Question 1

A custom boat shop would probably cost its inventory using the:

Accepted Answer

A) LIFO method of inventory costing. 
B) FIFO method of inventory costing. 
C) moving average method of inventory costing. 
D) specific-identification method of inventory costing. 
A) LIFO method of inventory costing. 
B) FIFO method of inventory costing. 
C) moving average method of inventory costing. 
D) specific-identification method of inventory costing. D

Question 2

In order to attract investors and borrow on favorable terms, a company would use ________ in times when inventory costs are rising.

Accepted Answer

A) LIFO 
B) FIFO 
C) average costing 
D) specific-identification costing 
A) LIFO 
B) FIFO 
C) average costing 
D) specific-identification costing B

Question 3

The inventory turnover rate is computed by:

Accepted Answer

A) dividing average inventory by cost of goods sold. 
B) dividing cost of goods sold by average inventory. 
C) dividing ending inventory by cost of goods sold. 
D) dividing ending inventory by beginning inventory. 
A) dividing average inventory by cost of goods sold. 
B) dividing cost of goods sold by average inventory. 
C) dividing ending inventory by cost of goods sold. 
D) dividing ending inventory by beginning inventory. B

Question 4

A business with a ________ net income percentage may often have a ________ inventory turnover rate:

Accepted Answer

A) lower, higher. 
B) lower, lower 
C) higher, lower 
D) all of the above are possible combinations of net income percentage and inventory turnover rate. 
A) lower, higher. 
B) lower, lower 
C) higher, lower 
D) all of the above are possible combinations of net income percentage and inventory turnover rate.

Question 5

A drawback to using ________ when inventory costs are rising is that the company reports lower net income.

Accepted Answer

A) LIFO 
B) FIFO 
C) average costing 
D) specific-identification costing 
A) LIFO 
B) FIFO 
C) average costing 
D) specific-identification costing

Question 6

The journal entry to record the purchase of $7,500 of inventory on account under the perpetual inventory system is:

Accepted Answer

A) debit Inventory, $7,500; credit Cash, $7,500. 
B) debit Purchases, $7,500; credit Accounts Payable, $7,500. 
C) debit Inventory, $7,500; credit Accounts Payable, $7,500. 
D) debit Cost of Goods Sold, $7,500; credit Inventory, $7,500. 
A) debit Inventory, $7,500; credit Cash, $7,500. 
B) debit Purchases, $7,500; credit Accounts Payable, $7,500. 
C) debit Inventory, $7,500; credit Accounts Payable, $7,500. 
D) debit Cost of Goods Sold, $7,500; credit Inventory, $7,500.

Question 7

Counting inventory that is in transit on December 31 that was shipped from the supplier FOB shipping point would not cause any error in the final inventory valuation.

Accepted Answer

A) True 
 B)False

Question 8

The second step in using the gross profit method to estimate ending inventory is to:

Accepted Answer

A) estimate the cost of goods sold. 
B) calculate the cost of goods available for sale. 
C) estimate the ending inventory. 
D) estimate the beginning inventory. 
A) estimate the cost of goods sold. 
B) calculate the cost of goods available for sale. 
C) estimate the ending inventory. 
D) estimate the beginning inventory.

Question 9

A method of valuing inventory based on the average of units is called the:

Accepted Answer

A) LIFO method. 
B) average cost method. 
C) specific-unit-cost method. 
D) FIFO method. 
A) LIFO method. 
B) average cost method. 
C) specific-unit-cost method. 
D) FIFO method.

Question 10

The last step in using the gross profit method to estimate ending inventory is to:

Accepted Answer

A) estimate the beginning inventory. 
B) estimate the cost of goods sold. 
C) calculate the cost of goods available for sale. 
D) estimate the ending inventory. 
A) estimate the beginning inventory. 
B) estimate the cost of goods sold. 
C) calculate the cost of goods available for sale. 
D) estimate the ending inventory.

Question 11

When using the FIFO inventory method, the ending inventory has the newer costs.

Accepted Answer

A) True 
 B)False

Question 12

Goods available for sale are $330,000; beginning inventory is $20,000; ending inventory is $35,000; and cost of goods sold is $245,000. The inventory turnover is: (Round your final answer two decimal places, X.XX.)

Accepted Answer

A) 12.25. 
B) 7.00. 
C) 12.00. 
D) 8.91. 
A) 12.25. 
B) 7.00. 
C) 12.00. 
D) 8.91.

Question 13

The consistency principle is mandated by:

Accepted Answer

A) the IRS. 
B) the SEC. 
C) GAAP. 
D) the federal government. 
A) the IRS. 
B) the SEC. 
C) GAAP. 
D) the federal government.

Question 14

Cost of goods sold equals:

Accepted Answer

A) ending inventory plus net purchases minus beginning inventory. 
B) beginning inventory minus net purchases plus ending inventory. 
C) beginning inventory plus net sales minus ending inventory. 
D) beginning inventory plus net purchases minus ending inventory. 
A) ending inventory plus net purchases minus beginning inventory. 
B) beginning inventory minus net purchases plus ending inventory. 
C) beginning inventory plus net sales minus ending inventory. 
D) beginning inventory plus net purchases minus ending inventory.

Question 15

If Period 1 ending inventory is overstated, then:

Accepted Answer

A) both cost of goods sold and net income are understated in Period 1. 
B) cost of goods sold is overstated and net income is understated in Period 1. 
C) cost of goods sold is understated and net income is overstated in Period 1. 
D) both cost of goods sold and net income are overstated in Period 1. 
A) both cost of goods sold and net income are understated in Period 1. 
B) cost of goods sold is overstated and net income is understated in Period 1. 
C) cost of goods sold is understated and net income is overstated in Period 1. 
D) both cost of goods sold and net income are overstated in Period 1.

Question 16

The objective of inventory tracking is to allocate the cost of goods available for sale between the cost of units sold and the cost of unsold inventory.

Accepted Answer

A) True 
 B)False

Question 17

If the ending inventory is overstated in Year 1, then the Cost of Goods Sold will be overstated in Year 2.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

C&S Petstore purchased 50 cases of dog food on January 1 and 25 cases of dog food on January 5. Right away, 50 cases were sold, so they purchased an additional 50 cases of dog food on January 15. How many inventory layers were created from these purchases?

Accepted Answer

A) 1 
B) 3 
C) 75 
D) 125 
A) 1 
B) 3 
C) 75 
D) 125

Question 20

Goods available for sale are $43,000; beginning inventory is $15,000; ending inventory is $19,000; and cost of goods sold is $47,000. The inventory turnover is: (Round your final answer two decimal places, X.XX)

Accepted Answer

A) 2.53. 
B) 2.76. 
C) 2.47. 
D) 2.26. 
A) 2.53. 
B) 2.76. 
C) 2.47. 
D) 2.26.

A custom boat shop would probably cost its inventory using the:

In order to attract investors and borrow on favorable terms, a company would use ________ in times when inventory costs are rising.

The inventory turnover rate is computed by:

A business with a net income percentage may often have a inventory turnover rate:

A drawback to using ________ when inventory costs are rising is that the company reports lower net income.

The journal entry to record the purchase of $7,500 of inventory on account under the perpetual inventory system is:

Counting inventory that is in transit on December 31 that was shipped from the supplier FOB shipping point would not cause any error in the final inventory valuation.

The second step in using the gross profit method to estimate ending inventory is to:

A method of valuing inventory based on the average of units is called the:

The last step in using the gross profit method to estimate ending inventory is to:

When using the FIFO inventory method, the ending inventory has the newer costs.

Goods available for sale are $330,000; beginning inventory is $20,000; ending inventory is $35,000; and cost of goods sold is $245,000. The inventory turnover is: (Round your final answer two decimal places, X.XX.)

The consistency principle is mandated by:

Cost of goods sold equals:

If Period 1 ending inventory is overstated, then:

The objective of inventory tracking is to allocate the cost of goods available for sale between the cost of units sold and the cost of unsold inventory.

If the ending inventory is overstated in Year 1, then the Cost of Goods Sold will be overstated in Year 2.

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

C&S Petstore purchased 50 cases of dog food on January 1 and 25 cases of dog food on January 5. Right away, 50 cases were sold, so they purchased an additional 50 cases of dog food on January 15. How many inventory layers were created from these purchases?

Goods available for sale are $43,000; beginning inventory is $15,000; ending inventory is $19,000; and cost of goods sold is $47,000. The inventory turnover is: (Round your final answer two decimal places, X.XX)

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 5: Inventory

A custom boat shop would probably cost its inventory using the:

In order to attract investors and borrow on favorable terms, a company would use ________ in times when inventory costs are rising.

The inventory turnover rate is computed by:

A business with a ________ net income percentage may often have a ________ inventory turnover rate:

A drawback to using ________ when inventory costs are rising is that the company reports lower net income.

The journal entry to record the purchase of $7,500 of inventory on account under the perpetual inventory system is:

Counting inventory that is in transit on December 31 that was shipped from the supplier FOB shipping point would not cause any error in the final inventory valuation.

The second step in using the gross profit method to estimate ending inventory is to:

A method of valuing inventory based on the average of units is called the:

The last step in using the gross profit method to estimate ending inventory is to:

When using the FIFO inventory method, the ending inventory has the newer costs.

Goods available for sale are $330,000; beginning inventory is $20,000; ending inventory is $35,000; and cost of goods sold is $245,000. The inventory turnover is: (Round your final answer two decimal places, X.XX.)

The consistency principle is mandated by:

Cost of goods sold equals:

If Period 1 ending inventory is overstated, then:

The objective of inventory tracking is to allocate the cost of goods available for sale between the cost of units sold and the cost of unsold inventory.

If the ending inventory is overstated in Year 1, then the Cost of Goods Sold will be overstated in Year 2.

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

C&S Petstore purchased 50 cases of dog food on January 1 and 25 cases of dog food on January 5. Right away, 50 cases were sold, so they purchased an additional 50 cases of dog food on January 15. How many inventory layers were created from these purchases?

Goods available for sale are $43,000; beginning inventory is $15,000; ending inventory is $19,000; and cost of goods sold is $47,000. The inventory turnover is: (Round your final answer two decimal places, X.XX)

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Financial Statement Analysis

Filters

A business with a net income percentage may often have a inventory turnover rate: