Question 1

Walker Company provides the following information:   What is the cost of goods available for sale?

Accepted Answer

A) $607,000 
B) $617,000 
C) $732,000 
D) $740,000 
A) $607,000 
B) $617,000 
C) $732,000 
D) $740,000 A

Question 2

If the LIFO reserve increases during the year,and inventory costs are increasing,________.

Accepted Answer

A) cost of goods sold will be higher under FIFO than LIFO 
B) cost of goods sold will be higher under LIFO than FIFO 
C) the journal entry will debit LIFO Reserve 
D) the journal entry will credit Cost of Goods Sold 
A) cost of goods sold will be higher under FIFO than LIFO 
B) cost of goods sold will be higher under LIFO than FIFO 
C) the journal entry will debit LIFO Reserve 
D) the journal entry will credit Cost of Goods Sold B

Question 3

Freight-out costs are included as part of inventory costs.

Accepted Answer

A) True 
 B)False  False

Question 4

The following information is available for the past year for a retail store:   What is the cost-to-retail ratio to estimate the cost of ending inventory using the conventional retail method? (Round cost-to-retail ratios to four decimal places.)

Accepted Answer

A) 50.00% 
B) 53.44% 
C) 40.00% 
D) 43.96% 
A) 50.00% 
B) 53.44% 
C) 40.00% 
D) 43.96%

Question 5

Donaldson Corporation uses a periodic inventory system.On January 1,inventory is $253,000.On April 5,Donaldson sells inventory with a selling price of $75,000 on account.The cost of the inventory sold is $50,000.The journal entry (entries)to record the sale is (are)________.

Accepted Answer

A) debit Cash and credit Sales Revenue 
B) debit Accounts Receivable and credit Sales Revenue; debit Cost of Goods Sold and credit Inventory 
C) debit Cash and Cost of Goods Sold and credit Sales Revenue and Inventory 
D) debit Accounts Receivable and credit Sales Revenue 
A) debit Cash and credit Sales Revenue 
B) debit Accounts Receivable and credit Sales Revenue; debit Cost of Goods Sold and credit Inventory 
C) debit Cash and Cost of Goods Sold and credit Sales Revenue and Inventory 
D) debit Accounts Receivable and credit Sales Revenue

Question 6

A fire destroyed the inventory of Barber Company.The following information is available:
   Required:
1.Prepare a schedule to compute the amount of inventory lost in the fire using the gross profit method.
2.Prepare the required journal entry after the fire.

Accepted Answer

The answer of A fire destroyed the inventory of Barber...

Question 7

When comparing the FIFO and LIFO inventory methods,________.

Accepted Answer

A) LIFO reports the most up-to-date inventory cost on the balance sheet 
B) FIFO results in the most realistic net income figure 
C) FIFO matches old inventory costs against revenue 
D) LIFO matches old inventory costs against revenue 
A) LIFO reports the most up-to-date inventory cost on the balance sheet 
B) FIFO results in the most realistic net income figure 
C) FIFO matches old inventory costs against revenue 
D) LIFO matches old inventory costs against revenue

Question 8

What is a LIFO liquidation? In a period of rising costs,why is a LIFO liquidation feared?

Accepted Answer

A LIFO liquidation occurs when ending in

Question 9

1.What is the LIFO conformity rule?
2.Why is LIFO used by so many companies?
3.What is the disadvantage of LIFO?

Accepted Answer

1.The LIFO conformity rule requires that

Question 10

At December 31,the Wendy Company has ending inventory with a historical cost of $630,000.Assume the company uses the perpetual inventory system.The current replacement cost of the inventory is $608,000.The net realizable value is $650,000.The normal profit on this inventory is $50,000.Before any adjustments at the end of the period,the cost of goods sold account has a balance of $900,000.Following U.S.GAAP,which journal entry is required on December 31 to adjust the ending balance of inventory if the indirect method is used?

Accepted Answer

A) Debit Cost of Goods Sold for $22,000 and credit Inventory for $22,000. 
B) Debit Inventory for $22,000 and credit Cost of Goods Sold for $22,000. 
C) Debit Loss on Inventory Writedown for $22,000 and credit Inventory for $22,000. 
D) Debit Loss on Inventory Writedown for $22,000 and credit Allowance to Reduce Inventory to Market for $22,000. 
A) Debit Cost of Goods Sold for $22,000 and credit Inventory for $22,000. 
B) Debit Inventory for $22,000 and credit Cost of Goods Sold for $22,000. 
C) Debit Loss on Inventory Writedown for $22,000 and credit Inventory for $22,000. 
D) Debit Loss on Inventory Writedown for $22,000 and credit Allowance to Reduce Inventory to Market for $22,000.

Question 11

The income taxes saved by using LIFO instead of FIFO are equal to ________.

Accepted Answer

A) the tax rate times the change in the ending inventory from last year to the current year 
B) the tax rate times the cost to retail ratio 
C) the tax rate times the LIFO reserve 
D) the tax rate times the change in the LIFO reserve 
A) the tax rate times the change in the ending inventory from last year to the current year 
B) the tax rate times the cost to retail ratio 
C) the tax rate times the LIFO reserve 
D) the tax rate times the change in the LIFO reserve

Question 12

Ferret Company uses the LIFO retail inventory method for inventory costing.Ferret Company has beginning inventory with a cost of $10,000 and a retail value of $40,000.During the year,the company purchases goods with a cost basis of $80,000 and a retail basis of $100,000.It has net markups of $5,000 and net markdowns of $5,000.Sales are $50,000 at retail.
Required:
What is the cost of the ending inventory using the LIFO retail inventory method? Round all ratios to four decimal places.Round all numbers to two decimal places.

Accepted Answer

@#IMG-DLM& 
 Ratio for beginning invento

Question 13

A company uses the conventional retail method to estimate the cost of ending inventory for interim financial statements.Which of the following responses describe the correct treatment of markups and markup cancellations in the calculation of the cost-to-retail ratio?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 14

If the cost-to-retail ratio increases under the conventional retail method,the cost assigned to the retail value of ending inventory will decrease.

Accepted Answer

A) True 
 B)False

Question 15

If costs are declining,using LIFO will result in lower cost of goods sold and a higher net income as compared to FIFO and moving-average methods.

Accepted Answer

A) True 
 B)False

Question 16

A periodic inventory system is used by most companies today due to the proliferation of computers.

Accepted Answer

A) True 
 B)False

Question 17

Following IFRS,reversal of an inventory write-down ________.

Accepted Answer

A) occurs when there is clear evidence of a decrease in net realizable value 
B) takes place when selling prices decrease following a write-down 
C) is limited to the amount of the original write-down 
D) will increase inventory but decrease reported income 
A) occurs when there is clear evidence of a decrease in net realizable value 
B) takes place when selling prices decrease following a write-down 
C) is limited to the amount of the original write-down 
D) will increase inventory but decrease reported income

Question 18

When writing down the inventory to market value the direct method reports a loss as a separate line item on the income statement.

Accepted Answer

A) True 
 B)False

Question 19

Inventory disclosures require information about any inventory financing arrangements.

Accepted Answer

A) True 
 B)False

Question 20

The flow of a manufacturer's product costs through the inventory accounts is ________.

Accepted Answer

A) Work-in-Process Inventory,Cost of Goods Sold,and Finished Goods Inventory 
B) Raw Materials Inventory,Cost of Goods Sold,and Finished Goods Inventory 
C) Raw Materials Inventory,Finished Goods Inventory,and Work-in-Process Inventory 
D) Raw Materials Inventory,Work-in-Process Inventory,and Finished Goods Inventory 
A) Work-in-Process Inventory,Cost of Goods Sold,and Finished Goods Inventory 
B) Raw Materials Inventory,Cost of Goods Sold,and Finished Goods Inventory 
C) Raw Materials Inventory,Finished Goods Inventory,and Work-in-Process Inventory 
D) Raw Materials Inventory,Work-in-Process Inventory,and Finished Goods Inventory

Walker Company provides the following information: What is the cost of goods available for sale?

If the LIFO reserve increases during the year,and inventory costs are increasing,________.

Freight-out costs are included as part of inventory costs.

The following information is available for the past year for a retail store: What is the cost-to-retail ratio to estimate the cost of ending inventory using the conventional retail method? (Round cost-to-retail ratios to four decimal places.)

Donaldson Corporation uses a periodic inventory system.On January 1,inventory is $253,000.On April 5,Donaldson sells inventory with a selling price of $75,000 on account.The cost of the inventory sold is $50,000.The journal entry (entries)to record the sale is (are)________.

A fire destroyed the inventory of Barber Company.The following information is available: Required: 1.Prepare a schedule to compute the amount of inventory lost in the fire using the gross profit method. 2.Prepare the required journal entry after the fire.

When comparing the FIFO and LIFO inventory methods,________.

What is a LIFO liquidation? In a period of rising costs,why is a LIFO liquidation feared?

1.What is the LIFO conformity rule? 2.Why is LIFO used by so many companies? 3.What is the disadvantage of LIFO?

The income taxes saved by using LIFO instead of FIFO are equal to ________.

A company uses the conventional retail method to estimate the cost of ending inventory for interim financial statements.Which of the following responses describe the correct treatment of markups and markup cancellations in the calculation of the cost-to-retail ratio?

If the cost-to-retail ratio increases under the conventional retail method,the cost assigned to the retail value of ending inventory will decrease.

If costs are declining,using LIFO will result in lower cost of goods sold and a higher net income as compared to FIFO and moving-average methods.

A periodic inventory system is used by most companies today due to the proliferation of computers.

Following IFRS,reversal of an inventory write-down ________.

When writing down the inventory to market value the direct method reports a loss as a separate line item on the income statement.

Inventory disclosures require information about any inventory financing arrangements.

The flow of a manufacturer's product costs through the inventory accounts is ________.

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

OL: Revenue Recognition

Short-Term Operating Assets: Cash and Receivables

Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

OL: Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

Filters

Exam 11: Short-Term Operating Assets: Inventory

Walker Company provides the following information: What is the cost of goods available for sale?

If the LIFO reserve increases during the year,and inventory costs are increasing,________.

Freight-out costs are included as part of inventory costs.

The following information is available for the past year for a retail store: What is the cost-to-retail ratio to estimate the cost of ending inventory using the conventional retail method? (Round cost-to-retail ratios to four decimal places.)

Donaldson Corporation uses a periodic inventory system.On January 1,inventory is $253,000.On April 5,Donaldson sells inventory with a selling price of $75,000 on account.The cost of the inventory sold is $50,000.The journal entry (entries)to record the sale is (are)________.

A fire destroyed the inventory of Barber Company.The following information is available: Required: 1.Prepare a schedule to compute the amount of inventory lost in the fire using the gross profit method. 2.Prepare the required journal entry after the fire.

When comparing the FIFO and LIFO inventory methods,________.

What is a LIFO liquidation? In a period of rising costs,why is a LIFO liquidation feared?

1.What is the LIFO conformity rule? 2.Why is LIFO used by so many companies? 3.What is the disadvantage of LIFO?

The income taxes saved by using LIFO instead of FIFO are equal to ________.

A company uses the conventional retail method to estimate the cost of ending inventory for interim financial statements.Which of the following responses describe the correct treatment of markups and markup cancellations in the calculation of the cost-to-retail ratio?

If the cost-to-retail ratio increases under the conventional retail method,the cost assigned to the retail value of ending inventory will decrease.

If costs are declining,using LIFO will result in lower cost of goods sold and a higher net income as compared to FIFO and moving-average methods.

A periodic inventory system is used by most companies today due to the proliferation of computers.

Following IFRS,reversal of an inventory write-down ________.

When writing down the inventory to market value the direct method reports a loss as a separate line item on the income statement.

Inventory disclosures require information about any inventory financing arrangements.

The flow of a manufacturer's product costs through the inventory accounts is ________.

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

OL: Revenue Recognition

Short-Term Operating Assets: Cash and Receivables

Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

OL: Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

Filters