Question 1

Which of the following statements is INCORRECT regarding the overriding objectives underlying inventory standards?

Accepted Answer

A)  Report an inventory cost on the statement of financial position that is representative of the inventory's recent cost. 
B)  Choose an approach that corresponds as closely as possible to the physical flow of goods. 
C)  Use the same method for all inventory assets that have similar economic characteristics. 
D)  It is permissible under ASPE to use any inventory method, including LIFO. 
A)  Report an inventory cost on the statement of financial position that is representative of the inventory's recent cost. 
B)  Choose an approach that corresponds as closely as possible to the physical flow of goods. 
C)  Use the same method for all inventory assets that have similar economic characteristics. 
D)  It is permissible under ASPE to use any inventory method, including LIFO.

Question 2

Gross profit method
Logan's Corporation recently suffered a fire in its warehouse. The fire destroyed all of the company's inventory on hand at June 30. The opening inventory on June 1 was $1,973,500. Logan purchased an additional $493,000 during June and had sales of $954,000 for the month at a gross profit of 25%.
Instructions
Using the gross profit method, estimate the value of inventory destroyed in the fire.

Accepted Answer

The answer of Gross profit method
Logan's Corporation recently suffered a...

Question 3

Inventory errors
An audit of the inventory records of Missouri Inc. identified a number of errors. These errors are summarized in Exhibit A below:
 $$\begin{array}{l}
\text { EXHIBIT A }\
\begin{array} { | c | r | l | r | } 
\hline \text { Year } & \begin{array} { c } 
\text { Net Income } \
\text { Reported }
\end{array} &  { \text { Description of Error } } & \
\hline 2016 & \$ 120,000 & \text { Overstatement of ending inventory } & \mathbf { \$ 1 1 , 0 0 0 } \
2017 & \$ 95,000 & \text { Understatement of ending irventory } & \mathbf { 1 , 5 0 0 } \
\mathbf { 2 0 1 8 } & \mathbf { 5 9 9 , 0 0 0 } & \text { Understatement of ending inventory } & \mathbf { \$ 1 8 , 0 0 0 } \
\mathbf { 2 0 1 9 } & \mathbf { \$ 1 0 5 , 0 0 0 } & \text { Overstatement of ending inventory } & \mathbf { 5 2 0 , 0 0 0 } \
\mathbf { 2 0 2 0 } & \mathbf { \$ 1 2 0 , 0 0 0 } & \text { Overstatement of ending inventory } & \mathbf { \$ 5 , 2 0 0 } \
\hline
\end{array}
\end{array}$$ 
Instructions
a)As financial accountant for Missouri, you have been asked to calculate the corrected net income amounts for each of the five years based on the audit findings.
b)Review your solution to part a) and consider the self-correcting effect of inventory errors. Why does total reported net income not equal total corrected income?

Accepted Answer

a)@#IMG-DLM& 
b)While it is True that inventory er

Question 4

An inventory cost formula in which the oldest costs incurred rarely have an effect on the ending inventory valuation is

Accepted Answer

A)  FIFO. 
B)  moving-average cost. 
C)  LIFO. 
D)  weighted average. 
A)  FIFO. 
B)  moving-average cost. 
C)  LIFO. 
D)  weighted average.

Question 5

Use the following information for the following  questions:
Giselle Ltd. is a calendar-year corporation. Its financial statements for the years 2020 and 2019 contained errors as follows:
 $$\begin{array} { l l l } 
&2020&2019\
\text { Ending inventory } & \$ 2,000 \text { overstated } & \$ 3,000 \text { overtated } \
\text { Depreciation expense } & \$ 6,000 \text { understated } & \$ 12,000 \text { overstated }
\end{array}$$
-Assume that no correcting entries were made at December 31, 2019. Ignoring income taxes, by how much will retained earnings at December 31, 2020 be overstated or understated?

Accepted Answer

A)  $4,000 understated 
B)  $6,000 overstated 
C)  $6,000 understated 
D)  $15,000 understated 
A)  $4,000 understated 
B)  $6,000 overstated 
C)  $6,000 understated 
D)  $15,000 understated

Question 6

Which statement is NOT true about the gross profit method of inventory valuation?

Accepted Answer

A)  It may be used to estimate inventories for interim statements. 
B)  It may be used to estimate inventories for annual statements. 
C)  It may be used by auditors. 
D)  It may be used to provide a rough check on the accuracy of the physical inventory count. 
A)  It may be used to estimate inventories for interim statements. 
B)  It may be used to estimate inventories for annual statements. 
C)  It may be used by auditors. 
D)  It may be used to provide a rough check on the accuracy of the physical inventory count.

Question 7

Journal entries for perpetual inventory system
Idaho Inc. is a wholesale company selling special parts for the automotive industry. The company uses FIFO and a perpetual inventory system. Its inventory records for part SA-123 show the following transactions for the month of May 2020:
 $$\begin{array} { | l | l | r | r | r | r | } 
\hline \text { Date } & \text { Transaction } & \begin{array} { r } 
\text { Units } \
\text { Purchased }
\end{array} & \begin{array} { r } 
\text { Unit } \
\text { Cost }
\end{array} & \begin{array} { r } 
\text { Units } \
\text { Sold }
\end{array} & \begin{array} { r } 
\text { Unit } \
\text { Selling } \
\text { Price }
\end{array} \
\hline \text { May 1 } & \text { Balance } & 120 & \$ 7.00 & & \
\text { May 10 } & \text { Purchase } & 500 & \$ 7.20 & & \
\text { May 15 } & \text { 5ale } & & & ( 100 ) & \$ 12.40 \
\text { May 21 } & \text { 5ale } & & & ( 150 ) & \$ 12.50 \
\text { May 23 } & \text { Purchase } & 250 & \$ 7.30 & & \
\hline
\end{array}$$ Instructions
Assuming Idaho makes all sales and purchases of inventory on account, prepare the journal entries for each of the above listed transactions.

Accepted Answer

The answer of Journal entries for perpetual inventory system
Idaho Inc....

Question 8

Lower of cost and net realizable value (NRV)
Determine the unit value that should be used for inventory costing, using the "lower of cost and NRV" rule.
 $$\begin{array} { l l l l l l l } 
& \mathbf { A } & \mathrm { B } & \mathrm { C } & \mathbf { D } & \mathbf { E } &\mathbf { F } \
\text { Cost } & \mathbf { \$ 2 . 4 0 } & \mathbf { \$ 2 . 4 0 } & \mathbf { \$ 2 . 3 0 } & \mathbf { \$ 2 . 5 4 } & \mathbf { \$ 2 . 4 4 } & \mathbf { \$ 2 . 6 5 } \
\text { Replacement cost } & 2.20 & 2.60 & 2.20 & 2.50 & 2.42 & 2.36 \
\text { Net realizbble }  \text { value } & 2.50 & 2.50 & 2.25 & 2.45 & 2.50 & 2.50
\end{array}$$

Accepted Answer

The answer of Lower of cost and net realizable value...

Which of the following statements is INCORRECT regarding the overriding objectives underlying inventory standards?

An inventory cost formula in which the oldest costs incurred rarely have an effect on the ending inventory valuation is

Which statement is NOT true about the gross profit method of inventory valuation?

Lower of cost and net realizable value (NRV) Determine the unit value that should be used for inventory costing, using the "lower of cost and NRV" rule. Cost Replacement cost 2.20 2.60 2.20 2.50 2.42 2.36 Net realizbble value 2.50 2.50 2.25 2.45 2.50 2.50

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 statements is INCORRECT regarding the overriding objectives underlying inventory standards?

An inventory cost formula in which the oldest costs incurred rarely have an effect on the ending inventory valuation is

Which statement is NOT true about the gross profit method of inventory valuation?

Lower of cost and net realizable value (NRV) Determine the unit value that should be used for inventory costing, using the "lower of cost and NRV" rule. Cost Replacement cost 2.20 2.60 2.20 2.50 2.42 2.36 Net realizbble value 2.50 2.50 2.25 2.45 2.50 2.50

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