Question 1

A manufacturing company typically maintains the following inventory account(s):

Accepted Answer

A)  Merchandise Inventory. 
B)  Raw Materials and Work in Process only. 
C)  Raw Materials, Work in Process, and Finished Goods. 
D)  Work in Process and Merchandise Inventory. 
A)  Merchandise Inventory. 
B)  Raw Materials and Work in Process only. 
C)  Raw Materials, Work in Process, and Finished Goods. 
D)  Work in Process and Merchandise Inventory.

Question 2

At December 31, 2020, the following information was available from Hampshire Corp.'s accounting records: $$\begin{array} { l l l } 
 & \text { Cost } & \text { Retail } \
\text { Inventory, Jan } 1& \$ 147,000 & \$ 215,000 \
\text { Purchases } & 763,000 & 1,155,000 \
\text { Additional markups } &---&\underline{40,000}\
\text { Available for sale } &\underline{\$910,000} &\underline{\$ 1,410,000} \

\end{array}$$
 Sales for the year totalled $1.1 million. Markdowns amounted to $10,000. Under the lower of average cost and market method, Hampshire's estimated inventory at December 31, 2020 was

Accepted Answer

A)  $188,500. 
B)  $195,000. 
C)  $200,071. 
D)  $205,070. 
A)  $188,500. 
B)  $195,000. 
C)  $200,071. 
D)  $205,070.

Question 3

The cost of goods available for sale is calculated as

Accepted Answer

A)  beginning inventory plus ending inventory. 
B)  beginning inventory minus ending inventory. 
C)  beginning inventory plus the cost of goods acquired during the period. 
D)  cost of goods acquired during the period minus ending inventory. 
A)  beginning inventory plus ending inventory. 
B)  beginning inventory minus ending inventory. 
C)  beginning inventory plus the cost of goods acquired during the period. 
D)  cost of goods acquired during the period minus ending inventory.

Question 4

The use of a "replacement cost" definition of "market" is based on the assumption that

Accepted Answer

A)  a decline in an item's replacement cost results in a decline in its selling price. 
B)  prices will fall in the same proportion as input costs fall. 
C)  replacement cost is appropriate for all situations. 
D)  using "net realizable value less a normal profit margin" will arbitrarily shift profits from one period to another. 
A)  a decline in an item's replacement cost results in a decline in its selling price. 
B)  prices will fall in the same proportion as input costs fall. 
C)  replacement cost is appropriate for all situations. 
D)  using "net realizable value less a normal profit margin" will arbitrarily shift profits from one period to another.

Question 5

FIFO cost formula
The Malibu Shop shows the following data related to item Y27:
 $$\begin{array} { l l } 
\text { Inventory, February 1 } & 100 \text { units @ } \$ 7.00 \
\text { Purchase, February } 9 & 200 \text { units @ } \$ 7.60 \
\text { Purchase, February 19 } & 150 \text { units @ } \$ 7.90 \
\text { Inventory, February } 28 & 200 \text { units }
\end{array}$$ Instructions
Using the FIFO cost formula, what value should be assigned to the ending inventory of item Y27?

Accepted Answer

Question 6

All of the following costs should be charged to expense in the period in which they are incurred EXCEPT for

Accepted Answer

A)  manufacturing overhead costs for a product manufactured and sold in the same accounting period. 
B)  costs that will not benefit any future period. 
C)  costs from idle manufacturing capacity resulting from an unexpected plant shutdown. 
D)  costs of normal shrinkage and scrap incurred for the manufacture of a product in ending inventory. 
A)  manufacturing overhead costs for a product manufactured and sold in the same accounting period. 
B)  costs that will not benefit any future period. 
C)  costs from idle manufacturing capacity resulting from an unexpected plant shutdown. 
D)  costs of normal shrinkage and scrap incurred for the manufacture of a product in ending inventory.

Question 7

Which of the following does NOT correctly describe the specific identification cost formula?

Accepted Answer

A)  This method is most appropriate when goods are not interchangeable. 
B)  This method is most appropriate when goods are interchangeable. 
C)  This method is generally used for expensive, one-of-a-kind merchandise. 
D)  This method is often used for merchandise with serial numbers such as automobiles. 
A)  This method is most appropriate when goods are not interchangeable. 
B)  This method is most appropriate when goods are interchangeable. 
C)  This method is generally used for expensive, one-of-a-kind merchandise. 
D)  This method is often used for merchandise with serial numbers such as automobiles.

Question 8

Which of the following is NOT a premise upon which the gross profit method of estimating inventory is based?

Accepted Answer

A)  Beginning inventory plus purchases equals cost of goods available for sale. 
B)  The gross profit must be equal to the contribution margin on goods sold. 
C)  Goods not included in cost of goods sold must be on hand in ending inventory. 
D)  When an estimate of cost of goods sold is deducted from cost of goods available for sale, the result is an estimate of ending inventory. 
A)  Beginning inventory plus purchases equals cost of goods available for sale. 
B)  The gross profit must be equal to the contribution margin on goods sold. 
C)  Goods not included in cost of goods sold must be on hand in ending inventory. 
D)  When an estimate of cost of goods sold is deducted from cost of goods available for sale, the result is an estimate of ending inventory.

Question 9

Inventory management
Explain why inventory management is referred to as a double-edged sword. What competing interests is management trying to balance in their management of inventories?

Accepted Answer

On one hand, management wants to have a

Question 10

The average days to sell inventory ratio is calculated as

Accepted Answer

A)  average inventory divided by inventory turnover. 
B)  inventory turnover divided by cost of goods sold. 
C)  inventory turnover divided by 365 days. 
D)  365 days divided by inventory turnover. 
A)  average inventory divided by inventory turnover. 
B)  inventory turnover divided by cost of goods sold. 
C)  inventory turnover divided by 365 days. 
D)  365 days divided by inventory turnover.

Question 11

Accounting definition
Define inventory from an accounting perspective

Accepted Answer

For accounting purposes, inventories are

Question 12

Items to be included in ending inventory
During the year, the following transactions took place for Blades Corporation. For each transaction, indicate whether the inventory should be included in Blades' inventory at the end of the year.
a) On December 31, the last day of the fiscal year, Baldes shipped 1,000 units to one of its customers. The product has not yet been received by the end of the day. Terms were FOB destination point.
b) Blades shipped some product to a customer, who received the product on December 15. Terms of sale call for payment on January 10 of the following year.
c) Roller Corporation is holding inventory on consignment for Blades. On December 31, 30% of the inventory is still at Roller's location.
d) Blades' manager instructed an employee to drive some inventory off-site so it could be considered sold during the fiscal year.

Accepted Answer

a) should be include

Question 13

Which of the following statements regarding borrowing costs is correct?

Accepted Answer

A)  Neither ASPE nor IFRS usually require disclosure of these items. 
B)  They are usually amortized until the majority of the underlying products have been sold. 
C)  They are usually treated as period costs if they are incurred to bring inventories to a condition ready for sale. 
D)  If interest is capitalized, ASPE requires this policy and the amount capitalized to be disclosed. 
A)  Neither ASPE nor IFRS usually require disclosure of these items. 
B)  They are usually amortized until the majority of the underlying products have been sold. 
C)  They are usually treated as period costs if they are incurred to bring inventories to a condition ready for sale. 
D)  If interest is capitalized, ASPE requires this policy and the amount capitalized to be disclosed.

Question 14

At January 1, 2020, Nevada Ltd. had 150 units of product A on hand, costing $32 each. Purchases of product A during January were as follows: $$\begin{array} { l l l l } 
\text { Date } & & \text { Units } & \text { Unit Cost } \
\text { Jan } 10 & & 200 & \$ 33.00 \
& 18 & 250 & 34.50 \
& 28 & 100 & 36.00
\end{array}$$ A physical count on January 31, 2020 shows 200 units of product A on hand. The cost of the inventory at January 31, 2020 under the FIFO cost formula is

Accepted Answer

A)  $6,150. 
B)  $6,375. 
C)  $6,600. 
D)  $7,050. 
A)  $6,150. 
B)  $6,375. 
C)  $6,600. 
D)  $7,050.

Question 15

Delaware Corp.'s accounts payable at December 31, 2020, totalled $450,000 before any necessary year-end adjustments relating to the following:
1) On December 27, 2020, Delaware wrote and recorded cheques to creditors totalling $175,000 causing an overdraft of $100,000 in Delaware's bank account at December 31, 2020. The cheques were mailed out on January 10, 2021.
2) On December 28, 2020, Delaware purchased and received goods for $100,000, terms 2/10, n/30. Delaware records purchases and accounts payable at net amounts. The invoice was recorded and paid on January 3, 2021.
3) Goods shipped FOB destination on December 20, 2020 from a vendor were received on January 2, 2021. The invoice cost was $65,000.
At December 31, 2020, what amount should Delaware report as total accounts payable?

Accepted Answer

A)  $550,000 
B)  $575,000 
C)  $723,000 
D)  $755,500 
A)  $550,000 
B)  $575,000 
C)  $723,000 
D)  $755,500

Question 16

When substantially all risks and rewards of ownership have passed to the purchaser, the purchaser then recognizes an asset. For this recognition, which of the following statements is correct?

Accepted Answer

A)  The purchaser must have both legal title and possession of the goods. 
B)  Legal title and possession do not always pass to the purchaser at the same time. 
C)  In practice, recording inventory purchases often takes place when they leave the seller's place of business. 
D)  The purchaser must have possession of goods before it has legal title. 
A)  The purchaser must have both legal title and possession of the goods. 
B)  Legal title and possession do not always pass to the purchaser at the same time. 
C)  In practice, recording inventory purchases often takes place when they leave the seller's place of business. 
D)  The purchaser must have possession of goods before it has legal title.

Question 17

Which of the following does NOT correctly describe the weighted average cost formula?

Accepted Answer

A)  It prices inventory on the basis of the average cost of beginning inventory. 
B)  It prices inventory on the basis of the average cost of goods available for sale during the period. 
C)  It takes into account that the volume of goods acquired at each price is different. 
D)  It includes the cost of beginning inventory in the calculations. 
A)  It prices inventory on the basis of the average cost of beginning inventory. 
B)  It prices inventory on the basis of the average cost of goods available for sale during the period. 
C)  It takes into account that the volume of goods acquired at each price is different. 
D)  It includes the cost of beginning inventory in the calculations.

Question 18

A hardware retailer typically maintains the following inventory account(s):

Accepted Answer

A)  Merchandise Inventory. 
B)  Raw Materials and Work in Process only. 
C)  Raw Materials, Work in Process, and Finished Goods. 
D)  Work in Process and Merchandise Inventory. 
A)  Merchandise Inventory. 
B)  Raw Materials and Work in Process only. 
C)  Raw Materials, Work in Process, and Finished Goods. 
D)  Work in Process and Merchandise Inventory.

Question 19

For calendar 2020, Redfern Corporation reported pre-tax income of $270,000. You have been made aware that the company's beginning inventory was overstated by $14,000 and ending inventory was understated by $9,000. What is Redfern's corrected pre-tax income for 2020?

Accepted Answer

A)  $270,000 
B)  $275,000 
C)  $265,000 
D)  $293,000 
A)  $270,000 
B)  $275,000 
C)  $265,000 
D)  $293,000

Question 20

Use the following information for the following questions:
The following information was available from the inventory records of Key Company for January:
 $$\begin{array} { c l l l } 
& \text { Units } & \text { Unit Cost } & \text { Total Cost } \
\text { Balance at January } 1 & 3,000 & \mathbf { \$ 9 . 7 7 } & \mathbf { \$ 2 9 , 3 1 0 } \
\text { Purchase: } & & & \
\text { January } 6 & 2,000 & 10.30 & \mathbf { 2 0 , 6 0 0 } \
\text { January } 26 & 2,700 & 10.71 & \mathbf { 2 8 , 9 1 7 } \
\text { sales: } & & & \
\text { January } 7 & ( 2,500 )  & & \
\quad \text { January } 31 &\underline{( 4,200 )} & &\
\text { Balance at January }  &\underline{1,000}&& 
\end{array}$$
-Assuming that Key uses the periodic inventory system, what should the inventory be at January 31, using the weighted-average inventory method, rounded to the nearest dollar?

Accepted Answer

A)  $10,237 
B)  $10,260 
C)  $10,360 
D)  $10,505 
A)  $10,237 
B)  $10,260 
C)  $10,360 
D)  $10,505

A manufacturing company typically maintains the following inventory account(s):

The cost of goods available for sale is calculated as

The use of a "replacement cost" definition of "market" is based on the assumption that

All of the following costs should be charged to expense in the period in which they are incurred EXCEPT for

Which of the following does NOT correctly describe the specific identification cost formula?

Which of the following is NOT a premise upon which the gross profit method of estimating inventory is based?

Inventory management Explain why inventory management is referred to as a double-edged sword. What competing interests is management trying to balance in their management of inventories?

The average days to sell inventory ratio is calculated as

Accounting definition Define inventory from an accounting perspective

Which of the following statements regarding borrowing costs is correct?

When substantially all risks and rewards of ownership have passed to the purchaser, the purchaser then recognizes an asset. For this recognition, which of the following statements is correct?

Which of the following does NOT correctly describe the weighted average cost formula?

A hardware retailer typically maintains the following inventory account(s):

For calendar 2020, Redfern Corporation reported pre-tax income of $270,000. You have been made aware that the company's beginning inventory was overstated by $14,000 and ending inventory was understated by $9,000. What is Redfern's corrected pre-tax income for 2020?

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

A manufacturing company typically maintains the following inventory account(s):

The cost of goods available for sale is calculated as

The use of a "replacement cost" definition of "market" is based on the assumption that

All of the following costs should be charged to expense in the period in which they are incurred EXCEPT for

Which of the following does NOT correctly describe the specific identification cost formula?

Which of the following is NOT a premise upon which the gross profit method of estimating inventory is based?

Inventory management Explain why inventory management is referred to as a double-edged sword. What competing interests is management trying to balance in their management of inventories?

The average days to sell inventory ratio is calculated as

Accounting definition Define inventory from an accounting perspective

Which of the following statements regarding borrowing costs is correct?

When substantially all risks and rewards of ownership have passed to the purchaser, the purchaser then recognizes an asset. For this recognition, which of the following statements is correct?

Which of the following does NOT correctly describe the weighted average cost formula?

A hardware retailer typically maintains the following inventory account(s):

For calendar 2020, Redfern Corporation reported pre-tax income of $270,000. You have been made aware that the company's beginning inventory was overstated by $14,000 and ending inventory was understated by $9,000. What is Redfern's corrected pre-tax income for 2020?

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