Question 1

In applying the lower of cost or market method to inventory valuation,market is defined as:

Accepted Answer

A)  Historical cost. 
B)  Current replacement cost. 
C)  Current sales price. 
D)  FIFO. 
E)  LIFO. 
A)  Historical cost. 
B)  Current replacement cost. 
C)  Current sales price. 
D)  FIFO. 
E)  LIFO.

Question 2

Most companies do not take a physical count of inventory each year,but rather rely on inventory records to determine the inventory value.

Accepted Answer

A) True 
 B)False

Question 3

Goods that are in transit and were shipped FOB shipping point should be included in the inventory records of the ________.

Accepted Answer

The answer of Goods that are in transit and were...

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.
 $$\begin{array} { | l | l | r | r | } 
\hline && \text { Units } &{ \text { Unit Cost } } &  { \text { Total Cost } } \
\hline 6 / 01& \text { Inventory Balance } & 30 & \$ 3 & \$ 90 \
\hline 6 / 06& \text { Purchase } & 70 & 4 & 280\
\hline 6 / 11& \text { Purchase } & 45 & 5 & 225 \
\hline 6 / 16 &\text { Purchase } & \underline { 50 } & 6 &300 \
\hline &\text { Goods available } & \underline { 195 } && \
\hline 6 / 12 &\text { Sale } & 100 & & \
\hline 6 / 2& \text { Sale } & \underline { 60 } & & \
\hline &\text { Goods sold } & \underline { 160 } & & \
\hline 6 / 31 &\text { Inventory Balance } &\underline { 35 } & \
\hline
\end{array}$$ 
Required:
Determine the cost of the ending inventory and the cost of goods sold for June using the LIFO method.

Accepted Answer

Ending Inventory:
 \[\begin{array} { | l

Question 5

Use the following information for Davis Company to compute inventory turnover for Year 2.
$$\begin{array} { | l | r | r | } 
\hline & \text { Year 2 } & \text { Year 1 } \
\hline \text { Cost of goods sold } & 279,500 & 291,800 \
\hline \text { Ending inventory } & 47,700 & 49,350 \
\hline
\end{array}$$

Accepted Answer

A)  5.86 
B)  5.76 
C)  5.67 
D)  11.77 
E)  5.89 
A)  5.86 
B)  5.76 
C)  5.67 
D)  11.77 
E)  5.89

Question 6

Identify the items that are included in merchandise inventory.(In your answer address the special situations of goods in transit,consigned goods,and damaged goods.)

Accepted Answer

Merchandise inventory consists of goods

Question 7

A company normally sells its product for $20 per unit.However,the selling price has fallen to $15 per unit.This company's current inventory consists of 200 units purchased at $16 per unit.Replacement cost has now fallen to $13 per unit.What is the amount of the lower cost of market adjustment the company must make as a result of this decline in value?

Accepted Answer

A)  $1,000. 
B)  $1,400. 
C)  $400. 
D)  $600. 
E)  $800. 
A)  $1,000. 
B)  $1,400. 
C)  $400. 
D)  $600. 
E)  $800.

Question 8

FIFO is preferred when purchase costs are rising and managers have incentives to report higher income for reasons such as bonus plans,job security,and reputation.

Accepted Answer

A) True 
 B)False

Question 9

Eastview Company uses a perpetual LIFO inventory system,and has the following purchases and sales:
$$\begin{array} { | l | l | } 
\hline \text { January 1 } & 150 \text { units were purchased at \$9 per unit. } \
\hline \text { January } 17 & 120 \text { units were sold. } \
\hline \text { January 20 } & 160 \text { units were purchased at \$11 per unit. } \
\hline \text { January 29 } & 150 \text { units were sold. } \
\hline
\end{array}$$
-
What is the value of ending inventory?

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 10

Acceptable methods of assigning specific costs to inventory and cost of goods sold include all of the following except:

Accepted Answer

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

Question 11

A merchandiser's ability to pay its short-term obligations depends on many factors including how quickly it sells its merchandise inventory.

Accepted Answer

A) True 
 B)False

Question 12

Eastview Company uses a periodic LIFO inventory system,and has the following purchases and sales:
$$\begin{array} { | l | l | } 
\hline \text { January 1 } & 150 \text { units were purchased at \$9 per unit. } \
\hline \text { January } 17 & 120 \text { units were sold. } \
\hline \text { January 20 } & 160 \text { units were purchased at \$11 per unit. } \
\hline \text { January 29 } & 150 \text { units were sold. } \
\hline
\end{array}$$
-
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 13

To avoid the time-consuming process of taking an inventory each year,most companies use the gross profit method to estimate ending inventory.

Accepted Answer

A) True 
 B)False

Question 14

Match the following terms with the appropriate definition.
-The required method of reporting inventory at market when market is lower than cost.

Accepted Answer

A) Gross profit method 
B) Inventory turnover 
C) Conservatism principle 
D) Consistency concept 
E) Consignor
F)Consignee
G)Days' sales in inventory
H)Retail inventory method
I)Specific identification method
J)Lower of cost or market 
A) Gross profit method 
B) Inventory turnover 
C) Conservatism principle 
D) Consistency concept 
E) Consignor
F)Consignee
G)Days' sales in inventory
H)Retail inventory method
I)Specific identification method
J)Lower of cost or market

Question 15

Goods on consignment are goods shipped by their owner,called the consignor,to another party called the consignee.The consignee sells goods for the owner.

Accepted Answer

A) True 
 B)False

Question 16

Companies can and often do use different costing methods for financial reporting and tax reporting.An exception to this is the:

Accepted Answer

A)  Full disclosure principle. 
B)  Consistency concept. 
C)  FIFO inventory valuation method. 
D)  LIFO conformity rule. 
E)  Matching principle. 
A)  Full disclosure principle. 
B)  Consistency concept. 
C)  FIFO inventory valuation method. 
D)  LIFO conformity rule. 
E)  Matching principle.

Question 17

Match each of the following terms with the appropriate definition.
-An inventory valuation method that assumes that inventory items are sold in the order acquired.

Accepted Answer

A) Conservatism constraint 
B) Inventory turnover 
C) Net realizable value 
D) Retail inventory method 
E) Days' sales in inventory
F)Weighted average inventory method
G)Interim statements
H)LIFO method
I)FIFO method
J)Specific identification method 
A) Conservatism constraint 
B) Inventory turnover 
C) Net realizable value 
D) Retail inventory method 
E) Days' sales in inventory
F)Weighted average inventory method
G)Interim statements
H)LIFO method
I)FIFO method
J)Specific identification method

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

A company had the following purchases and sales during its first year of operations:
$$\begin{array} { | l | l | l | } 
\hline & \text { Purchases } & \text { Sales } \
\hline \text { January: } & 10 \text { units at } \$ 120 & 6 \text { units } \
\hline \text { February: } & 20 \text { units at } \$ 125 & 5 \text { units } \
\hline \text { May: } & 15 \text { units at } \$ 130 & 9 \text { units } \
\hline \text { September: } & 12 \text { units at } \$ 135 & 8 \text { units } \
\hline \text { November: } & 10 \text { units at } \$ 140 & 13 \text { units } \
\hline
\end{array}$$
On December 31,there were 26 units remaining in ending inventory.
-Using the Periodic LIFO inventory valuation 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 20

Jammer Company uses a weighted average perpetual inventory system and reports the following:
$$\begin{array} { | l | l | l | } 
\hline \text { August 2 } & \text { Purchase } & 10 \text { units at } \$ 12 \text { per unit. } \
\hline \text { August 18 } & \text { Purchase } & 15 \text { units at } \$ 15 \text { per unit. } \
\hline \text { August 29 } & \text { Sale } & 20 \text { units. } \
\hline \text { August 31 } & \text { Purchase } & 14 \text { units at } \$ 16 \text { per unit. } \
\hline
\end{array}$$
What is the per-unit value of ending inventory on August 31?

Accepted Answer

A)  $12.00 
B)  $13.80 
C)  $15.42 
D)  $16.00 
E)  $17.74 
A)  $12.00 
B)  $13.80 
C)  $15.42 
D)  $16.00 
E)  $17.74

In applying the lower of cost or market method to inventory valuation,market is defined as:

Most companies do not take a physical count of inventory each year,but rather rely on inventory records to determine the inventory value.

Goods that are in transit and were shipped FOB shipping point should be included in the inventory records of the ________.

Use the following information for Davis Company to compute inventory turnover for Year 2. Year 2 Year 1 Cost of goods sold 279,500 291,800 Ending inventory 47,700 49,350

Identify the items that are included in merchandise inventory.(In your answer address the special situations of goods in transit,consigned goods,and damaged goods.)

FIFO is preferred when purchase costs are rising and managers have incentives to report higher income for reasons such as bonus plans,job security,and reputation.

Acceptable methods of assigning specific costs to inventory and cost of goods sold include all of the following except:

A merchandiser's ability to pay its short-term obligations depends on many factors including how quickly it sells its merchandise inventory.

To avoid the time-consuming process of taking an inventory each year,most companies use the gross profit method to estimate ending inventory.

Match the following terms with the appropriate definition. -The required method of reporting inventory at market when market is lower than cost.

Goods on consignment are goods shipped by their owner,called the consignor,to another party called the consignee.The consignee sells goods for the owner.

Companies can and often do use different costing methods for financial reporting and tax reporting.An exception to this is the:

Match each of the following terms with the appropriate definition. -An inventory valuation method that assumes that inventory items are sold in the order acquired.

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

Accounting in Business

Analyzing 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

Time Value of Money

Investments

Partnership Accounting

Filters

Exam 5: Inventories and Cost of Sales

In applying the lower of cost or market method to inventory valuation,market is defined as:

Most companies do not take a physical count of inventory each year,but rather rely on inventory records to determine the inventory value.

Goods that are in transit and were shipped FOB shipping point should be included in the inventory records of the ________.

Use the following information for Davis Company to compute inventory turnover for Year 2. Year 2 Year 1 Cost of goods sold 279,500 291,800 Ending inventory 47,700 49,350

Identify the items that are included in merchandise inventory.(In your answer address the special situations of goods in transit,consigned goods,and damaged goods.)

FIFO is preferred when purchase costs are rising and managers have incentives to report higher income for reasons such as bonus plans,job security,and reputation.

Acceptable methods of assigning specific costs to inventory and cost of goods sold include all of the following except:

A merchandiser's ability to pay its short-term obligations depends on many factors including how quickly it sells its merchandise inventory.

To avoid the time-consuming process of taking an inventory each year,most companies use the gross profit method to estimate ending inventory.

Match the following terms with the appropriate definition. -The required method of reporting inventory at market when market is lower than cost.

Goods on consignment are goods shipped by their owner,called the consignor,to another party called the consignee.The consignee sells goods for the owner.

Companies can and often do use different costing methods for financial reporting and tax reporting.An exception to this is the:

Match each of the following terms with the appropriate definition. -An inventory valuation method that assumes that inventory items are sold in the order acquired.

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

Accounting in Business

Analyzing 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

Time Value of Money

Investments

Partnership Accounting

Filters