Question 1

Lionworks Enterprises had the following inventory data:  
Assuming LIFO, what is the cost of goods sold for the July 14 sale?

Accepted Answer

A) $451 
B) $416 
C) $472 
D) $531 
A) $451 
B) $416 
C) $472 
D) $531

Question 2

Under the average cost method, the flow of costs through the accounting records will:

Accepted Answer

A) be nearly the opposite of the physical flow of goods through the business. 
B) closely match the physical flow of goods through the business. 
C) exactly match the physical flow of goods through the business. 
D) have no relationship to the physical flow of goods through the business. 
A) be nearly the opposite of the physical flow of goods through the business. 
B) closely match the physical flow of goods through the business. 
C) exactly match the physical flow of goods through the business. 
D) have no relationship to the physical flow of goods through the business.

Question 3

According to the consistency principle, companies may change inventory costing methods depending on circumstances.

Accepted Answer

A) True 
 B)False

Question 4

The average cost method generates gross profit, net income, and income tax amounts that fall between the extremes of FIFO and LIFO.

Accepted Answer

A) True 
 B)False

Question 5

The Betta Corp's inventory account balance was $1,450 at the end of the year. A physical inventory count revealed that inventory on hand was $1,150. What amount should Betta report on the balance sheet for inventory?

Accepted Answer

A) $300 
B) 1,150 
C) $1,450 
D) $2,600 
A) $300 
B) 1,150 
C) $1,450 
D) $2,600

Question 6

Lionworks Enterprises had the following inventory data:  
Assuming average cost, what is the ending inventory after the July 14 sale? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)

Accepted Answer

A) $248 
B) $256 
C) $220 
D) $232 
A) $248 
B) $256 
C) $220 
D) $232

Question 7

Companies that want a "middle ground" solution to net income and the amount of income taxes that the company will pay will value their inventory at:

Accepted Answer

A) FIFO. 
B) LIFO. 
C) average cost. 
D) specific identification. 
A) FIFO. 
B) LIFO. 
C) average cost. 
D) specific identification.

Question 8

Liberty, Inc. has the following list of inventory:  
Under specific-identification, what is Liberty's cost of goods sold if ICF and CRD were not sold during the current period?

Accepted Answer

A) $34,224 
B) $40,633 
C) $41,003 
D) $51,299 
A) $34,224 
B) $40,633 
C) $41,003 
D) $51,299

Question 9

Cascade Supply Company's income statement includes sales revenue $122,000, cost of goods sold $80,000, and gross profit $42,000. If ending inventory was accidentally overstated by $5,000, what is the correct amount for gross profit?

Accepted Answer

A) $37,000 
B) $42,000 
C) $47,000 
D) $52,000 
A) $37,000 
B) $42,000 
C) $47,000 
D) $52,000

Question 10

Inventory is probably the retailer's smallest (by value)current asset.

Accepted Answer

A) True 
 B)False

Question 11

If a misstatement of inventory occurs, the net income for ________ periods will be misstated.

Accepted Answer

A) 0 
B) 1 
C) 2 
D) 3 
A) 0 
B) 1 
C) 2 
D) 3

Question 12

Beginning inventory + Net purchases =

Accepted Answer

A) Cost of goods sold. 
B) Cost of goods available for sale. 
C) Gross profit. 
D) Ending inventory. 
A) Cost of goods sold. 
B) Cost of goods available for sale. 
C) Gross profit. 
D) Ending inventory.

Question 13

Part of the journal entry to record the cost of an item for $28 that sold for $42 cash under the perpetual inventory system is:

Accepted Answer

A) debit Sales, $42; credit Cost of Goods Sold, $28; credit Cash, $14. 
B) debit Cost of Goods Sold, $42; sales, $42. 
C) debit Cash, $42; credit Inventory $42. 
D) debit Cost of Goods Sold $28; credit Inventory, $28. 
A) debit Sales, $42; credit Cost of Goods Sold, $28; credit Cash, $14. 
B) debit Cost of Goods Sold, $42; sales, $42. 
C) debit Cash, $42; credit Inventory $42. 
D) debit Cost of Goods Sold $28; credit Inventory, $28.

Question 14

Under the LIFO method, the flow of costs through the accounting records will:

Accepted Answer

A) be nearly the opposite of the physical flow of goods through the business. 
B) closely match the physical flow of goods through the business. 
C) exactly match the physical flow of goods through the business. 
D) have no relationship to the physical flow of goods through the business. 
A) be nearly the opposite of the physical flow of goods through the business. 
B) closely match the physical flow of goods through the business. 
C) exactly match the physical flow of goods through the business. 
D) have no relationship to the physical flow of goods through the business.

Question 15

If the replacement cost of inventory is less than its historical cost, the company will write down the inventory by:

Accepted Answer

A) debiting Cost of Goods Sold and crediting Inventory. 
B) debiting Inventory and crediting Cost of Goods Sold. 
C) making a note in the financial statements only. 
D) debit Inventory for replacement cost, credit Inventory for historical cost. 
A) debiting Cost of Goods Sold and crediting Inventory. 
B) debiting Inventory and crediting Cost of Goods Sold. 
C) making a note in the financial statements only. 
D) debit Inventory for replacement cost, credit Inventory for historical cost.

Question 16

Lionworks Enterprises had the following inventory data:  
Assuming average cost, what is the cost of goods sold for the July 14 sale?

Accepted Answer

A) $340 
B) $448 
C) $436 
D) $456 
A) $340 
B) $448 
C) $436 
D) $456

Question 17

One lot of merchandise was counted at $566.34. A second count of the same merchandise showed $566.82. The difference could be ignored due to:

Accepted Answer

A) conservatism. 
B) consistency. 
C) materiality. 
D) entity. 
A) conservatism. 
B) consistency. 
C) materiality. 
D) entity.

Question 18

The LCM rule must be applied to inventory:

Accepted Answer

A) on an item-by-item basis. 
B) by categories of items. 
C) as a whole. 
D) as a company decides, for there is no requirement to apply LCM. 
A) on an item-by-item basis. 
B) by categories of items. 
C) as a whole. 
D) as a company decides, for there is no requirement to apply LCM.

Question 19

Which inventory costing method results in the oldest costs in ending inventory?

Accepted Answer

A) Average cost 
B) Last-In, First-Out 
C) First-In, First-Out 
D) Average-In, First-Out 
A) Average cost 
B) Last-In, First-Out 
C) First-In, First-Out 
D) Average-In, First-Out

Question 20

If shrinkage is found for $400, an adjusting entry would be made as follows:

Accepted Answer

A) debit Inventory for $400; credit Cost of Goods Sold for $400. 
B) debit Inventory for $400; credit Sales Returns and Allowances for $400. 
C) debit Cost of Goods Sold for $400; credit Inventory for $400. 
D) debit Sales Returns and Allowances for $400; credit Inventory for $400. 
A) debit Inventory for $400; credit Cost of Goods Sold for $400. 
B) debit Inventory for $400; credit Sales Returns and Allowances for $400. 
C) debit Cost of Goods Sold for $400; credit Inventory for $400. 
D) debit Sales Returns and Allowances for $400; credit Inventory for $400.

Lionworks Enterprises had the following inventory data: Assuming LIFO, what is the cost of goods sold for the July 14 sale?

Under the average cost method, the flow of costs through the accounting records will:

According to the consistency principle, companies may change inventory costing methods depending on circumstances.

The average cost method generates gross profit, net income, and income tax amounts that fall between the extremes of FIFO and LIFO.

The Betta Corp's inventory account balance was $1,450 at the end of the year. A physical inventory count revealed that inventory on hand was $1,150. What amount should Betta report on the balance sheet for inventory?

Lionworks Enterprises had the following inventory data: Assuming average cost, what is the ending inventory after the July 14 sale? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)

Companies that want a "middle ground" solution to net income and the amount of income taxes that the company will pay will value their inventory at:

Liberty, Inc. has the following list of inventory: Under specific-identification, what is Liberty's cost of goods sold if ICF and CRD were not sold during the current period?

Cascade Supply Company's income statement includes sales revenue $122,000, cost of goods sold $80,000, and gross profit $42,000. If ending inventory was accidentally overstated by $5,000, what is the correct amount for gross profit?

Inventory is probably the retailer's smallest (by value)current asset.

If a misstatement of inventory occurs, the net income for ________ periods will be misstated.

Beginning inventory + Net purchases =

Part of the journal entry to record the cost of an item for $28 that sold for $42 cash under the perpetual inventory system is:

Under the LIFO method, the flow of costs through the accounting records will:

If the replacement cost of inventory is less than its historical cost, the company will write down the inventory by:

Lionworks Enterprises had the following inventory data: Assuming average cost, what is the cost of goods sold for the July 14 sale?

One lot of merchandise was counted at $566.34. A second count of the same merchandise showed $566.82. The difference could be ignored due to:

The LCM rule must be applied to inventory:

Which inventory costing method results in the oldest costs in ending inventory?

If shrinkage is found for $400, an adjusting entry would be made as follows:

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

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Exam 5: Inventory

Lionworks Enterprises had the following inventory data: Assuming LIFO, what is the cost of goods sold for the July 14 sale?

Under the average cost method, the flow of costs through the accounting records will:

According to the consistency principle, companies may change inventory costing methods depending on circumstances.

The average cost method generates gross profit, net income, and income tax amounts that fall between the extremes of FIFO and LIFO.

The Betta Corp's inventory account balance was $1,450 at the end of the year. A physical inventory count revealed that inventory on hand was $1,150. What amount should Betta report on the balance sheet for inventory?

Lionworks Enterprises had the following inventory data: Assuming average cost, what is the ending inventory after the July 14 sale? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)

Companies that want a "middle ground" solution to net income and the amount of income taxes that the company will pay will value their inventory at:

Liberty, Inc. has the following list of inventory: Under specific-identification, what is Liberty's cost of goods sold if ICF and CRD were not sold during the current period?

Cascade Supply Company's income statement includes sales revenue $122,000, cost of goods sold $80,000, and gross profit $42,000. If ending inventory was accidentally overstated by $5,000, what is the correct amount for gross profit?

Inventory is probably the retailer's smallest (by value)current asset.

If a misstatement of inventory occurs, the net income for ________ periods will be misstated.

Beginning inventory + Net purchases =

Part of the journal entry to record the cost of an item for $28 that sold for $42 cash under the perpetual inventory system is:

Under the LIFO method, the flow of costs through the accounting records will:

If the replacement cost of inventory is less than its historical cost, the company will write down the inventory by:

Lionworks Enterprises had the following inventory data: Assuming average cost, what is the cost of goods sold for the July 14 sale?

One lot of merchandise was counted at $566.34. A second count of the same merchandise showed $566.82. The difference could be ignored due to:

The LCM rule must be applied to inventory:

Which inventory costing method results in the oldest costs in ending inventory?

If shrinkage is found for $400, an adjusting entry would be made as follows:

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

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