Question 1

The process of buying and selling inventory is known as inventory:

Accepted Answer

A)  circulation. 
B)  management. 
C)  turnover. 
D)  allocation. 
A)  circulation. 
B)  management. 
C)  turnover. 
D)  allocation.

Question 2

LIFO uses the ______ unit costs for cost of goods sold on the income statement and the ______ unit costs for inventory on the balance sheet.

Accepted Answer

A)  newest; oldest 
B)  oldest; oldest 
C)  oldest; newest 
D)  newest; newest 
A)  newest; oldest 
B)  oldest; oldest 
C)  oldest; newest 
D)  newest; newest

Question 3

Lucia Inc.uses a perpetual inventory system.The company has a beginning inventory of 400 units at $70 per unit.The company purchases 1,000 units in August at $72 each and 600 units in November at $75 each.The company sells 1,000 units in September and 900 units in December.
Required:
Calculate the company's ending inventory and cost of goods sold using the each of following inventory costing methods.(Round the per unit cost to two decimal places and then round your answer to the nearest whole dollar.)
Part a.FIFO
Part b.LIFO
Part c.Weighted Average

Accepted Answer

Part a
 @#IMG-DLM&

Question 4

An understatement of the beginning inventory balance causes cost of goods sold to be:

Accepted Answer

A)  understated and net income to be understated. 
B)  understated and net income to be overstated. 
C)  overstated and net income to be understated. 
D)  overstated and net income to be correct. 
A)  understated and net income to be understated. 
B)  understated and net income to be overstated. 
C)  overstated and net income to be understated. 
D)  overstated and net income to be correct.

Question 5

What is the inventory costing method that adds together the total cost of all goods available for sale during the period,and then divides that by the number of units available for sale to get a value to assign to all goods sold and all goods remaining in inventory?

Accepted Answer

A)  Weighted average 
B)  Cost 
C)  FIFO 
D)  LIFO 
E)  Specific identification 
A)  Weighted average 
B)  Cost 
C)  FIFO 
D)  LIFO 
E)  Specific identification

Question 6

Your company sells $469,300 of goods during the year that have a cost of $398,600.Inventory was $29,783 at the beginning of the year and $34,038 at the end of the year.
-Use the information above to answer the following question.What is the inventory turnover ratio?

Accepted Answer

A)  12.5 times 
B)  13.4 times 
C)  14.7 times 
D)  2.2 times 
A)  12.5 times 
B)  13.4 times 
C)  14.7 times 
D)  2.2 times

Question 7

-Coachlight Inc.has a periodic inventory system.The company purchased 200 units of inventory at $9 per unit and 300 units at $10 per unit.What is the weighted average unit cost for these purchases of inventory?

Accepted Answer

A)  $9.00. 
B)  $9.50. 
C)  $9.60. 
D)  $10.00. 
A)  $9.00. 
B)  $9.50. 
C)  $9.60. 
D)  $10.00.

Question 8

Langston Company updates its inventory periodically.The company's cost of goods sold was $2,700 and purchases were $5,600 during the year.The company's ending inventory count was $5,000.What was the amount of beginning inventory?

Accepted Answer

A)  $3,300 
B)  $13,300 
C)  $7,900 
D)  $2,100 
A)  $3,300 
B)  $13,300 
C)  $7,900 
D)  $2,100

Question 9

Which company is most likely to have a higher inventory turnover than its competitors within the same industry?

Accepted Answer

A)  A company with lower-priced goods and lower gross profit 
B)  A company with higher-priced goods and lower gross profit 
C)  A company with higher-priced goods and higher gross profit 
D)  A company that reports lower cost of goods sold and higher inventory values 
A)  A company with lower-priced goods and lower gross profit 
B)  A company with higher-priced goods and lower gross profit 
C)  A company with higher-priced goods and higher gross profit 
D)  A company that reports lower cost of goods sold and higher inventory values

Question 10

The specific identification method would probably be most appropriate for which of the following goods?

Accepted Answer

A)  Boxes of brass 4-inch drywall screws at Home Depot 
B)  Bottles of suntan lotion in Wal-Mart's central warehouse 
C)  Sets of tires at the Goodyear plant 
D)  Diamond necklaces at a Tiffany & Co. jewelry store 
A)  Boxes of brass 4-inch drywall screws at Home Depot 
B)  Bottles of suntan lotion in Wal-Mart's central warehouse 
C)  Sets of tires at the Goodyear plant 
D)  Diamond necklaces at a Tiffany & Co. jewelry store

Question 11

An understatement of the ending inventory balance will cause:

Accepted Answer

A)  Cost of goods sold to be overstated and net income to be understated. 
B)  Cost of goods sold to be overstated and net income to be overstated. 
C)  Cost of goods sold to be understated and net income to be overstated. 
D)  Cost of goods sold to be overstated and net income to be correct. 
A)  Cost of goods sold to be overstated and net income to be understated. 
B)  Cost of goods sold to be overstated and net income to be overstated. 
C)  Cost of goods sold to be understated and net income to be overstated. 
D)  Cost of goods sold to be overstated and net income to be correct.

Question 12

Amiable Inc.uses a perpetual inventory system.The following transactions took place during the month of August:
 
If Amiable uses the LIFO method,what is the ending inventory at August 31?

Accepted Answer

A) $496.00 
B) $486.00 
C) $492.57 
D) $300.00 
E) $510.00 
A) $496.00 
B) $486.00 
C) $492.57 
D) $300.00 
E) $510.00

Question 13

A company uses a perpetual inventory system.On May 1,beginning inventory consists of 10 items at a cost of $10 each.On May 3,10 items are purchased at $12 each.On May 8,12 items are sold.On May 15,10 items are purchased at $14 each.Using the weighted average cost,cost of goods sold for the month ended May 31 is:

Accepted Answer

A)  $230.40. 
B)  $132.00. 
C)  $228.00. 
D)  $144.00. 
A)  $230.40. 
B)  $132.00. 
C)  $228.00. 
D)  $144.00.

Question 14

Which of these would you expect to have the highest inventory turnover ratio?

Accepted Answer

A)  Ford Motor Company - automobile manufacturer 
B)  The Boeing Company - aircraft manufacturer 
C)  McDonald's Corporation - quick service hamburger restaurants 
D)  Macy's, Inc. - clothing and home furnishings retailer 
A)  Ford Motor Company - automobile manufacturer 
B)  The Boeing Company - aircraft manufacturer 
C)  McDonald's Corporation - quick service hamburger restaurants 
D)  Macy's, Inc. - clothing and home furnishings retailer

Question 15

Sun Concepts sells and installs solar energy products.Information from the financial statements for the last two years revealed the following:
  
-Use the information above to answer the following question.The number of days to sell in Year 2 was approximately:

Accepted Answer

A)  75 days 
B)  66 days 
C)  61 days 
D)  73 days 
A)  75 days 
B)  66 days 
C)  61 days 
D)  73 days

Question 16

Which of the following is not a primary goal of inventory management?

Accepted Answer

A)  Obtaining the lowest cost of inventory 
B)  Ensuring sufficient quantities of inventory are available to meet customers' needs 
C)  Ensuring inventory quality meets customers' expectations and company standards 
D)  Minimizing the costs of acquiring and carrying inventory 
A)  Obtaining the lowest cost of inventory 
B)  Ensuring sufficient quantities of inventory are available to meet customers' needs 
C)  Ensuring inventory quality meets customers' expectations and company standards 
D)  Minimizing the costs of acquiring and carrying inventory

Question 17

When a company has inventory which is subject to gradually increasing prices,the use of the LIFO method of valuing inventory will result in the:

Accepted Answer

A)  highest amount of assets and the lowest amount of net income. 
B)  highest amount of assets and the highest amount of net income. 
C)  lowest amount of assets and the highest amount of net income. 
D)  lowest amount of assets and the lowest amount of net income. 
A)  highest amount of assets and the lowest amount of net income. 
B)  highest amount of assets and the highest amount of net income. 
C)  lowest amount of assets and the highest amount of net income. 
D)  lowest amount of assets and the lowest amount of net income.

Question 18

Which of the following statements about the calculations used for the weighted average inventory costing method is correct?

Accepted Answer

A)  Under the weighted average cost method, if the goods in inventory were purchased at three different prices, the three different prices would be added and then divided by three to find the weighted average cost per unit. 
B)  When the weighted average inventory costing method is used, ending inventory and cost of goods sold are calculated using different costs per unit. 
C)  There is no difference in the calculations under the weighted average method whether a perpetual or periodic inventory system is used. 
D)  The weighted-average method will produce an inventory cost which is between the results of FIFO and LIFO inventory costing methods. 
A)  Under the weighted average cost method, if the goods in inventory were purchased at three different prices, the three different prices would be added and then divided by three to find the weighted average cost per unit. 
B)  When the weighted average inventory costing method is used, ending inventory and cost of goods sold are calculated using different costs per unit. 
C)  There is no difference in the calculations under the weighted average method whether a perpetual or periodic inventory system is used. 
D)  The weighted-average method will produce an inventory cost which is between the results of FIFO and LIFO inventory costing methods.

Question 19

Days to sell measures the average number of:

Accepted Answer

A)  days from the time inventory is purchased to the time it is sold 
B)  days' sales in accounts payable 
C)  times per year receivables are collected 
D)  times per year inventory is purchased 
A)  days from the time inventory is purchased to the time it is sold 
B)  days' sales in accounts payable 
C)  times per year receivables are collected 
D)  times per year inventory is purchased

Question 20

Of the four companies listed below,which company is more likely to use specific identification to value their inventory and cost of goods sold?

Accepted Answer

A)  Wedding cake baker 
B)  Dog biscuit manufacturer 
C)  Grocery store 
D)  Bulk candy merchandiser 
A)  Wedding cake baker 
B)  Dog biscuit manufacturer 
C)  Grocery store 
D)  Bulk candy merchandiser

The process of buying and selling inventory is known as inventory:

LIFO uses the unit costs for cost of goods sold on the income statement and the unit costs for inventory on the balance sheet.

An understatement of the beginning inventory balance causes cost of goods sold to be:

What is the inventory costing method that adds together the total cost of all goods available for sale during the period,and then divides that by the number of units available for sale to get a value to assign to all goods sold and all goods remaining in inventory?

Your company sells $469,300 of goods during the year that have a cost of $398,600.Inventory was $29,783 at the beginning of the year and $34,038 at the end of the year. -Use the information above to answer the following question.What is the inventory turnover ratio?

-Coachlight Inc.has a periodic inventory system.The company purchased 200 units of inventory at $9 per unit and 300 units at $10 per unit.What is the weighted average unit cost for these purchases of inventory?

Langston Company updates its inventory periodically.The company's cost of goods sold was $2,700 and purchases were $5,600 during the year.The company's ending inventory count was $5,000.What was the amount of beginning inventory?

Which company is most likely to have a higher inventory turnover than its competitors within the same industry?

The specific identification method would probably be most appropriate for which of the following goods?

An understatement of the ending inventory balance will cause:

Amiable Inc.uses a perpetual inventory system.The following transactions took place during the month of August: If Amiable uses the LIFO method,what is the ending inventory at August 31?

Which of these would you expect to have the highest inventory turnover ratio?

Sun Concepts sells and installs solar energy products.Information from the financial statements for the last two years revealed the following: -Use the information above to answer the following question.The number of days to sell in Year 2 was approximately:

Which of the following is not a primary goal of inventory management?

When a company has inventory which is subject to gradually increasing prices,the use of the LIFO method of valuing inventory will result in the:

Which of the following statements about the calculations used for the weighted average inventory costing method is correct?

Days to sell measures the average number of:

Of the four companies listed below,which company is more likely to use specific identification to value their inventory and cost of goods sold?

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 7: Reporting and Interpreting Inventories and Cost of Goods Sold

The process of buying and selling inventory is known as inventory:

LIFO uses the ______ unit costs for cost of goods sold on the income statement and the ______ unit costs for inventory on the balance sheet.

An understatement of the beginning inventory balance causes cost of goods sold to be:

What is the inventory costing method that adds together the total cost of all goods available for sale during the period,and then divides that by the number of units available for sale to get a value to assign to all goods sold and all goods remaining in inventory?

Your company sells $469,300 of goods during the year that have a cost of $398,600.Inventory was $29,783 at the beginning of the year and $34,038 at the end of the year. -Use the information above to answer the following question.What is the inventory turnover ratio?

-Coachlight Inc.has a periodic inventory system.The company purchased 200 units of inventory at $9 per unit and 300 units at $10 per unit.What is the weighted average unit cost for these purchases of inventory?

Langston Company updates its inventory periodically.The company's cost of goods sold was $2,700 and purchases were $5,600 during the year.The company's ending inventory count was $5,000.What was the amount of beginning inventory?

Which company is most likely to have a higher inventory turnover than its competitors within the same industry?

The specific identification method would probably be most appropriate for which of the following goods?

An understatement of the ending inventory balance will cause:

Amiable Inc.uses a perpetual inventory system.The following transactions took place during the month of August: If Amiable uses the LIFO method,what is the ending inventory at August 31?

Which of these would you expect to have the highest inventory turnover ratio?

Sun Concepts sells and installs solar energy products.Information from the financial statements for the last two years revealed the following: -Use the information above to answer the following question.The number of days to sell in Year 2 was approximately:

Which of the following is not a primary goal of inventory management?

When a company has inventory which is subject to gradually increasing prices,the use of the LIFO method of valuing inventory will result in the:

Which of the following statements about the calculations used for the weighted average inventory costing method is correct?

Days to sell measures the average number of:

Of the four companies listed below,which company is more likely to use specific identification to value their inventory and cost of goods sold?

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

LIFO uses the unit costs for cost of goods sold on the income statement and the unit costs for inventory on the balance sheet.