Question 1

The gross profit ratio is calculated by dividing gross profit by average inventory.

Accepted Answer

A) True 
 B)False

Question 2

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.
-FIFO

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 3

Nueva Company reported the following pretax data for its first year of operations.  
- What is Nueva's net income if it elects LIFO?

Accepted Answer

A)  $440. 
B)  $264. 
C)  $620. 
D)  $372. 
A)  $440. 
B)  $264. 
C)  $620. 
D)  $372.

Question 4

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.
-Freight-in

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 5

Under the net method, purchase discounts lost are:

Accepted Answer

A)  Included in purchases. 
B)  Added to accounts payable. 
C)  Included in interest expense. 
D)  Deducted from discount income. 
A)  Included in purchases. 
B)  Added to accounts payable. 
C)  Included in interest expense. 
D)  Deducted from discount income.

Question 6

It is the end of the accounting period, and your boss asks you to help determine the inventory balance to place in the company's balance sheet. Explain which physical quantities of inventory that you will include and which you will exclude.

Accepted Answer

Taking a physical inventory is a necessa

Question 7

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

Accepted Answer

Periodic Average Cos

Question 8

Nu Company reported the following pretax data for its first year of operations.  
- What is Nu's net income if it elects FIFO?

Accepted Answer

A)  $480. 
B)  $288. 
C)  $1,360. 
D)  $144. 
A)  $480. 
B)  $288. 
C)  $1,360. 
D)  $144.

Question 9

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.
-Specific identification method

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 10

Compared to dollar-value LIFO, unit LIFO is:

Accepted Answer

A)  Less costly to implement. 
B)  Less susceptible to LIFO liquidation. 
C)  More costly to implement. 
D)  More concerned with cost indexes. 
A)  Less costly to implement. 
B)  Less susceptible to LIFO liquidation. 
C)  More costly to implement. 
D)  More concerned with cost indexes.

Question 11

In a period when costs are falling and inventory quantities are stable, the lowest taxable income would be reported by using the inventory method of:

Accepted Answer

A)  Weighted average. 
B)  LIFO. 
C)  Moving average. 
D)  FIFO. 
A)  Weighted average. 
B)  LIFO. 
C)  Moving average. 
D)  FIFO.

Question 12

On January 1, 2018, Badger Inc. adopted the dollar-value LIFO method. The inventory cost on this date was $100,000. The ending inventory, valued at year-end costs, and the relative cost index for each of the next three years is below:  
- In determining the inventory balance should Badger report in its 12/31/2019 balance sheet:

Accepted Answer

A)  An additional layer of $23,000 is added to the 1/1/2019 balance. 
B)  An additional layer of $22,000 is added to the 1/1/2019 balance. 
C)  An additional layer of $11,000 is added to the 1/1/2019 balance. 
D)  None of these answer choices are correct. 
A)  An additional layer of $23,000 is added to the 1/1/2019 balance. 
B)  An additional layer of $22,000 is added to the 1/1/2019 balance. 
C)  An additional layer of $11,000 is added to the 1/1/2019 balance. 
D)  None of these answer choices are correct.

Question 13

The following information comes from the 2013 Occidental Petroleum Corporation annual report to shareholders:
NOTE 4 INVENTORIES
Net carrying values of inventories valued under the LIFO method were approximately $205 million and $185 million at December 31, 2013 and 2012, respectively. Inventories consisted of the following: ($ in millions)   The LIFO reserve indicates that inventories would have been $91 million and 101 million higher at the end of 2013 and 2012, respectively, if Occidental Petroleum had used FIFO to value its entire inventory.
Required:
If Occidental Petroleum had used FIFO to value its entire inventory how would its 2013 pre-tax income be affected?

Accepted Answer

Cost of goods sold for 2013 would have b

Question 14

In a perpetual 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 15

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.
-Gross profit ratio

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 16

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

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 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.
-F.o.b. shipping point

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

Appleton Inc. adopted dollar-value LIFO on January 1, 2018, when the inventory value was $1,200,000. The December 31, 2018, ending inventory at year-end costs was $1,430,000 and the cost index for the year is 1.1.
Required:
Compute the dollar-value LIFO inventory valuation for the December 31, 2018, inventory.

Accepted Answer

The answer of Appleton Inc. adopted dollar-value LIFO on January...

Question 19

HH Company uses LIFO. HH disclosed that if FIFO had been used, inventory at the end of 2018 would have been $20 million lower than the difference between LIFO and FIFO at the end of 2017. Assuming HH has a 30% income tax rate:

Accepted Answer

A)  Its reported cost of goods for 2018 would have been $14 million less if it had used FIFO rather than LIFO for its financial statements. 
B)  Its reported cost of goods for 2018 would have been $20 million less if it had used FIFO rather than LIFO for its financial statements. 
C)  Its reported cost of goods sold for 2018 would have been $14 million higher if it had used FIFO rather than LIFO for its financial statements. 
D)  Its reported cost of goods sold for 2018 would have been $20 million higher if it had used FIFO rather than LIFO for its financial statements. 
A)  Its reported cost of goods for 2018 would have been $14 million less if it had used FIFO rather than LIFO for its financial statements. 
B)  Its reported cost of goods for 2018 would have been $20 million less if it had used FIFO rather than LIFO for its financial statements. 
C)  Its reported cost of goods sold for 2018 would have been $14 million higher if it had used FIFO rather than LIFO for its financial statements. 
D)  Its reported cost of goods sold for 2018 would have been $20 million higher if it had used FIFO rather than LIFO for its financial statements.

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.
-Average cost

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.

The gross profit ratio is calculated by dividing gross profit by average inventory.

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. -FIFO

Nueva Company reported the following pretax data for its first year of operations. - What is Nueva's net income if it elects LIFO?

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. -Freight-in

Under the net method, purchase discounts lost are:

It is the end of the accounting period, and your boss asks you to help determine the inventory balance to place in the company's balance sheet. Explain which physical quantities of inventory that you will include and which you will exclude.

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

Nu Company reported the following pretax data for its first year of operations. - What is Nu's net income if it elects 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. -Specific identification method

Compared to dollar-value LIFO, unit LIFO is:

In a period when costs are falling and inventory quantities are stable, the lowest taxable income would be reported by using the inventory method of:

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

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. -Gross profit ratio

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

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. shipping point

HH Company uses LIFO. HH disclosed that if FIFO had been used, inventory at the end of 2018 would have been $20 million lower than the difference between LIFO and FIFO at the end of 2017. Assuming HH has a 30% income tax rate:

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. -Average cost

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 gross profit ratio is calculated by dividing gross profit by average inventory.

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. -FIFO

Nueva Company reported the following pretax data for its first year of operations. - What is Nueva's net income if it elects LIFO?

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. -Freight-in

Under the net method, purchase discounts lost are:

It is the end of the accounting period, and your boss asks you to help determine the inventory balance to place in the company's balance sheet. Explain which physical quantities of inventory that you will include and which you will exclude.

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

Nu Company reported the following pretax data for its first year of operations. - What is Nu's net income if it elects 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. -Specific identification method

Compared to dollar-value LIFO, unit LIFO is:

In a period when costs are falling and inventory quantities are stable, the lowest taxable income would be reported by using the inventory method of:

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

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. -Gross profit ratio

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

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. shipping point

HH Company uses LIFO. HH disclosed that if FIFO had been used, inventory at the end of 2018 would have been $20 million lower than the difference between LIFO and FIFO at the end of 2017. Assuming HH has a 30% income tax rate:

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. -Average cost

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