Question 1

The primary objectives of control over inventory are

Accepted Answer

A) safeguarding the inventory from damage and maintaining constant observation of the inventory 
B) reporting inventory in the financial statements 
C) maintaining constant observation of the inventory and reporting inventory in the financial statements 
D) safeguarding inventory from damage and reporting inventory in the financial statements 
A) safeguarding the inventory from damage and maintaining constant observation of the inventory 
B) reporting inventory in the financial statements 
C) maintaining constant observation of the inventory and reporting inventory in the financial statements 
D) safeguarding inventory from damage and reporting inventory in the financial statements

Question 2

A company will most likely use an estimated method of determining inventory when

Accepted Answer

A) the company decides not to do a physical inventory 
B) a natural disaster has destroyed most of the inventory 
C) the company has not kept up with its inventory records 
D) the company is preparing annual financial statements 
A) the company decides not to do a physical inventory 
B) a natural disaster has destroyed most of the inventory 
C) the company has not kept up with its inventory records 
D) the company is preparing annual financial statements

Question 3

If merchandise inventory is being valued at cost and the purchase price is steadily falling,which method of costing will yield the largest net income?

Accepted Answer

A) average cost 
B) LIFO 
C) FIFO 
D) weighted average 
A) average cost 
B) LIFO 
C) FIFO 
D) weighted average

Question 4

If ending inventory for the year is understated,net income for the year is overstated.

Accepted Answer

A) True 
 B)False

Question 5

If a company mistakenly counts less items during a physical inventory than actually exist,how will the error affect the cost of merchandise sold?

Accepted Answer

A) understated 
B) overstated 
C) no change 
D) only inventory will be affected 
A) understated 
B) overstated 
C) no change 
D) only inventory will be affected

Question 6

During a period of falling prices,which of the following inventory methods generally results in the lowest balance sheet amount for inventory?

Accepted Answer

A) average cost method 
B) LIFO method 
C) FIFO method 
D) cannot tell without more information 
A) average cost method 
B) LIFO method 
C) FIFO method 
D) cannot tell without more information

Question 7

Garrison Company uses the retail method of inventory costing.It started the year with an inventory that had a retail cost of $45,000.During the year,Garrison purchased an inventory with a retail sales value of $300,000.After performing a physical inventory,Garrison calculated the inventory at retail to be $80,000.The mark up is 100% of cost.Determine the ending inventory at its estimated cost.

Accepted Answer

A) $160,000 
B) $80,000 
C) $40,000 
D) $45,000 
A) $160,000 
B) $80,000 
C) $40,000 
D) $45,000

Question 8

The average cost method will always yield results between FIFO and LIFO.

Accepted Answer

A) True 
 B)False

Question 9

Which document establishes an initial record of the receipt of the inventory?

Accepted Answer

A) receiving report 
B) vendor's invoice 
C) purchase order 
D) petty cash voucher 
A) receiving report 
B) vendor's invoice 
C) purchase order 
D) petty cash voucher

Question 10

During periods of rapidly rising costs,the use of the LIFO method results in illusory or inventory profits.

Accepted Answer

A) True 
 B)False

Question 11

For the year ended December 31,Depot Max's cost of merchandise sold was $56,900.Inventory at the beginning of the year was $6,540.Ending inventory was $7,250.Depot Max's number of days' sales in inventory is closest to

Accepted Answer

A) 42 
B) 46 
C) 8 
D) 44 
A) 42 
B) 46 
C) 8 
D) 44

Question 12

Of the three widely used inventory costing methods FIFO,LIFO,and average cost,the LIFO method of costing inventory assumes costs are charged based on the most recent purchases first.

Accepted Answer

A) True 
 B)False

Question 13

Use the information below to answer the following questions.

The Boxwood Company sells blankets for $60 each.  The following was taken from the inventory records during May.  The company had no beginning inventory on May 1.

$\begin{array}{|c|l|c|c|}
\hline \text { Date } & {\text { Blankets }} & \text { Units } & \text { Cost } \
\hline \text { May } 3 & \text { Purchase } & 5 & \$ 20 \
\hline 10 & \text { Sale } & 3 & \
\hline 17 & \text { Purchase } & 10 & \$ 24 \
\hline 20 & \text { Sale } & 6 & \
\hline 23 & \text { Sale } & 3 & \
\hline 30 & \text { Purchase } & 10 & \$ 30 \
\hline
\end{array}$
-Assuming that the company uses the perpetual inventory system,determine the ending inventory for the month of May using the LIFO inventory cost method.

Accepted Answer

A) $324 
B) $372 
C) $320 
D) $364 
A) $324 
B) $372 
C) $320 
D) $364

Question 14

Under a periodic inventory system

Accepted Answer

A) accounting records continuously disclose the amount of inventory 
B) a separate account for each type of merchandise is maintained in a subsidiary ledger 
C) a physical inventory is taken at the end of the period 
D) merchandise inventory is debited when goods are returned to vendors 
A) accounting records continuously disclose the amount of inventory 
B) a separate account for each type of merchandise is maintained in a subsidiary ledger 
C) a physical inventory is taken at the end of the period 
D) merchandise inventory is debited when goods are returned to vendors

Question 15

During the taking of its physical inventory on December 31,Almond Supplies Company incorrectly counted its inventory as $545,000 instead of the correct amount of $554,000.Indicate the effects of the misstatement on Almond Supplies Company's balance sheet and income statement for the year ended December 31.

Accepted Answer

None

Question 16

The inventory method that assigns the most recent costs to cost of merchandise sold is

Accepted Answer

A) FIFO 
B) LIFO 
C) weighted average 
D) specific identification 
A) FIFO 
B) LIFO 
C) weighted average 
D) specific identification

The primary objectives of control over inventory are

A company will most likely use an estimated method of determining inventory when

If merchandise inventory is being valued at cost and the purchase price is steadily falling,which method of costing will yield the largest net income?

If ending inventory for the year is understated,net income for the year is overstated.

If a company mistakenly counts less items during a physical inventory than actually exist,how will the error affect the cost of merchandise sold?

During a period of falling prices,which of the following inventory methods generally results in the lowest balance sheet amount for inventory?

The average cost method will always yield results between FIFO and LIFO.

Which document establishes an initial record of the receipt of the inventory?

During periods of rapidly rising costs,the use of the LIFO method results in illusory or inventory profits.

For the year ended December 31,Depot Max's cost of merchandise sold was $56,900.Inventory at the beginning of the year was $6,540.Ending inventory was $7,250.Depot Max's number of days' sales in inventory is closest to

Of the three widely used inventory costing methods FIFO,LIFO,and average cost,the LIFO method of costing inventory assumes costs are charged based on the most recent purchases first.

Under a periodic inventory system

The inventory method that assigns the most recent costs to cost of merchandise sold is

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Sarbanes-Oxley,internal Control,and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization,stock Transactions,and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

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Exam 6: Inventories

The primary objectives of control over inventory are

A company will most likely use an estimated method of determining inventory when

If merchandise inventory is being valued at cost and the purchase price is steadily falling,which method of costing will yield the largest net income?

If ending inventory for the year is understated,net income for the year is overstated.

If a company mistakenly counts less items during a physical inventory than actually exist,how will the error affect the cost of merchandise sold?

During a period of falling prices,which of the following inventory methods generally results in the lowest balance sheet amount for inventory?

The average cost method will always yield results between FIFO and LIFO.

Which document establishes an initial record of the receipt of the inventory?

During periods of rapidly rising costs,the use of the LIFO method results in illusory or inventory profits.

For the year ended December 31,Depot Max's cost of merchandise sold was $56,900.Inventory at the beginning of the year was $6,540.Ending inventory was $7,250.Depot Max's number of days' sales in inventory is closest to

Of the three widely used inventory costing methods FIFO,LIFO,and average cost,the LIFO method of costing inventory assumes costs are charged based on the most recent purchases first.

Under a periodic inventory system

The inventory method that assigns the most recent costs to cost of merchandise sold is

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Sarbanes-Oxley,internal Control,and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization,stock Transactions,and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters