Question 1

Purchases equal the invoice amount:

Accepted Answer

A)  Plus freight-in, plus discounts lost. 
B)  Less purchase returns, plus purchase allowances. 
C)  Plus freight-in, less purchase discounts. 
D)  Plus discounts, less purchase returns. 
A)  Plus freight-in, plus discounts lost. 
B)  Less purchase returns, plus purchase allowances. 
C)  Plus freight-in, less purchase discounts. 
D)  Plus discounts, less purchase returns.

Question 2

The Mateo Corporation's inventory at December 31, 2018, was $325,000 based on a physical count priced at cost, and before any necessary adjustment for the following:

Merchandise costing $30,000, shipped f.o.b. shipping point from a vendor on December 30, 2018, was received on January 5, 2019. 
Merchandise costing $22,000, shipped f.o.b. destination from a vendor on December 28, 2018, was received on January 3, 2019. 
Merchandise costing $38,000 was shipped to a customer f.o.b. destination on December 28, arrived at the customer's location on January 6, 2019. 
Merchandise costing $12,000 was being held on consignment by Traynor Company.

What amount should Mateo Corporation report as inventory in its December 31, 2018, balance sheet?

Accepted Answer

A)  $367,000. 
B)  $427,000. 
C)  $405,000. 
D)  $325,000. 
A)  $367,000. 
B)  $427,000. 
C)  $405,000. 
D)  $325,000.

Question 3

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 pools

Accepted Answer

A) Units grouped according to similarities. 
B) Captured by FIFO for perishable products. 
C) Considered a product cost. 
D) Reduces the quality of current period earnings information. 
E) Continuously records changes in inventory. 
A) Units grouped according to similarities. 
B) Captured by FIFO for perishable products. 
C) Considered a product cost. 
D) Reduces the quality of current period earnings information. 
E) Continuously records changes in inventory.

Question 4

Inventory records for Herb's Chemicals revealed the following: March 1, 2018, inventory: 1,000 gallons @ $7.20 = $7,200  
- The ending inventory under a periodic inventory system assuming average cost (rounding unit cost to three decimal places) is:

Accepted Answer

A)  $5,087. 
B)  $5,107. 
C)  $5,077. 
D)  $5,005. 
A)  $5,087. 
B)  $5,107. 
C)  $5,077. 
D)  $5,005.

Question 5

A company that prepares its financial statements according to International Financial Reporting Standards (IFRS) can use each of the following inventory valuation methods except:

Accepted Answer

A)  Average cost. 
B)  FIFO. 
C)  LIFO. 
D)  All of these methods can be used. 
A)  Average cost. 
B)  FIFO. 
C)  LIFO. 
D)  All of these methods can be used.

Question 6

Udon Inc. adopted dollar-value LIFO (DVL) as of January 1, 2018, when it had an inventory of $700,000. Its inventory as of December 31, 2018, was $777,000 at year-end costs and the cost index was 1.05. What was DVL inventory on December 31, 2018?

Accepted Answer

A)  $735,000. 
B)  $740,000. 
C)  $742,000. 
D)  $777,000. 
A)  $735,000. 
B)  $740,000. 
C)  $742,000. 
D)  $777,000.

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.
-Net method

Accepted Answer

A) Most recent purchases will be included in ending inventory. 
B) 1 - (Cost of goods sold Net sales). 
C) Purchase discounts not taken are included in inventory. 
D) Products that are not yet complete. 
E) Purchase discounts not taken are considered interest expense. 
A) Most recent purchases will be included in ending inventory. 
B) 1 - (Cost of goods sold Net sales). 
C) Purchase discounts not taken are included in inventory. 
D) Products that are not yet complete. 
E) Purchase discounts not taken are considered interest expense.

Question 8

Unit LIFO is more costly to implement than dollar-value LIFO.

Accepted Answer

A) True 
 B)False

Question 9

The Constance Corporation's inventory at December 31, 2018, was $125,000 (at cost) based on a physical count of inventory on hand, before any necessary adjustment for the following: Merchandise costing $15,000, shipped f.o.b. shipping point from a vendor on December 27, 2019, was received by Constance on January 5, 2019.
Merchandise costing $45,000 was shipped to a customer f.o.b. shipping point on December 28, 2018, arrived at the customer's location on January 6, 2019.
Merchandise costing $21,000 was being held on hand for Jess Company on consignment.
Estimated sales returns are 10% of annual sales. Sales revenue was $550,000 with a gross profit ratio of 25%.
What amount should Constance Corporation report as inventory in its December 31, 2018, balance sheet?

Accepted Answer

A)  $160,250. 
B)  $145,250. 
C)  $187,250. 
D)  $190,250. 
A)  $160,250. 
B)  $145,250. 
C)  $187,250. 
D)  $190,250.

Question 10

The table below contains selected financial information from recent financial statements of KBI Toys and Little Tikes Adventure Toys, Inc., two toy manufacturing companies ($ in thousands):
 
Required:
Calculate the 2018 gross profit ratio, inventory turnover ratio, and the average days in inventory for the two companies (rounded).

Accepted Answer

($ in thousands)
KBI Toys Litt

Question 11

Modern Day Appliances, Inc. is a wholesaler of kitchen appliances. The company uses a periodic inventory system and the LIFO cost method. Modern Day's December 31, 2018, fiscal year-end inventory of its main product, double-door stainless steel refrigerators, consisted of the following (listed in chronological order of acquisition):
 
The replacement cost of the refrigerators throughout 2019 was $900. Modern Day sold 5,000 of these refrigerators during 2019. The company's selling price throughout 2019 was $1,200.

Required: 
1. 	Compute the gross profit (sales minus cost of goods sold) and the gross profit ratio for 2019 assuming that Modern Day purchased 5,200 units during the year.
2.	Repeat requirement 1 assuming that Modern Day purchased only 4,500 units.
3.	For requirements 1 and 2, what amount of before-tax LIFO liquidation profit or loss would Modern Day report in its 2019 disclosure notes, if any, assuming any calculated amount is material?

Accepted Answer

1.
Sales (5,000 units x $1,200) $6,000,0

Question 12

The inventories disclosure note in the 2014 financial statements for SUPERVALU Inc., one of the largest grocery chains in the United States, included the following:

"During fiscal 2014, 2013 and 2012, inventory quantities in certain LIFO layers were reduced. These reductions resulted in a liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years as compared with the cost of fiscal 2014, 2013 and 2012 purchases. As a result, Cost of sales decreased by $14, $6 and $9 in fiscal 2014, 2013 and 2012, respectively. All inventories are stated at the lower of cost or current market values. Cost for inventories at the majority of our operations is determined on a last-in, first-out ("LIFO") basis."

-What additional income tax payments did the 2014 liquidation cost SUPERVALU?

Accepted Answer

$14 millio

Question 13

Cost of goods sold is given by:

Accepted Answer

A)  Beginning inventory − net purchases + ending inventory. 
B)  Beginning inventory + accounts payable − net purchases. 
C)  Net purchases + ending inventory − beginning inventory. 
D)  Net Purchases + beginning inventory − ending inventory. 
A)  Beginning inventory − net purchases + ending inventory. 
B)  Beginning inventory + accounts payable − net purchases. 
C)  Net purchases + ending inventory − beginning inventory. 
D)  Net Purchases + beginning inventory − ending inventory.

Question 14

On January 1, 2017, RAY Co. adopted the dollar-value LIFO method for its one inventory pool. The pool's value on this date was $300 million. The 12/31/2017 inventory valued at year-end costs was $385 million. The 12/31/2017 inventory, using dollar-value LIFO was $355 million.
Required:
Calculate 2017 cost index for RAY's inventory.

Accepted Answer

The answer of On January 1, 2017, RAY Co. adopted...

Question 15

Briefly explain when there would be a tax benefit from electing LIFO rather than FIFO.

Accepted Answer

In periods of rising costs, LIFO provide

Question 16

Carmen Inc., producer of high-tech boating equipment, disclosed the following information in its 2018 annual report to shareholders:
Inventories are valued at the lower of cost or net realizable value with cost determined by the last-in, first-out (LIFO) method for inventories.
Inventories at May 31 were as follows:     How does the supplemental LIFO information indicating what the value of ending inventory would have been if measured using FIFO improve the quality of financial reporting by Carmen?

Accepted Answer

By providing this information, external

Question 17

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 18

Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition): 40 units at $100
70 units at $80
170 units at $60
Sales for the year totaled 270 units, leaving 10 units on hand at the end of the year.
-
Ending inventory using the FIFO method is:

Accepted Answer

A)  $650. 
B)  $1,000. 
C)  $707. 
D)  $600. 
A)  $650. 
B)  $1,000. 
C)  $707. 
D)  $600.

Question 19

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 20

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

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.

Purchases equal the invoice amount:

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 pools

Inventory records for Herb's Chemicals revealed the following: March 1, 2018, inventory: 1,000 gallons @ $7.20 = $7,200 - The ending inventory under a periodic inventory system assuming average cost (rounding unit cost to three decimal places) is:

A company that prepares its financial statements according to International Financial Reporting Standards (IFRS) can use each of the following inventory valuation methods except:

Udon Inc. adopted dollar-value LIFO (DVL) as of January 1, 2018, when it had an inventory of $700,000. Its inventory as of December 31, 2018, was $777,000 at year-end costs and the cost index was 1.05. 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. -Net method

Unit LIFO is more costly to implement than dollar-value LIFO.

Cost of goods sold is given by:

Briefly explain when there would be a tax benefit from electing LIFO rather than FIFO.

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. -

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. -FIFO

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

Purchases equal the invoice amount:

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 pools

Inventory records for Herb's Chemicals revealed the following: March 1, 2018, inventory: 1,000 gallons @ $7.20 = $7,200 - The ending inventory under a periodic inventory system assuming average cost (rounding unit cost to three decimal places) is:

A company that prepares its financial statements according to International Financial Reporting Standards (IFRS) can use each of the following inventory valuation methods except:

Udon Inc. adopted dollar-value LIFO (DVL) as of January 1, 2018, when it had an inventory of $700,000. Its inventory as of December 31, 2018, was $777,000 at year-end costs and the cost index was 1.05. 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. -Net method

Unit LIFO is more costly to implement than dollar-value LIFO.

Cost of goods sold is given by:

Briefly explain when there would be a tax benefit from electing LIFO rather than FIFO.

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. -

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. -FIFO

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