Question 1

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

Accepted Answer

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

Question 2

When applying the lower of cost or market method of inventory valuation,market is defined as the ________.

Accepted Answer

The answer of When applying the lower of cost or...

Question 3

When LIFO is used with the periodic inventory system,cost of goods sold is assigned costs from the most recent purchases at the point of each sale,rather than from the most recent purchases for the period.

Accepted Answer

A) True 
 B)False

Question 4

Hasham purchases inventory from overseas and incurs the following costs: the merchandise cost is $80,000,credit terms 1/10,n/30,applicable only to the $80,000; FOB shipping point freight charges are $2,500; insurance during transit is $300; and import duties are $1,500.Hasham paid within the discount period.Compute the cost that should be assigned to the inventory.

Accepted Answer

A)  $83,500 
B)  $79,200 
C)  $81,700 
D)  $84,300 
E)  $81,000 
A)  $83,500 
B)  $79,200 
C)  $81,700 
D)  $84,300 
E)  $81,000

Question 5

Grays Company has inventory of 10 units at a cost of $10 each on August 1.On August 3,it purchased 20 units at $12 each.12 units are sold on August 6.Using the FIFO perpetual inventory method,what amount will be reported as cost of goods sold for the 12 units that were sold?

Accepted Answer

A)  $120. 
B)  $124. 
C)  $128. 
D)  $130. 
E)  $140. 
A)  $120. 
B)  $124. 
C)  $128. 
D)  $130. 
E)  $140.

Question 6

A company's inventory records report the following:
$$\begin{array} { | l | l | l | } 
\hline \text { August 1 } & \text { Beginning balance } & 15 \text { units @ \$12 } \
\hline \text { August 5 } & \text { Purchase } & 10 \text { units @ \$13 } \
\hline \text { August 12 } & \text { Purchase } & 20 \text { units @ \$14 } \
\hline
\end{array}$$
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 7

The inventory turnover ratio:

Accepted Answer

A)  Is used to analyze profitability. 
B)  Is used to measure solvency. 
C)  Reveals how many times a company sells its merchandise inventory during a period. 
D)  Reveals how many days a company can sell inventory if no new merchandise is purchased. 
E)  Calculation depends on the company's inventory valuation method. 
A)  Is used to analyze profitability. 
B)  Is used to measure solvency. 
C)  Reveals how many times a company sells its merchandise inventory during a period. 
D)  Reveals how many days a company can sell inventory if no new merchandise is purchased. 
E)  Calculation depends on the company's inventory valuation method.

Question 8

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 amount will be reported as cost of goods sold for the 11 units that were sold?

Accepted Answer

A)  $2,239. 
B)  $2,255. 
C)  $2,200. 
D)  $2,228. 
E)  $2,215. 
A)  $2,239. 
B)  $2,255. 
C)  $2,200. 
D)  $2,228. 
E)  $2,215.

Question 9

When purchase costs regularly rise,the ________ method of inventory valuation yields the highest gross profit and net income.

Accepted Answer

First in,f

Question 10

The inventory valuation method that has the advantages of assigning an amount to inventory on the balance sheet that approximates its current cost,and also mimics the actual flow of goods for most businesses is:

Accepted Answer

A)  FIFO. 
B)  Weighted average. 
C)  LIFO. 
D)  Specific identification. 
E)  Lower of cost or market. 
A)  FIFO. 
B)  Weighted average. 
C)  LIFO. 
D)  Specific identification. 
E)  Lower of cost or market.

Question 11

The reliability of the gross profit method depends on a good estimate of the gross profit ratio.

Accepted Answer

A) True 
 B)False

Question 12

Evaluate each inventory error separately and determine whether it overstates or understates cost of goods sold and net income.
 $$\begin{array} { | l | l | l | } 
\hline \text { Inventory error: } & \text { Cost of goods sold is: } & \text { Net income is: } \
\hline \text { Understatement of beginning inventory } & & \
\hline \text { Understatement of ending inventory } & & \
\hline \text { Overstatement of beginning inventory } & & \
\hline \text { Overstatement of ending inventory } & & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | c | c | } 
\hlin

Question 13

The inventory turnover ratio is calculated as:

Accepted Answer

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

Question 14

An advantage of the ________ method of inventory valuation is that it tends to smooth out the effect of erratic changes in costs.

Accepted Answer

The answer of An advantage of the ________ method of...

Question 15

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 16

Using the information given below for a company that uses a perpetual inventory system,calculate the ending inventory using weighted average.
 $$\begin{array} { | l | c | r | } 
\hline & \text { Units } &  { \text { Unit Cost } } \
\hline \text { Beginning inventory } & 100 & \$10 \
\hline \text { Jan. 5 purchased } & 40 &12 \
\hline \text { Jan. 10 sold } & 60 &- \
\hline \text { Jan. 15 purchased } & 70 &13 \
\hline \text {Jan. 25 sold } & 50 &- \
\hline
\end{array}$$

Accepted Answer

@#IMG-DLM& *$1,480/140 units =

Question 17

Match each of the following terms with the appropriate definition.
-The expected sales price of an item minus the cost of making the sale.

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

Salmone Company reported the following purchases and sales of its only product.Salmone uses a periodic inventory system.Determine the cost assigned to ending inventory using LIFO.
$$\begin{array} { | c | l | l | l | } 
\hline \text { Date } & { \text { Activities } } & \text { Units Acquired at Cost } & \text { Units Sold at Retail } \
\hline \text { May 1}& \text { Beginning Inventory } & 150 \text { units @ } \$ 10.00 & \
\hline 5& \text { Purchase } & 220 \text { units @ } \$ 12.00 & \
\hline 10& \text { Sales } & & 140 \text { units @ \$20.00 } \
\hline 15& \text { Purchase } & 100 \text { units @ } \$ 13.00 & \
\hline 24& \text { Sales } & & 90 \text { units @ \$21.00 } \
\hline
\end{array}$$

Accepted Answer

A)  $2,260 
B)  $3,180 
C)  $2,580 
D)  $3,580 
E)  $2,100 
A)  $2,260 
B)  $3,180 
C)  $2,580 
D)  $3,580 
E)  $2,100

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

When applying the lower of cost or market method of inventory valuation,market is defined as the ________.

When LIFO is used with the periodic inventory system,cost of goods sold is assigned costs from the most recent purchases at the point of each sale,rather than from the most recent purchases for the period.

Grays Company has inventory of 10 units at a cost of $10 each on August 1.On August 3,it purchased 20 units at $12 each.12 units are sold on August 6.Using the FIFO perpetual inventory method,what amount will be reported as cost of goods sold for the 12 units that were sold?

A company's inventory records report the following: August 1 Beginning balance 15 units @ \1 2 August 5 Purchase 10 units @ \1 3 August 12 Purchase 20 units @ \1 4 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?

The inventory turnover ratio:

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 amount will be reported as cost of goods sold for the 11 units that were sold?

When purchase costs regularly rise,the ________ method of inventory valuation yields the highest gross profit and net income.

The inventory valuation method that has the advantages of assigning an amount to inventory on the balance sheet that approximates its current cost,and also mimics the actual flow of goods for most businesses is:

The reliability of the gross profit method depends on a good estimate of the gross profit ratio.

The inventory turnover ratio is calculated as:

An advantage of the ________ method of inventory valuation is that it tends to smooth out the effect of erratic changes in costs.

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

Using the information given below for a company that uses a perpetual inventory system,calculate the ending inventory using weighted average. Units Unit Cost Beginning inventory 100 \1 0 Jan. 5 purchased 40 12 Jan. 10 sold 60 - Jan. 15 purchased 70 13 Jan. 25 sold 50 -

Match each of the following terms with the appropriate definition. -The expected sales price of an item minus the cost of making the sale.

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

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

When applying the lower of cost or market method of inventory valuation,market is defined as the ________.

When LIFO is used with the periodic inventory system,cost of goods sold is assigned costs from the most recent purchases at the point of each sale,rather than from the most recent purchases for the period.

Grays Company has inventory of 10 units at a cost of $10 each on August 1.On August 3,it purchased 20 units at $12 each.12 units are sold on August 6.Using the FIFO perpetual inventory method,what amount will be reported as cost of goods sold for the 12 units that were sold?

A company's inventory records report the following: August 1 Beginning balance 15 units @ \1 2 August 5 Purchase 10 units @ \1 3 August 12 Purchase 20 units @ \1 4 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?

The inventory turnover ratio:

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 amount will be reported as cost of goods sold for the 11 units that were sold?

When purchase costs regularly rise,the ________ method of inventory valuation yields the highest gross profit and net income.

The inventory valuation method that has the advantages of assigning an amount to inventory on the balance sheet that approximates its current cost,and also mimics the actual flow of goods for most businesses is:

The reliability of the gross profit method depends on a good estimate of the gross profit ratio.

The inventory turnover ratio is calculated as:

An advantage of the ________ method of inventory valuation is that it tends to smooth out the effect of erratic changes in costs.

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

Using the information given below for a company that uses a perpetual inventory system,calculate the ending inventory using weighted average. Units Unit Cost Beginning inventory 100 \1 0 Jan. 5 purchased 40 12 Jan. 10 sold 60 - Jan. 15 purchased 70 13 Jan. 25 sold 50 -

Match each of the following terms with the appropriate definition. -The expected sales price of an item minus the cost of making the sale.

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