Exam 7: Inventories

Which of the following is an inventory costing method?

The determination of the balance sheet cost of merchandise inventory is important to the determination of net income.

The portion of cost of goods available for sale that is not assigned to ending inventory is assigned to cost of goods sold.

Use this information to answer the following question. A periodic inventory system is used; ending inventory is 151 units. What is the value of ending inventory under FIFO?

Use this inventory information for the month of May to answer the following question. Assuming that a periodic inventory system is used,what is ending inventory (rounded)under the average-cost method?

Use this information to answer the following question. Assuming that the specific identification method is used and that ending inventory consists of 15 units from each of the three purchases and five units from the January 1 inventory,cost of goods sold is

Assume that during the physical count of the inventory of a large corporation last year,$750,000 of merchandise was not counted.The error was not detected,and the financial statements for the current fiscal year were prepared.Identify the individual statements that would be affected and explain the effect the error would have on each of these statements.

Prior to a fire that destroyed most of its inventory,Verona Company had inventory purchases during the period of $80,000 and sales of $250,000.Verona began the period with $190,000 in inventory.Verona's typical gross profit percentage is 20 percent.Inventory that cost $10,000 survived the fire.Using the gross profit method,estimate the inventory loss from the fire.(Show your work.)

How does the perpetual inventory system differ from the periodic inventory system in the determination of cost of goods sold?

Cost of goods sold equals $1,000,000,and average inventory equals $400,000.Inventory turnover equals

Assume that during the physical count of the inventory of a large corporation for this year,$900,000 of merchandise was counted twice.The error was not detected,and the financial statements were prepared.Identify the individual statements that would be affected and explain the effect the count error would have on each.(Omit income tax consideration.)

For each of the following descriptive statements,indicate whether FIFO or LIFO is being described. _____ 1.Preferable method for conforming to matching principle _____ 2.Preferable method for tax purposes under rising prices _____ 3.Results in more up-to-date ending inventory figure _____ 4.Results in fictitious profits under rising prices _____ 5.Produces higher income when prices are declining _____ 6.Produces higher ending inventory when prices are rising

Which of the following costs would not be included in the inventory cost?

In accounting for inventory,the assumed cost flow must match the physical goods flow.

Use this inventory information for the month of June to answer the following questions. Assuming that a perpetual inventory system is used,what is cost of goods sold (rounded)under the average-cost method?

Which inventory method generally results in the most realistic ending inventory figure?

Under rising prices,why will the FIFO method produce a higher ending inventory than LIFO?

A company has cost of goods available for sale of $500,000,sales of $574,000,and a gross profit percentage of 30 percent.Using the gross profit method,what is the ending inventory?

Manufacturing overhead would not include which of the following costs?

Supply-chain management helps companies maintain higher levels of inventory.