if it elects LIFO?

Inventory costing methods are merely means by which costs are allocated between ending inventory and cost of goods sold.

In a perpetual average cost system:

In a periodic inventory system, the cost of purchases is debited to:

The following information is taken from the accounting records of Madeline Inc. for the year 2018. Missing information has been left blank. Inventory is the only supply that Madeline purchases on credit. Required: Compute the missing amounts. -

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

Inventory records for Herb's Chemicals revealed the following: March 1, 2018, inventory: 1,000 gallons @ $7.20 = $7,200 - Ending inventory assuming LIFO in a periodic inventory system would be:

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