Question 1

Under FIFO,the most recent costs are assigned to ending inventory.

Accepted Answer

A) True 
 B)False

Question 2

A company's inventory records report the following in November of the current year:   On November 8,it sold 12 units for $54 each.
-Using the LIFO perpetual inventory method,what amount of gross profit was earned from the 12 units sold?

Accepted Answer

A) $577 
B) $260 
C) $366 
D) $438 
E) $388 
A) $577 
B) $260 
C) $366 
D) $438 
E) $388

Question 3

Internal controls that should be applied when a business takes a physical count of inventory should include all of the following except:

Accepted Answer

A) Prenumbered inventory tickets. 
B) A manager confirms that all inventories are ticketed only once. 
C) Counters confirm the validity of inventory existence,amounts,and quality. 
D) Second counts by a different counter. 
E) Counters of inventory should be those who are responsible for the inventory. 
A) Prenumbered inventory tickets. 
B) A manager confirms that all inventories are ticketed only once. 
C) Counters confirm the validity of inventory existence,amounts,and quality. 
D) Second counts by a different counter. 
E) Counters of inventory should be those who are responsible for the inventory.

Question 4

Apply the retail method to the following company information to estimate the cost of the ending inventory for the current period.

Accepted Answer

The answer of Apply the retail method to the following...

Question 5

Goods in transit are automatically included in inventory regardless of whether title has passed to the buyer.

Accepted Answer

A) True 
 B)False

Question 6

When purchase costs regularly rise,the ________ method of inventory valuation yields the lowest gross profit and net income,providing a tax advantage.

Accepted Answer

Last in,fi

Question 7

A company had the following purchases and sales during its first year of operations:   On December 31,there were 26 units remaining in ending inventory.
-Using the periodic LIFO inventory costing method,what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)

Accepted Answer

A) $3,405. 
B) $3,270. 
C) $3,200. 
D) $3,364. 
E) $5,400. 
A) $3,405. 
B) $3,270. 
C) $3,200. 
D) $3,364. 
E) $5,400.

Question 8

A company's inventory records report the following:   On August 15,it sold 30 units.Using the FIFO perpetual inventory method,what is the value of the inventory at August 15 after the sale?

Accepted Answer

A) $140 
B) $160 
C) $210 
D) $380 
E) $590 
A) $140 
B) $160 
C) $210 
D) $380 
E) $590

Question 9

Eastview Company uses a periodic LIFO inventory system,and has the following purchases and sales:   
-What is the value of ending inventory?

Accepted Answer

A) $2,730. 
B) $2,750. 
C) $2,670. 
D) $440. 
E) $360. 
A) $2,730. 
B) $2,750. 
C) $2,670. 
D) $440. 
E) $360.

Question 10

Explain the reason a company might use the retail inventory method for valuing inventory.

Accepted Answer

The retail method is generally used to p

Question 11

Beckenworth had cost of goods sold of $9,421 million,ending inventory of $2,089 million,and average inventory of $1,965 million.Its days' sales in inventory equals: (Use 365 days a year.)

Accepted Answer

A) 0.21. 
B) 4.51. 
C) 4.79. 
D) 76.1 days. 
E) 80.9 days. 
A) 0.21. 
B) 4.51. 
C) 4.79. 
D) 76.1 days. 
E) 80.9 days.

Question 12

A ________ is recorded when inventory damage or obsolescence occurs.

Accepted Answer

The answer of A ________ is recorded when inventory damage...

Question 13

Explain how the lower of cost or market rule is used to value inventory.

Accepted Answer

The lower of cost or market rule compare

Question 14

A company has beginning inventory of 15 units at a cost of $12 each on October 1.On October 5,it purchases 10 units at $13 per unit.On October 12 it purchases 20 units at $14 per unit.On October 15,it sells 30 units.Using the FIFO periodic inventory method,what is the value of the inventory at October 15 after the sale?

Accepted Answer

A) $140 
B) $160 
C) $210 
D) $380 
E) $590 
A) $140 
B) $160 
C) $210 
D) $380 
E) $590

Question 15

Overstating beginning inventory will understate cost of goods sold and net income.

Accepted Answer

A) True 
 B)False

Question 16

Salmone Company reported the following purchases and sales of its only product.Salmone uses a perpetual inventory system.
 
-Determine the cost assigned to the ending inventory using FIFO.

Accepted Answer

A) $2,980 
B) $2,460 
C) $2,850 
D) $2,590 
E) $2,860 
A) $2,980 
B) $2,460 
C) $2,850 
D) $2,590 
E) $2,860

Question 17

The LIFO conformity rule:

Accepted Answer

A) Requires when LIFO is used for tax reporting,it is also used for financial reporting. 
B) Requires a company to use one method of inventory valuation exclusively. 
C) Requires that all companies in the same industry use the same accounting methods of inventory valuation. 
D) Is also called the taxation principle. 
E) Is only applicable to the automotive industry. 
A) Requires when LIFO is used for tax reporting,it is also used for financial reporting. 
B) Requires a company to use one method of inventory valuation exclusively. 
C) Requires that all companies in the same industry use the same accounting methods of inventory valuation. 
D) Is also called the taxation principle. 
E) Is only applicable to the automotive industry.

Question 18

Carolina Company uses the perpetual LIFO method for valuing its ending inventory.The following financial statement information is available for its first year of operation:
   Carolina's ending inventory using the perpetual LIFO method was $8,700.Carolina's accountant determined that had the company used perpetual FIFO,the ending inventory would have been $9,100.
a.Determine what the income before taxes would have been,had Carolina used the FIFO method of inventory valuation instead of LIFO.
b.What would be the difference in income taxes between LIFO and FIFO,assuming a 30% tax rate?
c.If Carolina wanted to lower the amount of income taxes to be paid,which method would it choose?

Accepted Answer

a.If ending inventory is $400 higher usi

Question 19

A company reported the following data:
   Required:
1.Calculate the company's merchandise inventory turnover for each year.
2.Comment on the company's efficiency in managing its inventory.

Accepted Answer

1.Year 1 $317,500/72,000 = 4.41
Year 2 $

Question 20

Explain how the inventory turnover ratio and the days' sales in inventory ratio are used to evaluate inventory management.

Accepted Answer

A merchandiser's ability to pay its shor

Exam 5: Inventories and Cost of Sales

Under FIFO,the most recent costs are assigned to ending inventory.

A company's inventory records report the following in November of the current year: On November 8,it sold 12 units for $54 each. -Using the LIFO perpetual inventory method,what amount of gross profit was earned from the 12 units sold?

Internal controls that should be applied when a business takes a physical count of inventory should include all of the following except:

Apply the retail method to the following company information to estimate the cost of the ending inventory for the current period.

Goods in transit are automatically included in inventory regardless of whether title has passed to the buyer.

When purchase costs regularly rise,the ________ method of inventory valuation yields the lowest gross profit and net income,providing a tax advantage.

A company's inventory records report the following: On August 15,it sold 30 units.Using the FIFO perpetual inventory method,what is the value of the inventory at August 15 after the sale?

Eastview Company uses a periodic LIFO inventory system,and has the following purchases and sales: -What is the value of ending inventory?

Explain the reason a company might use the retail inventory method for valuing inventory.

Beckenworth had cost of goods sold of $9,421 million,ending inventory of $2,089 million,and average inventory of $1,965 million.Its days' sales in inventory equals: (Use 365 days a year.)

A ________ is recorded when inventory damage or obsolescence occurs.

Explain how the lower of cost or market rule is used to value inventory.

Overstating beginning inventory will understate cost of goods sold and net income.

Salmone Company reported the following purchases and sales of its only product.Salmone uses a perpetual inventory system. -Determine the cost assigned to the ending inventory using FIFO.

The LIFO conformity rule:

A company reported the following data: Required: 1.Calculate the company's merchandise inventory turnover for each year. 2.Comment on the company's efficiency in managing its inventory.

Explain how the inventory turnover ratio and the days' sales in inventory ratio are used to evaluate inventory management.

Accounting in Business

Accounting for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Cash,fraud,and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Time Value of Money

Investments

Lean Principles and Accounting

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