Question 1

The work-in-process inventory is found on the books of a merchandising concern.

Accepted Answer

A) True 
 B)False

Question 2

Lorna Company has the following data available:   The estimated cost of the ending inventory using the gross profit method is ________.

Accepted Answer

A) $90,000 
B) $160,000 
C) $480,000 
D) $570,000 
A) $90,000 
B) $160,000 
C) $480,000 
D) $570,000

Question 3

Dombrose Company uses a perpetual inventory system.On January 1,inventory is $253,000.On April 5,Dombrose 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 Cost of Goods Sold and credit Sales Revenue and Inventory 
B) debit Accounts Receivable and credit Sales Revenue; debit Cost of Goods Sold and credit Inventory 
C) debit Accounts Receivable and credit Sales Revenue 
D) debit Cash and credit Sales Revenue 
A) debit Cash and Cost of Goods Sold and credit Sales Revenue and Inventory 
B) debit Accounts Receivable and credit Sales Revenue; debit Cost of Goods Sold and credit Inventory 
C) debit Accounts Receivable and credit Sales Revenue 
D) debit Cash and credit Sales Revenue

Question 4

The total cost in dollars of ending inventory is equal to the number of units on hand multiplied by the cost per unit.

Accepted Answer

A) True 
 B)False

Question 5

The Jensen Store has the following data for inventory:   The store uses the dollar-value LIFO retail method.The price index for the year is 1.08.The price index that pertains to the beginning inventory is 1.00.What is the retail value of the ending inventory at January 31?

Accepted Answer

A) $351,000 
B) $567,600 
C) $138,600 
D) $780,000 
A) $351,000 
B) $567,600 
C) $138,600 
D) $780,000

Question 6

An increase in the LIFO reserve is recorded as ________.

Accepted Answer

A) a credit to Cost of Goods Sold 
B) a debit to Cost of Goods Sold 
C) debit to the LIFO Reserve 
D) credit to the Inventory account 
A) a credit to Cost of Goods Sold 
B) a debit to Cost of Goods Sold 
C) debit to the LIFO Reserve 
D) credit to the Inventory account

Question 7

The first-in,first-out inventory method assigns the most recent costs to the cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 8

On June 1,Atkinson Company purchased $5,000 of inventory on account from Donnie Company.Donnie Company offers a 3% discount if payment is received within 15 days.Atkinson Company records the purchase using the gross method and the perpetual inventory system.Atkinson Company makes the payment for the inventory on June 10.The journal entry on June 10 by Atkinson Company includes ________.

Accepted Answer

A) a debit to Cash for $5,000 
B) a credit to Cash for $4,850 
C) a debit to Inventory for $150 
D) a credit to Interest Expense for $150 
A) a debit to Cash for $5,000 
B) a credit to Cash for $4,850 
C) a debit to Inventory for $150 
D) a credit to Interest Expense for $150

Question 9

How do inventory disclosures following IFRS differ from those following U.S.GAAP?

Accepted Answer

A) Firms using IFRS are required to report the amount of reversals of inventory write-downs. 
B) Firms using IFRS disclose the amount of write-downs recognized as expenses or losses. 
C) Firms using IFRS do not disclose the market value of inventory. 
D) Firms using IFRS do not disclose inventory financing agreements. 
A) Firms using IFRS are required to report the amount of reversals of inventory write-downs. 
B) Firms using IFRS disclose the amount of write-downs recognized as expenses or losses. 
C) Firms using IFRS do not disclose the market value of inventory. 
D) Firms using IFRS do not disclose inventory financing agreements.

Question 10

The Petrowski Company uses the perpetual inventory system.The Petrowski Company has the following data available for the month of January:
   1.Determine the Cost of Goods Sold for January using the following methods:
a.FIFO
b.LIFO
c.Moving-average (Round per unit costs and all other dollar amounts to two decimal places.)

Accepted Answer

a.FIFO
 FIFO periodic is the same as FIF

Question 11

IFRS does not allow the LIFO inventory method because ________.

Accepted Answer

A) of the increased taxes owed under the LIFO method 
B) the majority of companies do not actually sell the oldest items first 
C) it is viewed as unrealistic and lacks representational faithfulness of inventory flows 
D) the FIFO method more accurately reflects the cost of inventory 
A) of the increased taxes owed under the LIFO method 
B) the majority of companies do not actually sell the oldest items first 
C) it is viewed as unrealistic and lacks representational faithfulness of inventory flows 
D) the FIFO method more accurately reflects the cost of inventory

Question 12

At December 31,the Postotnik 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 has a balance of $900,000.Following IFRS,which journal entry is required on December 31 to adjust the ending balance of inventory if the direct method is used?

Accepted Answer

A) No journal entry is required. 
B) Debit Cost of Goods Sold $20,000 and credit Inventory $20,000. 
C) Debit Inventory $20,000 and credit Cost of Goods Sold $20,000. 
D) Debit Cost of Goods Sold $22,000 and credit Inventory $22,000. 
A) No journal entry is required. 
B) Debit Cost of Goods Sold $20,000 and credit Inventory $20,000. 
C) Debit Inventory $20,000 and credit Cost of Goods Sold $20,000. 
D) Debit Cost of Goods Sold $22,000 and credit Inventory $22,000.

Question 13

The Exclusive Company uses the perpetual inventory system.The Exclusive Company has the following data available for the month of January:   What is the cost of ending inventory on January 31 using LIFO?

Accepted Answer

A) $846 
B) $968 
C) $920 
D) $730 
A) $846 
B) $968 
C) $920 
D) $730

Question 14

Firms using the periodic inventory system record purchases of inventory with a ________.

Accepted Answer

A) credit to Purchases 
B) debit to Purchases 
C) debit to Inventory 
D) credit to Inventory 
A) credit to Purchases 
B) debit to Purchases 
C) debit to Inventory 
D) credit to Inventory

Question 15

On August 10,Charles Company purchased 75 refrigerators for $650 each from Appliances Wholesalers.The purchase was on account with terms of 3/10,n/30.Charles Company paid for 50 of the refrigerators on August 18 and the remaining refrigerators on August 30.Charles Company uses the gross method for purchase discounts and the perpetual inventory system to record the transactions.On August 30,Charles Company recorded ________.

Accepted Answer

A) a debit to Accounts Payable and a credit to Cash 
B) a debit to Cash and a credit to Accounts Payable 
C) a debit to Accounts Payable and a credit to Inventory 
D) a debit to Cash and a credit to Inventory 
A) a debit to Accounts Payable and a credit to Cash 
B) a debit to Cash and a credit to Accounts Payable 
C) a debit to Accounts Payable and a credit to Inventory 
D) a debit to Cash and a credit to Inventory

Question 16

Following IFRS,which of the following statements is not correct?

Accepted Answer

A) Firms determine the lower-of-cost-or-market value of inventory using individual-items or groups of items. 
B) IFRS inventory write-downs can be reversed later if the net realizable value of inventory increases. 
C) The net realizable value of inventory is calculated as the estimated selling price plus the estimated costs of completion and sale. 
D) IFRS-reporting firms determine if a write-down for inventory is needed by comparing the historical cost and the net realizable value of inventory. 
A) Firms determine the lower-of-cost-or-market value of inventory using individual-items or groups of items. 
B) IFRS inventory write-downs can be reversed later if the net realizable value of inventory increases. 
C) The net realizable value of inventory is calculated as the estimated selling price plus the estimated costs of completion and sale. 
D) IFRS-reporting firms determine if a write-down for inventory is needed by comparing the historical cost and the net realizable value of inventory.

Question 17

Beginning inventory + Net Purchases = Cost of Goods Sold.

Accepted Answer

A) True 
 B)False

Question 18

Sampe Company has the following data available:   If Sampe Company uses a perpetual FIFO inventory system,the cost of goods sold for the year is ________.

Accepted Answer

A) $5,400 
B) $16,850 
C) $12,100 
D) $4,200 
A) $5,400 
B) $16,850 
C) $12,100 
D) $4,200

Question 19

At December 31,the Selig 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 direct method is used?

Accepted Answer

A) Debit Cost of Goods Sold for $20,000 and credit Inventory for $20,000. 
B) Debit Inventory for $20,000 and credit Cost of Goods Sold for $20,000. 
C) Debit Cost of Goods Sold for $22,000 and credit Inventory for $22,000. 
D) Debit Inventory for $22,000 and credit Cost of Goods Sold for $22,000. 
A) Debit Cost of Goods Sold for $20,000 and credit Inventory for $20,000. 
B) Debit Inventory for $20,000 and credit Cost of Goods Sold for $20,000. 
C) Debit Cost of Goods Sold for $22,000 and credit Inventory for $22,000. 
D) Debit Inventory for $22,000 and credit Cost of Goods Sold for $22,000.

Question 20

The LIFO reserve is disclosed in the footnotes to the financial statements.

Accepted Answer

A) True 
 B)False

The work-in-process inventory is found on the books of a merchandising concern.

Lorna Company has the following data available: The estimated cost of the ending inventory using the gross profit method is ________.

Dombrose Company uses a perpetual inventory system.On January 1,inventory is $253,000.On April 5,Dombrose 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)________.

The total cost in dollars of ending inventory is equal to the number of units on hand multiplied by the cost per unit.

The Jensen Store has the following data for inventory: The store uses the dollar-value LIFO retail method.The price index for the year is 1.08.The price index that pertains to the beginning inventory is 1.00.What is the retail value of the ending inventory at January 31?

An increase in the LIFO reserve is recorded as ________.

The first-in,first-out inventory method assigns the most recent costs to the cost of goods sold.

How do inventory disclosures following IFRS differ from those following U.S.GAAP?

IFRS does not allow the LIFO inventory method because ________.

The Exclusive Company uses the perpetual inventory system.The Exclusive Company has the following data available for the month of January: What is the cost of ending inventory on January 31 using LIFO?

Firms using the periodic inventory system record purchases of inventory with a ________.

Following IFRS,which of the following statements is not correct?

Beginning inventory + Net Purchases = Cost of Goods Sold.

Sampe Company has the following data available: If Sampe Company uses a perpetual FIFO inventory system,the cost of goods sold for the year is ________.

The LIFO reserve is disclosed in the footnotes to the financial statements.

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

The work-in-process inventory is found on the books of a merchandising concern.

Lorna Company has the following data available: The estimated cost of the ending inventory using the gross profit method is ________.

Dombrose Company uses a perpetual inventory system.On January 1,inventory is $253,000.On April 5,Dombrose 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)________.

The total cost in dollars of ending inventory is equal to the number of units on hand multiplied by the cost per unit.

The Jensen Store has the following data for inventory: The store uses the dollar-value LIFO retail method.The price index for the year is 1.08.The price index that pertains to the beginning inventory is 1.00.What is the retail value of the ending inventory at January 31?

An increase in the LIFO reserve is recorded as ________.

The first-in,first-out inventory method assigns the most recent costs to the cost of goods sold.

How do inventory disclosures following IFRS differ from those following U.S.GAAP?

IFRS does not allow the LIFO inventory method because ________.

The Exclusive Company uses the perpetual inventory system.The Exclusive Company has the following data available for the month of January: What is the cost of ending inventory on January 31 using LIFO?

Firms using the periodic inventory system record purchases of inventory with a ________.

Following IFRS,which of the following statements is not correct?

Beginning inventory + Net Purchases = Cost of Goods Sold.

Sampe Company has the following data available: If Sampe Company uses a perpetual FIFO inventory system,the cost of goods sold for the year is ________.

The LIFO reserve is disclosed in the footnotes to the financial statements.

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