Question 1

Which of the following is a characteristic of a perpetual inventory system?

Accepted Answer

A)  Inventory purchases are debited to a Purchases account. 
B)  Inventory records are not kept for every item. 
C)  Cost of goods sold is recorded with each sale. 
D)  Cost of goods sold is determined as the amount of purchases less the change in inventory. 
A)  Inventory purchases are debited to a Purchases account. 
B)  Inventory records are not kept for every item. 
C)  Cost of goods sold is recorded with each sale. 
D)  Cost of goods sold is determined as the amount of purchases less the change in inventory.

Question 2

FIFO and LIFO inventory methods
During June, the following changes in inventory item 27 took place:
 $$\begin{array} { l l l l } 
\text { June } & 1 & \text { Balance } & 1,400 \text { units } @ \$ 24 \
&14 & \text { Purchased } & \text { g00 units } @ \$ 56 \
&24 & \text { Purchased } & 700 \text { units } @ \$ 50 \
&8 & \text { sold } & 400 \text { units } @ \$ 50 \
&10 & \text { sold } & 1,000 \text { units } @ \$ 40 \
&29 & \text { sold } & 500 \text { units } @ \$ 44
\end{array}$$ Perpetual inventories are maintained.
Instructions
What is the cost of the ending inventory for item 27 under the following methods? (Show calculations.) 
a) FIFO
b) LIFO

Accepted Answer

a)@#LAT-DLM& 700 @ $30 =	@#LAT-DLM&$21,0

Question 3

A manufacturer that carries very little inventory likely follows the

Accepted Answer

A)  allowance method. 
B)  just-in-time method. 
C)  indirect method. 
D)  replacement method. 
A)  allowance method. 
B)  just-in-time method. 
C)  indirect method. 
D)  replacement method.

Question 4

The gross profit percentage is calculated by

Accepted Answer

A)  dividing cost of goods sold by net sales. 
B)  dividing gross profit on sales by cost of goods sold. 
C)  dividing gross profit on sales by net sales. 
D)  dividing gross profit on sales by goods available for sale. 
A)  dividing cost of goods sold by net sales. 
B)  dividing gross profit on sales by cost of goods sold. 
C)  dividing gross profit on sales by net sales. 
D)  dividing gross profit on sales by goods available for sale.

Question 5

Under IFRS, bearer plants used to grow produce including tea bushes, grape vines, and rubber trees are accounted for

Accepted Answer

A)  as agricultural assets, in accordance with IAS41. 
B)  using the cost or revaluation method. 
C)  as inventory, at cost, in accordance with IAS2. 
D)  as inventory, at fair value less costs to sell, in accordance with IAS2. 
A)  as agricultural assets, in accordance with IAS41. 
B)  using the cost or revaluation method. 
C)  as inventory, at cost, in accordance with IAS2. 
D)  as inventory, at fair value less costs to sell, in accordance with IAS2.

Question 6

Wilma received merchandise on consignment from Betty. As at March 31, Wilma had recorded the transaction as a purchase and included the goods in inventory. The effect of this on Wilma's financial statements for March 31 would be

Accepted Answer

A)  net income was correct and current assets and current liabilities were overstated. 
B)  net income, current assets, and current liabilities were overstated. 
C)  net income and current liabilities were overstated. 
D)  no effect. 
A)  net income was correct and current assets and current liabilities were overstated. 
B)  net income, current assets, and current liabilities were overstated. 
C)  net income and current liabilities were overstated. 
D)  no effect.

Question 7

Use the following information for the following questions:
The following information is available for Anselmo Corporation's inventories:
 December 31, 2019:
At cost: $\$ 585,000$
At lower of cost and net realizable value (NRV): $\$ 525,000$
December 31, 2020:
At cost:$\$780,000$
At lower of cost and net realizable value (NRV): $740,000 Anselmo uses a periodic inventory system and an allowance account to adjust its inventory from cost to the lower of cost and NRV.
-Anselmo's 2019 journal entry to adjust its inventory from cost to the lower of cost and net realizable value (NRV) will include a

Accepted Answer

A)  debit of $60,000 to Loss on Inventory Due to Decline in NRV. 
B)  credit of $60,000 to Loss on Inventory Due to Decline in NRV. 
C)  debit of $60,000 to Allowance to Reduce Inventory to NRV. 
D)  credit of $60,000 to Inventory. 
A)  debit of $60,000 to Loss on Inventory Due to Decline in NRV. 
B)  credit of $60,000 to Loss on Inventory Due to Decline in NRV. 
C)  debit of $60,000 to Allowance to Reduce Inventory to NRV. 
D)  credit of $60,000 to Inventory.

Question 8

The lower of cost and NRV principle specifies that the comparison is usually applied on

Accepted Answer

A)  total inventory. 
B)  individual categories of inventory. 
C)  an item-by-item basis. 
D)  major categories of inventory. 
A)  total inventory. 
B)  individual categories of inventory. 
C)  an item-by-item basis. 
D)  major categories of inventory.

Question 9

Vendor rebates
Bell Corp. has been purchasing more inventory from Wood Ltd. in recent years. Wood offers Bell a rebate of $0.14 per unit on each unit purchased if Wood buys more than 80,000 units in a calendar year. Bell has already exceeded this threshold in the first 6 months of 2020, as it has purchased 120,000 units.
Instructions
Prepare the entry that Bell should record if it is preparing semi-annual financial statements assuming that, of the 120,000 units purchased, 40,000 units are still on hand.

Accepted Answer

@#IMG-DLM&
As the rebate only relates to the 40,00

Question 10

Average cost formulas
Distinguish between the weighted average cost formula and the moving-average cost formula.

Accepted Answer

The @#LAT-DLM& takes into account that the volume

Question 11

When using a periodic inventory system,

Accepted Answer

A)  a Purchases account is not used. 
B)  a Cost of Goods Sold account is used. 
C)  two entries are required to record a sale. 
D)  a Cost of Goods Sold account is not used. 
A)  a Purchases account is not used. 
B)  a Cost of Goods Sold account is used. 
C)  two entries are required to record a sale. 
D)  a Cost of Goods Sold account is not used.

Question 12

On April 15 of the current year, a fire destroyed the entire inventory of Nourish, a retail store. The following data are available: $\begin{array}{llcc}
  \text {Sales, January 1 through April 15  } &\$473,000  \
 \text { Inventory, January 1 } &60,000\
 \text { Purchases, January 1 through April 15 } &372,000\
 \text {Markup on cost  } &25\%\
\end{array}$
 The amount of the inventory loss is estimated to be

Accepted Answer

A)  $327,000. 
B)  $67,000. 
C)  $159,250. 
D)  $53,600. 
A)  $327,000. 
B)  $67,000. 
C)  $159,250. 
D)  $53,600.

Question 13

Use the following information for the following questions:
The following information is available for Anselmo Corporation's inventories:
 December 31, 2019:
At cost: $\$ 585,000$
At lower of cost and net realizable value (NRV): $\$ 525,000$
December 31, 2020:
At cost:$\$780,000$
At lower of cost and net realizable value (NRV): $740,000 Anselmo uses a periodic inventory system and an allowance account to adjust its inventory from cost to the lower of cost and NRV.
-Anselmo's 2020 journal entry to adjust its inventory from cost to the lower of cost and net realizable value (NRV) will include a

Accepted Answer

A)  debit of $40,000 to Loss on Inventory Due to Decline in NRV. 
B)  debit of $40,000 to Allowance to Reduce Inventory to NRV. 
C)  debit of $20,000 to Allowance to Reduce Inventory to NRV. 
D)  credit of $40,000 to Recovery of Loss Due to Decline in Inventory. 
A)  debit of $40,000 to Loss on Inventory Due to Decline in NRV. 
B)  debit of $40,000 to Allowance to Reduce Inventory to NRV. 
C)  debit of $20,000 to Allowance to Reduce Inventory to NRV. 
D)  credit of $40,000 to Recovery of Loss Due to Decline in Inventory.

Question 14

Periodic FIFO
Maine Corporation sells item A as part of its product line, using the periodic system. Information as to balances on hand, purchases, and sales of item A are given in the following table for the first six months of 2020:
 $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $$ \text { Quantities}$
 
$\begin{array} { l r r r c }
&&&&\text { Unit Price}\
 \text { Date } & \text { Purchased } & \text { Sold } & \text { Balance } & \text { of Purchase } \ \text { January 11 } & - & - & 300 & \$ 5.00 \ \text { January 24 } & 1,300 & - & 1,600 & 5.20 \ \text { February 8 } & - & 300 & 1,300 & - \ \text { March 16 } & - & 560 & 740 & - \ \text { June 11 } & 600 & - & 1,340 & 5.60 \end{array}$
Instructions
Calculate the cost of goods sold for the first six months of 2020 using the FIFO cost formula.

Accepted Answer

The answer of Periodic FIFO
Maine Corporation sells item A as...

Question 15

The following information is available for Plymouth Ltd. for last year: $$\begin{array} { l l } 
\text { Freight-in } & \$ 120,000 \
\text { Purchase returns } & 183,000 \
\text { Selling expenses } & 255,000 \
\text { Ending inventory } & 480,000
\end{array}$$ The cost of goods sold is equal to 200% of selling expenses. What is the cost of goods available for sale?

Accepted Answer

A)  Cannot be determined from information given. 
B)  $447,000 
C)  $990,000 
D)  $927,000 
A)  Cannot be determined from information given. 
B)  $447,000 
C)  $990,000 
D)  $927,000

Question 16

For last month, Mingi Corp.'s cost of goods sold and ending inventory were $200,000 and $300,000 respectively. Assuming Mingi had neither purchases nor returns during the month, what was the cost of its beginning inventory?

Accepted Answer

A)  $100,000 
B)  $300,000 
C)  $500,000 
D)  Cannot be determined from the information given. 
A)  $100,000 
B)  $300,000 
C)  $500,000 
D)  Cannot be determined from the information given.

Question 17

Which of the following types of interest cost incurred in connection with the purchase or manufacture of inventory should be capitalized as a product cost?

Accepted Answer

A)  purchase discounts lost 
B)  interest incurred during the production of discrete projects such as ships or real estate projects 
C)  interest incurred on notes payable to vendors for routine purchases made on a repetitive basis 
D)  interest on a building mortgage 
A)  purchase discounts lost 
B)  interest incurred during the production of discrete projects such as ships or real estate projects 
C)  interest incurred on notes payable to vendors for routine purchases made on a repetitive basis 
D)  interest on a building mortgage

Question 18

Use the following information for the following question:  
Tang Inc. uses the retail inventory method. The following information is available for the current year:
$\begin{array}{lll} 
& \text { Cost } & \text { Retail } \
\text { Beginning inventory } & \$ 117,000 & \$ 183,000 \
\text { Purchases } & 442,000 & 623,000 \
\text { Freight-in } & 8,000 & - \
\text { Employee discounts } & - & 3,000 \
\text { Net markups } & - & 22,000 \
\text { Net markdowns } & - & 30,000 \
\text { Sales } & - & 585,000
\end{array}$

-The ending inventory at retail should be

Accepted Answer

A)  $210,000. 
B)  $216,000. 
C)  $225,000. 
D)  $240,000. 
A)  $210,000. 
B)  $216,000. 
C)  $225,000. 
D)  $240,000.

Question 19

What is the difference between an executory contract and an onerous contract?

Accepted Answer

An executory contract is one where neith

Question 20

Retail inventory method
Explain five reasons why the retail inventory method of calculating inventory would be used.

Accepted Answer

The retail inventory method of calculati

Which of the following is a characteristic of a perpetual inventory system?

A manufacturer that carries very little inventory likely follows the

The gross profit percentage is calculated by

Under IFRS, bearer plants used to grow produce including tea bushes, grape vines, and rubber trees are accounted for

Wilma received merchandise on consignment from Betty. As at March 31, Wilma had recorded the transaction as a purchase and included the goods in inventory. The effect of this on Wilma's financial statements for March 31 would be

The lower of cost and NRV principle specifies that the comparison is usually applied on

Average cost formulas Distinguish between the weighted average cost formula and the moving-average cost formula.

When using a periodic inventory system,

The following information is available for Plymouth Ltd. for last year: Freight-in \ 120,000 Purchase returns 183,000 Selling expenses 255,000 Ending inventory 480,000 The cost of goods sold is equal to 200% of selling expenses. What is the cost of goods available for sale?

For last month, Mingi Corp.'s cost of goods sold and ending inventory were $200,000 and $300,000 respectively. Assuming Mingi had neither purchases nor returns during the month, what was the cost of its beginning inventory?

Which of the following types of interest cost incurred in connection with the purchase or manufacture of inventory should be capitalized as a product cost?

What is the difference between an executory contract and an onerous contract?

Retail inventory method Explain five reasons why the retail inventory method of calculating inventory would be used.

The Canadian Financial Reporting Environment

Conceptual Framework Underlying Financial Reporting

Measurement

Reporting Financial Performance

Financial Position and Cash Flows

Revenue Recognition

Cash and Receivables

Investments

Property, Plant, and Equipment: Accounting Model Basics

Depreciation, Impairment, and Disposition

Intangible Assets and Goodwill

Accounting Information Systems and Adjusting Entries: A Comprehensive Guide

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Exam 8: Inventory

Which of the following is a characteristic of a perpetual inventory system?

A manufacturer that carries very little inventory likely follows the

The gross profit percentage is calculated by

Under IFRS, bearer plants used to grow produce including tea bushes, grape vines, and rubber trees are accounted for

Wilma received merchandise on consignment from Betty. As at March 31, Wilma had recorded the transaction as a purchase and included the goods in inventory. The effect of this on Wilma's financial statements for March 31 would be

The lower of cost and NRV principle specifies that the comparison is usually applied on

Average cost formulas Distinguish between the weighted average cost formula and the moving-average cost formula.

When using a periodic inventory system,

The following information is available for Plymouth Ltd. for last year: Freight-in \ 120,000 Purchase returns 183,000 Selling expenses 255,000 Ending inventory 480,000 The cost of goods sold is equal to 200% of selling expenses. What is the cost of goods available for sale?

For last month, Mingi Corp.'s cost of goods sold and ending inventory were $200,000 and $300,000 respectively. Assuming Mingi had neither purchases nor returns during the month, what was the cost of its beginning inventory?

Which of the following types of interest cost incurred in connection with the purchase or manufacture of inventory should be capitalized as a product cost?

What is the difference between an executory contract and an onerous contract?

Retail inventory method Explain five reasons why the retail inventory method of calculating inventory would be used.

The Canadian Financial Reporting Environment

Conceptual Framework Underlying Financial Reporting

Measurement

Reporting Financial Performance

Financial Position and Cash Flows

Revenue Recognition

Cash and Receivables

Investments

Property, Plant, and Equipment: Accounting Model Basics

Depreciation, Impairment, and Disposition

Intangible Assets and Goodwill

Accounting Information Systems and Adjusting Entries: A Comprehensive Guide

Filters