Exam 6: Inventory

The inventory turnover ratio is normally computed for:

Which of the following is an INCORRECT statement if ending inventory is understated?

Manufacturers generally purchase large amounts of products from wholesalers and resell them to retailers.

An error on inventory in one year does not have any effect on the inventory at the start of the next year.

An example of full disclosure would be a footnote to the financial statements indicating what method was used to value inventory.

Compare the effects of the different costing methods on the financial statements -If a company wants a "middle ground" solution to net income and the amount of income taxes that the company will pay, what method would they use to value their inventory?

A company has $4,500 in net sales, $3,200 in gross profit, $1,300 in ending inventory, and $1,800 in beginning inventory. What is the company's cost of goods sold?

Shrinkage refers to the loss of inventory due to theft, damage, or other similar occurrences.

Compare the effects of the different costing methods on the financial statements -__________ produces the lowest cost of goods sold and the highest gross profit when prices are increasing.

Prepare the journal entry to record the purchase of $7,400 of inventory on account under the perpetual inventory method.

The LCM rule compares original cost to current replacement cost to determine the amount at which inventory should be valued.

Brandon Company has the following list of inventory: Under specific-identification, what is Brandon's ending inventory if EOR and CIS are not sold during the current period?

Assigning LCNRV to the items that make up the inventory of merchandise at the end of the accounting period is an application of which accounting concept?

When merchandise is sold and the perpetual system of inventory is used, the journal entry to record a sale of merchandise on account would include:

Cost of goods sold may include all of the following EXCEPT for:

Merchandise inventory represents the goods that a merchandiser has available to sell to its customers.

Merchandising companies can be either wholesalers or retailers.

If gross profit is overstated in Period 1, then what is the effect on the ending inventory and net income in Period 1?