Exam 6: Inventories

Assume that three identical units of merchandise are purchased during October,as follows: Units Cost October 5 Purchase 1 \ 5 12 Purchase 1 13 28 Purchase Total 3 \ 33 Assume one unit is sold on October 31 for $28.Determine cost of merchandise sold,gross profit,and ending inventory under the FIFO method.

Generally,the lower the number of days' sales in inventory,the better.

"Market" as used in the phrase "lower of cost or market" for valuing inventory,refers to the price at which the inventory is being offered for sale by the company.

Determine the total value of the merchandise using net realizable value.

The following data were taken from Castle,Inc. Determine the inventory turnover ratio and the number of days' sales in inventory for Castle Inc.Round to two decimal places.

Use of the retail inventory method requires taking a physical count of inventory.

When using a perpetual inventory system,the journal entry to record the cost of merchandise sold is:

Which of the following is not an example for safeguarding inventory?

FIFO reports higher gross profit and net income than the LIFO method when

Under the________ inventory method,accounting records maintain a continuously updated inventory value.

If a fire destroys the merchandise inventory,the gross profit method can be used to estimate the cost of merchandise destroyed.

Applying the lower of cost or market to each item of inventory, what should the total inventory value be for the following items?

If a company mistakenly counts more items during a physical inventory than actually exist,how will the error affect their bottom line?

All of the following are documents used for inventory control except

If merchandise inventory is being valued at cost and the price level is steadily rising,the method of costing that will yield the highest net income is

The two most widely used methods for determining the cost of inventory are

Beginning inventory,purchases,and sales for an inventory item are as follows: Beginning inventory 150 units@ \ 755 Sale 120 units First purchase 400 units @ \ 785 Sale 200 units Second purchase 300 units @ \ 805 Sale 290 units The firm uses the perpetual inventory system and there are 240 units of the item on hand at the end of the year.What is the total cost of ending inventory according to FIFO?

Safeguarding inventory from damage or theft is a primary objective for the control of inventory.If you were running a clothing store,name three specific controls you would implement to guard inventory from theft.

Which of the following will be the same amount regardless of the cost flow assumption adopted?

On the basis of the following data,determine the value of the inventory at the lower of cost or market.Apply lower of cost or market to each inventory item.Show your work.