Question 1

LL Co. has several retail clothing stores with an inventory turnover of 2. LL Co. should be pleased with its turnover rate.

Accepted Answer

A) True 
 B)False

Question 2

Use the following information to answer questions 
Andrews Company uses the retail inventory method to value its merchandise inventory. The following information is available:  
-What is the cost-to-retail percentage? (Round to the nearest percentage.)

Accepted Answer

A)  50% 
B)  60% 
C)  62% 
D)  64% 
E)  74% 
A)  50% 
B)  60% 
C)  62% 
D)  64% 
E)  74%

Question 3

The FIFO method of inventory costing

Accepted Answer

A)  assumes that the goods acquired first are the first ones sold, leaving the oldest costs in ending inventory. 
B)  uses the per unit costs of the most recently acquired goods to determine the cost of goods sold. 
C)  requires businesses to sell the oldest inventory units first. 
D)  yields a lower net income than the LIFO method in an inflationary environment when these methods are applied to the same financial data. 
E)  assumes that the goods acquired first are the first ones sold, leaving the newest costs in ending inventory. 
A)  assumes that the goods acquired first are the first ones sold, leaving the oldest costs in ending inventory. 
B)  uses the per unit costs of the most recently acquired goods to determine the cost of goods sold. 
C)  requires businesses to sell the oldest inventory units first. 
D)  yields a lower net income than the LIFO method in an inflationary environment when these methods are applied to the same financial data. 
E)  assumes that the goods acquired first are the first ones sold, leaving the newest costs in ending inventory.

Question 4

The following information applied to Candy Co. for the current year:
 
The company would have debited Inventory for a total of what amount during the current year ?

Accepted Answer

A)  $ 99,500 
B)  $100,800 
C)  $104,500 
D)  $106,500 
E)  none of the above 
A)  $ 99,500 
B)  $100,800 
C)  $104,500 
D)  $106,500 
E)  none of the above

Question 5

FIFO provides a better matching of revenue and expenses than LIFO does.

Accepted Answer

A) True 
 B)False

Question 6

On June 25, 2010, Crusaders Co. purchased goods costing $20,000, terms were FOB destination. The following costs were incurred in connection with the delivery of the goods:
 
The goods were received on June 30, 2010. How much of these costs should be included in Crusaders' June 30, 2010 balance sheet?

Accepted Answer

A)  $20,000 
B)  $21,500 
C)  $22,500 
D)  $23,000 
E)  all of the above 
A)  $20,000 
B)  $21,500 
C)  $22,500 
D)  $23,000 
E)  all of the above

Question 7

In a periodic system, temporary accounts are used to record the transactions associated with acquiring inventory.

Accepted Answer

A) True 
 B)False

Question 8

All goods that a business sells, or converts into saleable goods, to customers are known as

Accepted Answer

A)  accounts receivable. 
B)  inventory. 
C)  plant, property, and equipment. 
D)  intangibles. 
E)  revenues. 
A)  accounts receivable. 
B)  inventory. 
C)  plant, property, and equipment. 
D)  intangibles. 
E)  revenues.

Question 9

Use the following information to answer questions 
On December 31, 2009, the Italian Pasta Company's ending inventory consisted of 100 bags of fettuccine at a cost of $0.75 per bag. Throughout January 2010, the Italian Pasta Company purchased and sold additional bags of fettuccine. Refer to the table below for additional information.
  
-Assume that the Italian Pasta Company uses a moving average inventory system. (Round each calculation to nearest cent.) Cost of goods sold for January 2010 is

Accepted Answer

A)  $450. 
B)  $454. 
C)  $456 
D)  $458. 
E)  $463. 
A)  $450. 
B)  $454. 
C)  $456 
D)  $458. 
E)  $463.

Question 10

On October 1, 2010, Shoe World purchased 100 pairs of tennis shoes at $30 per pair from Run Mfg. On October 3, Sally Jacobs bought three pair of the tennis shoes at $45 per pair. On October 11, Jacobs returned two pair of shoes to Shoe World, which uses a perpetual inventory system. Shoe World should recognize a

Accepted Answer

A)  $60 decrease in its purchases account. 
B)  $60 increase in its purchases returns account. 
C)  $60 increase in its inventory account. 
D)  $30 decrease in its inventory account. 
E)  $60 increase in its sales returns account. 
A)  $60 decrease in its purchases account. 
B)  $60 increase in its purchases returns account. 
C)  $60 increase in its inventory account. 
D)  $30 decrease in its inventory account. 
E)  $60 increase in its sales returns account.

Question 11

A change in inventory methods will make inventory ratios increase.

Accepted Answer

A) True 
 B)False

Question 12

In periods of continuously rising prices, use of LIFO rather than the FIFO inventory method will have what effect on the following items?

Accepted Answer

The answer of In periods of continuously rising prices, use...

Question 13

Reductions in the amount owed to a supplier granted as a result of defective goods are

Accepted Answer

A)  purchase allowances. 
B)  purchase discounts. 
C)  purchase returns. 
D)  sales allowances. 
E)  sales discounts. 
A)  purchase allowances. 
B)  purchase discounts. 
C)  purchase returns. 
D)  sales allowances. 
E)  sales discounts.

Question 14

Which of the following reflects the equation for cost of goods available for sale?

Accepted Answer

A)  beginning inventory - purchases + purchase returns - purchases discounts + freight in charges 
B)  beginning inventory + purchases - purchase returns - purchases discounts + freight in charges 
C)  beginning inventory + purchases - purchase returns - purchases discounts + freight in charges - ending inventory 
D)  ending inventory + purchases - purchase returns - purchases discounts + freight in charges - beginning inventory 
E)  beginning inventory + purchases - purchase returns - purchases discounts + freight in charges - freight out - ending inventory 
A)  beginning inventory - purchases + purchase returns - purchases discounts + freight in charges 
B)  beginning inventory + purchases - purchase returns - purchases discounts + freight in charges 
C)  beginning inventory + purchases - purchase returns - purchases discounts + freight in charges - ending inventory 
D)  ending inventory + purchases - purchase returns - purchases discounts + freight in charges - beginning inventory 
E)  beginning inventory + purchases - purchase returns - purchases discounts + freight in charges - freight out - ending inventory

Question 15

Cost of goods available for sale is equal to beginning inventory plus net purchases minus ending inventory.

Accepted Answer

A) True 
 B)False

Question 16

In a retail store, an inventory write-down related to the use of lower-of-cost-or-market would be debited to Merchandise Inventory.

Accepted Answer

A) True 
 B)False

Question 17

A high rate of inventory turnover decreases the risk of inventory obsolescence.

Accepted Answer

A) True 
 B)False

Question 18

The table following information is available about Grapevine's April 2010 inventory transactions.
?  
Required:
A)	Assume that Grapevine uses a FIFO perpetual inventory system. Compute Grapevine's cost of goods sold and ending inventory in dollars at April 30, 2010.
B)	Assume that Grapevine uses a LIFO perpetual inventory system. Compute Grapevine's cost of goods sold and ending inventory in dollars at April 30, 2010.
C)	Assume that Grapevine uses a moving-average inventory system. Compute Grapevine's cost of goods sold and ending inventory in dollars at April 30, 2010. Round per-unit computations to the nearest penny.

Accepted Answer

The answer of The table following information is available about...

Question 19

To minimize taxes in an inflationary environment, companies would use the

Accepted Answer

A)  retail inventory method. 
B)  FIFO inventory method. 
C)  LIFO inventory method. 
D)  moving average inventory method. 
E)  IFRS inventory method. 
A)  retail inventory method. 
B)  FIFO inventory method. 
C)  LIFO inventory method. 
D)  moving average inventory method. 
E)  IFRS inventory method.

Question 20

In a perpetual inventory system, two entries are required when goods are returned by a customer to a vendor.

Accepted Answer

A) True 
 B)False

LL Co. has several retail clothing stores with an inventory turnover of 2. LL Co. should be pleased with its turnover rate.

Use the following information to answer questions Andrews Company uses the retail inventory method to value its merchandise inventory. The following information is available: -What is the cost-to-retail percentage? (Round to the nearest percentage.)

The FIFO method of inventory costing

The following information applied to Candy Co. for the current year: The company would have debited Inventory for a total of what amount during the current year ?

FIFO provides a better matching of revenue and expenses than LIFO does.

On June 25, 2010, Crusaders Co. purchased goods costing $20,000, terms were FOB destination. The following costs were incurred in connection with the delivery of the goods: The goods were received on June 30, 2010. How much of these costs should be included in Crusaders' June 30, 2010 balance sheet?

In a periodic system, temporary accounts are used to record the transactions associated with acquiring inventory.

All goods that a business sells, or converts into saleable goods, to customers are known as

A change in inventory methods will make inventory ratios increase.

In periods of continuously rising prices, use of LIFO rather than the FIFO inventory method will have what effect on the following items?

Reductions in the amount owed to a supplier granted as a result of defective goods are

Which of the following reflects the equation for cost of goods available for sale?

Cost of goods available for sale is equal to beginning inventory plus net purchases minus ending inventory.

In a retail store, an inventory write-down related to the use of lower-of-cost-or-market would be debited to Merchandise Inventory.

A high rate of inventory turnover decreases the risk of inventory obsolescence.

To minimize taxes in an inflationary environment, companies would use the

In a perpetual inventory system, two entries are required when goods are returned by a customer to a vendor.

An Introduction to the Role of Accounting in the Business World

Concepts and Elements Underlying Accounting

The Mechanics of Double-Entry Bookkeeping

Cash, Short-Term Investments and Accounts Receivable

Long-Term Assets: Property, Plant Equipment and Intangibles

Liabilities

Stockholders Equity

The Corporate Income Statement and Financial Analysis

Statement of Cash Flows

Managerial Accounting

Cost-Volume-Profit Analysis

The Master Budget

Activity-Based Management and Performance Measurementreward

Filters

Exam 5: Inventory

LL Co. has several retail clothing stores with an inventory turnover of 2. LL Co. should be pleased with its turnover rate.

Use the following information to answer questions Andrews Company uses the retail inventory method to value its merchandise inventory. The following information is available: -What is the cost-to-retail percentage? (Round to the nearest percentage.)

The FIFO method of inventory costing

The following information applied to Candy Co. for the current year: The company would have debited Inventory for a total of what amount during the current year ?

FIFO provides a better matching of revenue and expenses than LIFO does.

In a periodic system, temporary accounts are used to record the transactions associated with acquiring inventory.

All goods that a business sells, or converts into saleable goods, to customers are known as

A change in inventory methods will make inventory ratios increase.

In periods of continuously rising prices, use of LIFO rather than the FIFO inventory method will have what effect on the following items?

Reductions in the amount owed to a supplier granted as a result of defective goods are

Which of the following reflects the equation for cost of goods available for sale?

Cost of goods available for sale is equal to beginning inventory plus net purchases minus ending inventory.

In a retail store, an inventory write-down related to the use of lower-of-cost-or-market would be debited to Merchandise Inventory.

A high rate of inventory turnover decreases the risk of inventory obsolescence.

To minimize taxes in an inflationary environment, companies would use the

In a perpetual inventory system, two entries are required when goods are returned by a customer to a vendor.

An Introduction to the Role of Accounting in the Business World

Concepts and Elements Underlying Accounting

The Mechanics of Double-Entry Bookkeeping

Cash, Short-Term Investments and Accounts Receivable

Long-Term Assets: Property, Plant Equipment and Intangibles

Liabilities

Stockholders Equity

The Corporate Income Statement and Financial Analysis

Statement of Cash Flows

Managerial Accounting

Cost-Volume-Profit Analysis

The Master Budget

Activity-Based Management and Performance Measurementreward

Filters