Question 1

Which statement is correct about the various cost allocation methods available in GAAP?

Accepted Answer

A) FIFO is used in the initial recognition and measurement of inventory. 
B) LIFO is used to measure the ending inventory balance on the balance sheet. 
C) Weighted average is not an acceptable allocation method for the income statement. 
D) Moving weighted average is the perpetual weighted average cost method. 
A) FIFO is used in the initial recognition and measurement of inventory. 
B) LIFO is used to measure the ending inventory balance on the balance sheet. 
C) Weighted average is not an acceptable allocation method for the income statement. 
D) Moving weighted average is the perpetual weighted average cost method.

Question 2

Use the chart provided below to determine the impact if a company forgets to include $3,500 of inventory that was shipped FOB shipping point on December 25, 2013 but was still in transit at year end. The purchase invoice was processed in fiscal 2014.

Accepted Answer

The answer of Use the chart provided below to determine...

Question 3

Which goods in transit would be recorded in inventory at year end?

Accepted Answer

A) Goods purchased with terms F.O.B. destination point that were received after year end. 
B) Goods sold with terms F.O.B. shipping point that were shipped before year end. 
C) Goods purchased with terms F.O.B. shipping point that were received after year end. 
D) Goods sold with terms F.O.B. destination point that were shipped before year end. 
A) Goods purchased with terms F.O.B. destination point that were received after year end. 
B) Goods sold with terms F.O.B. shipping point that were shipped before year end. 
C) Goods purchased with terms F.O.B. shipping point that were received after year end. 
D) Goods sold with terms F.O.B. destination point that were shipped before year end.

Question 4

Use the chart provided below to determine the impact of a company processing a $3,500 purchase invoice in fiscal 2014 for a purchase made near its fiscal 2013 year end. The goods were appropriately included in the year end inventory count.

Accepted Answer

The answer of Use the chart provided below to determine...

Question 5

Use the following information:   If the market price at year end is $210,000, what is the write down required?

Accepted Answer

A) $0 
B) $40,000 
C) $210,000 
D) $250,000 
A) $0 
B) $40,000 
C) $210,000 
D) $250,000

Question 6

Which statement is correct about using a cost flow assumption?

Accepted Answer

A) An organization must use the same cost flow assumption as other organizations in its industry. 
B) There is only one acceptable cost flow assumption under GAAP in Canada. 
C) In Canada, organizations can use the FIFO or weighted average cost flow assumptions. 
D) In Canada, organizations can use the FIFO, LIFO or weighted average cost flow assumptions. 
A) An organization must use the same cost flow assumption as other organizations in its industry. 
B) There is only one acceptable cost flow assumption under GAAP in Canada. 
C) In Canada, organizations can use the FIFO or weighted average cost flow assumptions. 
D) In Canada, organizations can use the FIFO, LIFO or weighted average cost flow assumptions.

Question 7

Which statement is correct about inventory errors?

Accepted Answer

A) Misstatements in inventory usually affect two reporting periods. 
B) Misstatements in inventory usually affect only the current accounting period. 
C) Misstatements in inventory usually affect only beginning inventory amounts. 
D) Misstatements in inventory usually affect only ending inventory amounts. 
A) Misstatements in inventory usually affect two reporting periods. 
B) Misstatements in inventory usually affect only the current accounting period. 
C) Misstatements in inventory usually affect only beginning inventory amounts. 
D) Misstatements in inventory usually affect only ending inventory amounts.

Question 8

Which goods in transit would not be recorded in the buyer's inventory at year end?

Accepted Answer

A) Goods purchased with terms F.O.B. destination point that were received at year end. 
B) Goods purchased with terms F.O.B. shipping point that were received at year end. 
C) Goods purchased with terms F.O.B. destination point that were received after year end. 
D) Goods purchased F.O.B. shipping point that were lost in shipment. 
A) Goods purchased with terms F.O.B. destination point that were received at year end. 
B) Goods purchased with terms F.O.B. shipping point that were received at year end. 
C) Goods purchased with terms F.O.B. destination point that were received after year end. 
D) Goods purchased F.O.B. shipping point that were lost in shipment.

Question 9

Assume that a purchase invoice for $1,000 was appropriately recorded in fiscal 2012, but the inventory was excluded in error during the ending inventory count. What impact will this not have on fiscal 2013 financial reporting?

Accepted Answer

A) Beginning inventory is understated by $1,000. 
B) Gross margin is understated by $1,000. 
C) Cost of sales is overstated by $1,000. 
D) Inventory is overstated on the balance sheet. 
A) Beginning inventory is understated by $1,000. 
B) Gross margin is understated by $1,000. 
C) Cost of sales is overstated by $1,000. 
D) Inventory is overstated on the balance sheet.

Question 10

Explain how manufacturing companies can manipulate earnings through its production process. What should an auditor or financial statement user do to detect this type of manipulation?

Accepted Answer

For manufacturing companies, producing m

Question 11

Compare the FIFO and LIFO methods of inventory valuation. Which method provides better quality information and why?

Accepted Answer

•To evaluate the quality of the informat

Question 12

Which statement is correct about cost allocation methods under GAAP?

Accepted Answer

A) FIFO method expenses the oldest costs first. 
B) FIFO method has the oldest costs on the balance sheet. 
C) FIFO method has the most recent costs in the income statement. 
D) FIFO is not an acceptable cost allocation method. 
A) FIFO method expenses the oldest costs first. 
B) FIFO method has the oldest costs on the balance sheet. 
C) FIFO method has the most recent costs in the income statement. 
D) FIFO is not an acceptable cost allocation method.

Question 13

Which statement best explains the difference between the retail inventory and gross margin methods?

Accepted Answer

A) The gross margin method estimates cost of goods sold by applying an average gross margin to the amount of sales recorded for the period. 
B) The gross margin method estimates ending inventory cost using retail prices and an average gross margin. 
C) The retail inventory method estimates cost of goods sold by applying an average gross margin to the amount of sales recorded for the period. 
D) The retail inventory method estimates ending inventory cost using purchase prices and an average gross margin. 
A) The gross margin method estimates cost of goods sold by applying an average gross margin to the amount of sales recorded for the period. 
B) The gross margin method estimates ending inventory cost using retail prices and an average gross margin. 
C) The retail inventory method estimates cost of goods sold by applying an average gross margin to the amount of sales recorded for the period. 
D) The retail inventory method estimates ending inventory cost using purchase prices and an average gross margin.

Question 14

Which statement is correct about cost allocation methods under GAAP?

Accepted Answer

A) LIFO method expenses the oldest costs first. 
B) LIFO method has the most recent costs on the balance sheet. 
C) LIFO method has the most recent costs in the income statement. 
D) LIFO is an acceptable cost allocation method. 
A) LIFO method expenses the oldest costs first. 
B) LIFO method has the most recent costs on the balance sheet. 
C) LIFO method has the most recent costs in the income statement. 
D) LIFO is an acceptable cost allocation method.

Question 15

Which statement is correct about using a cost flow assumption?

Accepted Answer

A) This is an assumption about the flow of goods through the various departments in an organization. 
B) This is an assumption about the flow of costs between the income statement and the balance sheet. 
C) There is only one acceptable cost flow assumption under GAAP in Canada. 
D) Specific identification and LIFO are both acceptable cost flow assumptions in Canada. 
A) This is an assumption about the flow of goods through the various departments in an organization. 
B) This is an assumption about the flow of costs between the income statement and the balance sheet. 
C) There is only one acceptable cost flow assumption under GAAP in Canada. 
D) Specific identification and LIFO are both acceptable cost flow assumptions in Canada.

Question 16

Which statement is correct about overhead?

Accepted Answer

A) Fixed overhead is capitalized under absorption costing. 
B) Fixed overhead is capitalized under variable costing. 
C) Variable overhead is always expensed. 
D) Selling costs are part of fixed overhead. 
A) Fixed overhead is capitalized under absorption costing. 
B) Fixed overhead is capitalized under variable costing. 
C) Variable overhead is always expensed. 
D) Selling costs are part of fixed overhead.

Question 17

Explain how a manufacturing company can manipulate earnings by including non-production costs in inventories. What does an auditor or financial statement user do to detect this type of manipulation?

Accepted Answer

When an enterprise incurs an expenditure

Question 18

Which statement is correct about the system used to account for inventories?

Accepted Answer

A) Organizations must use the perpetual system to determine the amount of inventory and cost of goods sold. 
B) The perpetual system is used to determine the amount of inventory and the periodic system is used to determine the cost of goods sold. 
C) The perpetual and periodic system are both acceptable methods to use for inventory control. 
D) The balance sheet under the perpetual system is different than that under the periodic system. 
A) Organizations must use the perpetual system to determine the amount of inventory and cost of goods sold. 
B) The perpetual system is used to determine the amount of inventory and the periodic system is used to determine the cost of goods sold. 
C) The perpetual and periodic system are both acceptable methods to use for inventory control. 
D) The balance sheet under the perpetual system is different than that under the periodic system.

Question 19

What is the meaning of the terms "F.O.B. shipping point"?

Accepted Answer

A) The buyer takes ownership of the goods once they arrive at their receiving location. 
B) The point at which the buyer takes legal possession of the goods. 
C) The buyer takes ownership of the goods as soon as they are shipped to the buyer. 
D) The seller remains liable for any loss or damage incurred during shipment. 
A) The buyer takes ownership of the goods once they arrive at their receiving location. 
B) The point at which the buyer takes legal possession of the goods. 
C) The buyer takes ownership of the goods as soon as they are shipped to the buyer. 
D) The seller remains liable for any loss or damage incurred during shipment.

Question 20

Connect has been selling cellular phones for the last five years. Its best-selling model is the E-PHONE, and costs have been falling quickly recently (although selling prices to Connect's customers are stable). The following information pertains to the E-PHONE inventory for August 2013:
   Required:
a. If Connect uses the FIFO method under a periodic inventory system, what would be the cost of ending inventory for August 2013?
b. If Connect uses the weighted-average method under a periodic inventory system, what would be the cost of goods sold for August 2013?
c. If Connect uses the weighted-average method under a perpetual inventory system, what would be the cost of ending inventory for August 2013?

Accepted Answer

a. @#IMG-DLM&_TB2820_00 b.
COGAS / units available

Which statement is correct about the various cost allocation methods available in GAAP?

Use the chart provided below to determine the impact if a company forgets to include $3,500 of inventory that was shipped FOB shipping point on December 25, 2013 but was still in transit at year end. The purchase invoice was processed in fiscal 2014.

Which goods in transit would be recorded in inventory at year end?

Use the chart provided below to determine the impact of a company processing a $3,500 purchase invoice in fiscal 2014 for a purchase made near its fiscal 2013 year end. The goods were appropriately included in the year end inventory count.

Use the following information: If the market price at year end is $210,000, what is the write down required?

Which statement is correct about using a cost flow assumption?

Which statement is correct about inventory errors?

Which goods in transit would not be recorded in the buyer's inventory at year end?

Assume that a purchase invoice for $1,000 was appropriately recorded in fiscal 2012, but the inventory was excluded in error during the ending inventory count. What impact will this not have on fiscal 2013 financial reporting?

Explain how manufacturing companies can manipulate earnings through its production process. What should an auditor or financial statement user do to detect this type of manipulation?

Compare the FIFO and LIFO methods of inventory valuation. Which method provides better quality information and why?

Which statement is correct about cost allocation methods under GAAP?

Which statement best explains the difference between the retail inventory and gross margin methods?

Which statement is correct about cost allocation methods under GAAP?

Which statement is correct about using a cost flow assumption?

Which statement is correct about overhead?

Explain how a manufacturing company can manipulate earnings by including non-production costs in inventories. What does an auditor or financial statement user do to detect this type of manipulation?

Which statement is correct about the system used to account for inventories?

What is the meaning of the terms "F.O.B. shipping point"?

Fundamentals of Financial Accounting Theory

Conceptual Frameworks for Financial Reporting

Accrual Accounting

Revenue Recognition

Cash and Receivables

Financial Assets

Property, Plant, and Equipment

Intangible Assets, Goodwill, Mineral Resources, and Government Grants

Applications of Fair Value to Non-Current Assets

Filters

Exam 6: Inventories

Which statement is correct about the various cost allocation methods available in GAAP?

Use the chart provided below to determine the impact if a company forgets to include $3,500 of inventory that was shipped FOB shipping point on December 25, 2013 but was still in transit at year end. The purchase invoice was processed in fiscal 2014.

Which goods in transit would be recorded in inventory at year end?

Use the chart provided below to determine the impact of a company processing a $3,500 purchase invoice in fiscal 2014 for a purchase made near its fiscal 2013 year end. The goods were appropriately included in the year end inventory count.

Use the following information: If the market price at year end is $210,000, what is the write down required?

Which statement is correct about using a cost flow assumption?

Which statement is correct about inventory errors?

Which goods in transit would not be recorded in the buyer's inventory at year end?

Assume that a purchase invoice for $1,000 was appropriately recorded in fiscal 2012, but the inventory was excluded in error during the ending inventory count. What impact will this not have on fiscal 2013 financial reporting?

Explain how manufacturing companies can manipulate earnings through its production process. What should an auditor or financial statement user do to detect this type of manipulation?

Compare the FIFO and LIFO methods of inventory valuation. Which method provides better quality information and why?

Which statement is correct about cost allocation methods under GAAP?

Which statement best explains the difference between the retail inventory and gross margin methods?

Which statement is correct about cost allocation methods under GAAP?

Which statement is correct about using a cost flow assumption?

Which statement is correct about overhead?

Explain how a manufacturing company can manipulate earnings by including non-production costs in inventories. What does an auditor or financial statement user do to detect this type of manipulation?

Which statement is correct about the system used to account for inventories?

What is the meaning of the terms "F.O.B. shipping point"?

Fundamentals of Financial Accounting Theory

Conceptual Frameworks for Financial Reporting

Accrual Accounting

Revenue Recognition

Cash and Receivables

Financial Assets

Property, Plant, and Equipment

Intangible Assets, Goodwill, Mineral Resources, and Government Grants

Applications of Fair Value to Non-Current Assets

Filters