Question 1

Goods available for sale are $28,000;beginning inventory is $13,000;ending inventory is $15,000;and cost of goods sold is $39,000.The inventory turnover is:

Accepted Answer

A) 3)00. 
B) 2)60. 
C) 2)79. 
D) 2)00. 
A) 3)00. 
B) 2)60. 
C) 2)79. 
D) 2)00.

Question 2

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 3

Knowledgeable decisions that are made by outsiders who read financial reports are a result of the concept of conservatism.

Accepted Answer

A) True 
 B)False

Question 4

Lionworks Enterprises had the following inventory data:
 
Assuming FIFO,what is the cost of goods sold for the July 7 sale?

Accepted Answer

A) $624 
B) $654 
C) $648 
D) $645 
A) $624 
B) $654 
C) $648 
D) $645

Question 5

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 6

Manufacturers have three different kinds of inventory.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is often used when taking a physical inventory?

Accepted Answer

A) Pre-numbered count sheets 
B) Tags to show what inventory has been counted 
C) Maps of the location of the inventory 
D) All of the above 
A) Pre-numbered count sheets 
B) Tags to show what inventory has been counted 
C) Maps of the location of the inventory 
D) All of the above

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Under the conservatism rule,assets and income would be understated,rather than overstated.

Accepted Answer

A) True 
 B)False

Question 10

An indication that inventory is being sold quickly is:

Accepted Answer

A) a high turnover rate and high days-sales-in-inventory rate. 
B) a high turnover rate and low days-sales-in-inventory rate. 
C) a low turnover rate and high days-sales-in-inventory rate. 
D) a low turnover rate and low days-sales-in-inventory rate. 
A) a high turnover rate and high days-sales-in-inventory rate. 
B) a high turnover rate and low days-sales-in-inventory rate. 
C) a low turnover rate and high days-sales-in-inventory rate. 
D) a low turnover rate and low days-sales-in-inventory rate.

Question 11

If ending inventory in Period 1 is overstated,gross profit in Period 2 is:

Accepted Answer

A) overstated. 
B) understated. 
C) not affected. 
D) the same as in Period 1. 
A) overstated. 
B) understated. 
C) not affected. 
D) the same as in Period 1.

Question 12

If the inventory shows an actual count of $350 and the perpetual inventory according to the records shows $339,the adjusting entry for the $11 would:

Accepted Answer

A) debit Cost of Goods Sold;debit Purchase Returns and Allowances. 
B) debit Cost of Goods Sold;credit Inventory. 
C) debit Inventory;credit Cost of Goods Sold. 
D) debit Inventory;credit Purchase Returns and Allowances. 
A) debit Cost of Goods Sold;debit Purchase Returns and Allowances. 
B) debit Cost of Goods Sold;credit Inventory. 
C) debit Inventory;credit Cost of Goods Sold. 
D) debit Inventory;credit Purchase Returns and Allowances.

Question 13

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 14

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

Accepted Answer

A) Cost of goods sold is overstated. 
B) Gross profit is overstated. 
C) Net income understated. 
D) Income tax is understated. 
A) Cost of goods sold is overstated. 
B) Gross profit is overstated. 
C) Net income understated. 
D) Income tax is understated.

Question 15

If Cost of Goods Sold was understated in Period 1,then Cost of Goods Sold and gross profit in Period 2 will be:

Accepted Answer

A) both understated. 
B) both overstated. 
C) understated for cost of goods sold and overstated for gross profit. 
D) overstated for cost of goods sold and understated for gross profit. 
A) both understated. 
B) both overstated. 
C) understated for cost of goods sold and overstated for gross profit. 
D) overstated for cost of goods sold and understated for gross profit.

Question 16

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 17

The method used to estimate the cost of ending inventory is called:

Accepted Answer

A) the FIFO method. 
B) the LIFO method. 
C) gross profit method. 
D) the average cost method. 
A) the FIFO method. 
B) the LIFO method. 
C) gross profit method. 
D) the average cost method.

Question 18

A method of valuing inventory based on the assumption that the oldest goods will be sold first is called the:

Accepted Answer

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

Question 19

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 20

A manufacturer's goods available for sale represents:

Accepted Answer

A) work-in-process inventory. 
B) raw materials inventory. 
C) cost of goods sold inventory. 
D) finished goods inventory. 
A) work-in-process inventory. 
B) raw materials inventory. 
C) cost of goods sold inventory. 
D) finished goods inventory.

Goods available for sale are $28,000;beginning inventory is $13,000;ending inventory is $15,000;and cost of goods sold is $39,000.The inventory turnover is:

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

Knowledgeable decisions that are made by outsiders who read financial reports are a result of the concept of conservatism.

Lionworks Enterprises had the following inventory data: Assuming FIFO,what is the cost of goods sold for the July 7 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:

Manufacturers have three different kinds of inventory.

Which of the following is often used when taking a physical inventory?

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

Under the conservatism rule,assets and income would be understated,rather than overstated.

An indication that inventory is being sold quickly is:

If ending inventory in Period 1 is overstated,gross profit in Period 2 is:

If the inventory shows an actual count of $350 and the perpetual inventory according to the records shows $339,the adjusting entry for the $11 would:

The LCM rule must be applied to inventory:

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

If Cost of Goods Sold was understated in Period 1,then Cost of Goods Sold and gross profit in Period 2 will be:

If Period 1 ending inventory is overstated,then:

The method used to estimate the cost of ending inventory is called:

A method of valuing inventory based on the assumption that the oldest goods will be sold first is called the:

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

A manufacturer's goods available for sale represents:

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

Goods available for sale are $28,000;beginning inventory is $13,000;ending inventory is $15,000;and cost of goods sold is $39,000.The inventory turnover is:

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

Knowledgeable decisions that are made by outsiders who read financial reports are a result of the concept of conservatism.

Lionworks Enterprises had the following inventory data: Assuming FIFO,what is the cost of goods sold for the July 7 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:

Manufacturers have three different kinds of inventory.

Which of the following is often used when taking a physical inventory?

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

Under the conservatism rule,assets and income would be understated,rather than overstated.

An indication that inventory is being sold quickly is:

If ending inventory in Period 1 is overstated,gross profit in Period 2 is:

If the inventory shows an actual count of $350 and the perpetual inventory according to the records shows $339,the adjusting entry for the $11 would:

The LCM rule must be applied to inventory:

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

If Cost of Goods Sold was understated in Period 1,then Cost of Goods Sold and gross profit in Period 2 will be:

If Period 1 ending inventory is overstated,then:

The method used to estimate the cost of ending inventory is called:

A method of valuing inventory based on the assumption that the oldest goods will be sold first is called the:

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

A manufacturer's goods available for sale represents:

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: