Question 1

Goods in transit are included in a purchaser's inventory:

Accepted Answer

A) At any time during transit. 
B) When the goods are shipped FOB shipping point. 
C) When the supplier is responsible for freight charges. 
D) If the goods are shipped FOB destination. 
E) After the half-way point between the buyer and seller. 
A) At any time during transit. 
B) When the goods are shipped FOB shipping point. 
C) When the supplier is responsible for freight charges. 
D) If the goods are shipped FOB destination. 
E) After the half-way point between the buyer and seller.

Question 2

A company's inventory records indicate the following data for the month of January:
   If the company uses the LIFO perpetual inventory system,what would be the cost of the ending inventory?

Accepted Answer

The answer of A company's inventory records indicate the following...

Question 3

Merchandise inventory includes:

Accepted Answer

A) All goods owned by a company and held for sale. 
B) All goods in transit. 
C) All goods on consignment. 
D) Only damaged goods. 
E) Only non-damaged goods. 
A) All goods owned by a company and held for sale. 
B) All goods in transit. 
C) All goods on consignment. 
D) Only damaged goods. 
E) Only non-damaged goods.

Question 4

A company uses the periodic inventory system,and the following information is available.All purchases and sales are on credit.The selling price for the merchandise is $11 per unit.
   Required:
Determine the cost of the ending inventory and the cost of goods sold for June using the LIFO method.

Accepted Answer

Ending Inv

Question 5

The selected inventory costing method impacts:

Accepted Answer

A) Gross profit and ending inventory. 
B) Sales. 
C) The physical flow of goods. 
D) Amount of inventory on hand. 
E) The shipping terms to the buyer. 
A) Gross profit and ending inventory. 
B) Sales. 
C) The physical flow of goods. 
D) Amount of inventory on hand. 
E) The shipping terms to the buyer.

Question 6

When costs to purchase inventory regularly decline,which method of inventory costing will yield the lowest gross profit and income?

Accepted Answer

A) FIFO. 
B) LIFO. 
C) Weighted average. 
D) Specific identification. 
E) Gross margin. 
A) FIFO. 
B) LIFO. 
C) Weighted average. 
D) Specific identification. 
E) Gross margin.

Question 7

The weighted average method matches the costs of inventory items with the revenue generated by the sale of the inventory items.

Accepted Answer

A) True 
 B)False

Question 8

According to the expense recognition principle,inventory costs are expensed as cost of goods sold when inventory is sold.

Accepted Answer

A) True 
 B)False

Question 9

Assuming items in inventory were purchased at different prices,the inventory cost method used affects net income.

Accepted Answer

A) True 
 B)False

Question 10

The inventory valuation method that tends to smooth out erratic changes in costs is:

Accepted Answer

A) FIFO. 
B) Weighted average. 
C) LIFO. 
D) Specific identification. 
E) WIFO. 
A) FIFO. 
B) Weighted average. 
C) LIFO. 
D) Specific identification. 
E) WIFO.

Question 11

It can be expected that companies selling perishable goods have a higher inventory turnover than companies selling nonperishable goods.

Accepted Answer

A) True 
 B)False

Question 12

McCarthy Company has inventory of 8 units at a cost of $200 each on October 1.On October 2,it purchased 20 units at $205 each.11 units are sold on October 4.Using the FIFO perpetual inventory method,
-What is the value of inventory after the October 4 sale?

Accepted Answer

A) $3,485. 
B) $3,445. 
C) $3,500. 
D) $3,472. 
E) $3,461. 
A) $3,485. 
B) $3,445. 
C) $3,500. 
D) $3,472. 
E) $3,461.

Question 13

In applying the lower of cost or market method to inventory valuation,market is defined as the current replacement cost for LIFO.

Accepted Answer

A) True 
 B)False

Question 14

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 FIFO 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 15

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

Accepted Answer

A) $2,730. 
B) $2,750. 
C) $2,670. 
D) $440. 
E) $380. 
A) $2,730. 
B) $2,750. 
C) $2,670. 
D) $440. 
E) $380.

Question 16

Days' sales in inventory is calculated as:

Accepted Answer

A) Ending inventory divided by cost of goods sold. 
B) Cost of goods sold divided by ending inventory. 
C) Ending inventory divided by cost of goods sold times 365. 
D) Cost of goods sold divided by ending inventory times 365. 
E) Ending inventory times cost of goods sold. 
A) Ending inventory divided by cost of goods sold. 
B) Cost of goods sold divided by ending inventory. 
C) Ending inventory divided by cost of goods sold times 365. 
D) Cost of goods sold divided by ending inventory times 365. 
E) Ending inventory times cost of goods sold.

Question 17

A company had the following purchases and sales during its first month of operations:   Using the perpetual weighted average method,what is the value of cost of goods sold? (Round weighted average costs per unit to 2 decimal places.)

Accepted Answer

A) $40.00. 
B) $59.00. 
C) $25.00. 
D) $24.00. 
E) $23.35. 
A) $40.00. 
B) $59.00. 
C) $25.00. 
D) $24.00. 
E) $23.35.

Question 18

Determining the unit costs assigned to inventory items is one of the most important decisions in accounting for inventory.

Accepted Answer

A) True 
 B)False

Question 19

The ________ method is commonly used to estimate the value of inventory that has been destroyed,lost,or stolen.

Accepted Answer

The answer of The ________ method is commonly used to...

Question 20

A company decides which inventory amounts to record to cost of goods sold and which amounts remain in ending inventory:

Accepted Answer

A) Through application of the cost-benefit constraint. 
B) By selecting one of four possible inventory costing methods. 
C) By selecting the cost principle. 
D) Through application of the conservation constraint principle. 
E) Is the lower of cost or market principle. 
A) Through application of the cost-benefit constraint. 
B) By selecting one of four possible inventory costing methods. 
C) By selecting the cost principle. 
D) Through application of the conservation constraint principle. 
E) Is the lower of cost or market principle.

Exam 5: Inventories and Cost of Sales

Goods in transit are included in a purchaser's inventory:

A company's inventory records indicate the following data for the month of January: If the company uses the LIFO perpetual inventory system,what would be the cost of the ending inventory?

Merchandise inventory includes:

A company uses the periodic inventory system,and the following information is available.All purchases and sales are on credit.The selling price for the merchandise is $11 per unit. Required: Determine the cost of the ending inventory and the cost of goods sold for June using the LIFO method.

The selected inventory costing method impacts:

When costs to purchase inventory regularly decline,which method of inventory costing will yield the lowest gross profit and income?

The weighted average method matches the costs of inventory items with the revenue generated by the sale of the inventory items.

According to the expense recognition principle,inventory costs are expensed as cost of goods sold when inventory is sold.

Assuming items in inventory were purchased at different prices,the inventory cost method used affects net income.

The inventory valuation method that tends to smooth out erratic changes in costs is:

It can be expected that companies selling perishable goods have a higher inventory turnover than companies selling nonperishable goods.

McCarthy Company has inventory of 8 units at a cost of $200 each on October 1.On October 2,it purchased 20 units at $205 each.11 units are sold on October 4.Using the FIFO perpetual inventory method, -What is the value of inventory after the October 4 sale?

In applying the lower of cost or market method to inventory valuation,market is defined as the current replacement cost for LIFO.

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

Days' sales in inventory is calculated as:

A company had the following purchases and sales during its first month of operations: Using the perpetual weighted average method,what is the value of cost of goods sold? (Round weighted average costs per unit to 2 decimal places.)

Determining the unit costs assigned to inventory items is one of the most important decisions in accounting for inventory.

The ________ method is commonly used to estimate the value of inventory that has been destroyed,lost,or stolen.

A company decides which inventory amounts to record to cost of goods sold and which amounts remain in ending inventory:

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Managerial Accounting Concepts and Principles

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Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

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