Question 1

If a fire destroys the inventory, the gross profit method can be used to estimate the cost of merchandise destroyed.

Accepted Answer

A) True 
 B)False

Question 2

The following data were taken from Castle, Inc.   Determine the inventory turnover ratio and the number of days' sales in inventory for Castle Inc. Round to two decimal places.

Accepted Answer

Inventory turnover = Cost of goods sold/

Question 3

On the basis of the following data for Sanford Industries as of December 31, determine the value of the inventory at the lower of cost or market. Also, show how the inventory would appear on the balance sheet (assume that the cost was determined by the FIFO method). Apply lower of cost or market to each inventory item.

Accepted Answer

Inventory valuation

Question 4

In the retail inventory method, the cost to retail ratio is equal to the cost of goods sold divided by the retail price of the goods sold.

Accepted Answer

A) True 
 B)False

Question 5

List the internal control objectives illustrated by the following:

Accepted Answer

The answer of List the internal control objectives illustrated by...

Question 6

What is the amount of cost of goods sold for the year according to the LIFO method?

Accepted Answer

A)  $1,380 
B)  $1,375 
C)  $1,510 
D)  $1,250 
A)  $1,380 
B)  $1,375 
C)  $1,510 
D)  $1,250

Question 7

The units of an item available for sale during the year were as follows: $\begin{array}{lrll}
\text { Jan. } & 1 & \text { Inventory } & 25 \text { units at } \$ 45 \
\text { Mar. } & 4& \text { Purchase } & 15 \text { units at } \$ 50 \
\text { June } & 7& \text { Purchase } & 35 \text { units at } \$ 58 \
\text { Nov. } & 15& \text { Purchase } & 20 \text { units at } \$ 65
\end{array}$ ​
There are 30 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the ending inventory cost using FIFO.

Accepted Answer

$1,880 (20

Question 8

Inventory at the end of the year was inadvertently overstated. Which of the following statements correctly states the effect of the error on net income, assets, and stockholders' equity?

Accepted Answer

A)  net income is overstated, assets are overstated, and stockholders' equity is understated 
B)  net income is overstated, assets are overstated, and stockholders' equity is overstated 
C)  net income is understated, assets are understated, and stockholders' equity is understated 
D)  net income is understated, assets are understated, and stockholders' equity is overstated 
A)  net income is overstated, assets are overstated, and stockholders' equity is understated 
B)  net income is overstated, assets are overstated, and stockholders' equity is overstated 
C)  net income is understated, assets are understated, and stockholders' equity is understated 
D)  net income is understated, assets are understated, and stockholders' equity is overstated

Question 9

On the basis of the following data, estimate the cost of the inventory at March 31 by the retail method.

Accepted Answer

​ @#IMG-DLM&_TB2281_00 Ratio o

Question 10

If the revenues are correctly reported and the gross profit of a company is understated, what is the effect on stockholders' equity?

Accepted Answer

A)  understated 
B)  overstated 
C)  correctly stated 
D)  none of these 
A)  understated 
B)  overstated 
C)  correctly stated 
D)  none of these

Question 11

Based on the following information: what is the company's (1) inventory turnover; (2) average daily cost of goods sold; and (3) number of days' sales in inventory for the current year? Use a 365-day year.   ​

Accepted Answer

A)  (1) 14.33 times
(2) $589.04
(3) 24.5 days 
B)  (1) 23.88 times
(2) $589.04
(3) 15.3 days 
C)  (1) 13.43 times
(2) $597.22
(3) 26.8 days 
D)  (1) 14.33 times
(2) $597.22
(3) 25.1 days 
A)  (1) 14.33 times
(2) $589.04
(3) 24.5 days 
B)  (1) 23.88 times
(2) $589.04
(3) 15.3 days 
C)  (1) 13.43 times
(2) $597.22
(3) 26.8 days 
D)  (1) 14.33 times
(2) $597.22
(3) 25.1 days

Question 12

Match between columns
                        Premises:  Produces the same cost of goods sold under both the periodic and the perpetual inventory systems
 Rarely used with a perpetual inventory system
 Produces results that are similar to the specific identification method
 Widely used for tax purposes
 Never results in either the highest or lowest possible net income
 Produces the highest gross profit when costs are decreasing
 Produces the highest ending inventory when costs are increasing
 Assigns the same value to all inventory units
 Prohibited under International Financial Reporting Standards (IFRS)
 Does not follow the physical flow of goods in most cases
 Cost of the latest purchases are assigned to ending inventory

Accepted Answer

The Answer of FIFO and LIFO and Weighted average is...

Question 13

Beginning inventory, purchases, and sales data for widgets are as follows:   ​
Complete the inventory cost card assuming the business maintains a perpetual inventory system and determine the cost of goods sold and ending inventory using FIFO.

Accepted Answer

The answer of Beginning inventory, purchases, and sales data for...

Question 14

Excess inventory results in all of the following except

Accepted Answer

A)  tied-up funds that could be used to improve operations 
B)  lost sales 
C)  increased storage expense 
D)  increased risk of loss due to damage 
A)  tied-up funds that could be used to improve operations 
B)  lost sales 
C)  increased storage expense 
D)  increased risk of loss due to damage

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

On the basis of the following data, what is the estimated cost of the inventory on May 31 using the retail method? $$\begin{array} { l l r r } 
& & \text { Cost } & \text { Retail } \
\text { May 1 } & \text { Inventory } & \$ 125,000 & \$ 166,667 \
\text { May 1-31 } & \text { Purchases } & 235,000 & 313,333 \
\text { May 1-31 } & \text { Sales } & & 230,000
\end{array}$$

Accepted Answer

A)  $250,000 
B)  $360,000 
C)  $172,500 
D)  $187,500 
A)  $250,000 
B)  $360,000 
C)  $172,500 
D)  $187,500

Question 17

Under a perpetual inventory system, the amount of each type of merchandise on hand is available in the

Accepted Answer

A)  customer's ledger 
B)  creditor's ledger 
C)  inventory ledger 
D)  purchase ledger 
A)  customer's ledger 
B)  creditor's ledger 
C)  inventory ledger 
D)  purchase ledger

Question 18

Stevens Company started the year with an inventory cost of $145,000. During the month of January, Stevens purchased inventory that cost $53,000. January sales totaled $140,000. Estimated gross profit is 35%. The estimated ending inventory as of January 31 is

Accepted Answer

A)  $58,000 
B)  $91,000 
C)  $107,000 
D)  $69,300 
A)  $58,000 
B)  $91,000 
C)  $107,000 
D)  $69,300

Question 19

The following units of an inventory item were available for sale during the year. Use this information to answer the following questions.
 $$\begin{array} { l l } 
\text { Beginning inventory } & 10 \text { units at } \$ 55 \
\text { First purchase } & 25 \text { units at } \$ 60 \
\text { Second purchase } & 30 \text { units at } \$ 65 \
\text { Third purchase } & 15 \text { units at } \$ 70
\end{array}$$ The firm uses the periodic inventory system. During the year, 60 units of the item were sold.
​
-The ending inventory cost rounded to nearest dollar using average cost is:

Accepted Answer

A)  $1,353 
B)  $1,263 
C)  $1,375 
D)  $1,150 
A)  $1,353 
B)  $1,263 
C)  $1,375 
D)  $1,150

Question 20

When inventory is shown on the balance sheet, both the method of determining the cost of the inventory and the method of valuing the inventory should be shown.

Accepted Answer

A) True 
 B)False

If a fire destroys the inventory, the gross profit method can be used to estimate the cost of merchandise destroyed.

The following data were taken from Castle, Inc. Determine the inventory turnover ratio and the number of days' sales in inventory for Castle Inc. Round to two decimal places.

In the retail inventory method, the cost to retail ratio is equal to the cost of goods sold divided by the retail price of the goods sold.

List the internal control objectives illustrated by the following:

What is the amount of cost of goods sold for the year according to the LIFO method?

Inventory at the end of the year was inadvertently overstated. Which of the following statements correctly states the effect of the error on net income, assets, and stockholders' equity?

On the basis of the following data, estimate the cost of the inventory at March 31 by the retail method.

If the revenues are correctly reported and the gross profit of a company is understated, what is the effect on stockholders' equity?

Based on the following information: what is the company's (1) inventory turnover; (2) average daily cost of goods sold; and (3) number of days' sales in inventory for the current year? Use a 365-day year.

Beginning inventory, purchases, and sales data for widgets are as follows: Complete the inventory cost card assuming the business maintains a perpetual inventory system and determine the cost of goods sold and ending inventory using FIFO.

Excess inventory results in all of the following except

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

On the basis of the following data, what is the estimated cost of the inventory on May 31 using the retail method? Cost Retail May 1 Inventory \ 125,000 \ 166,667 May 1-31 Purchases 235,000 313,333 May 1-31 Sales 230,000

Under a perpetual inventory system, the amount of each type of merchandise on hand is available in the

Stevens Company started the year with an inventory cost of $145,000. During the month of January, Stevens purchased inventory that cost $53,000. January sales totaled $140,000. Estimated gross profit is 35%. The estimated ending inventory as of January 31 is

When inventory is shown on the balance sheet, both the method of determining the cost of the inventory and the method of valuing the inventory should be shown.

Accounting and Business

Double-Entry Accounting

Adjustments: Accruals and Deferrals

The Accounting Cycle

Accounting for Retail Businesses

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current, Installment Notes, and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, Stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Investments

Filters

Exam 6: Inventories

If a fire destroys the inventory, the gross profit method can be used to estimate the cost of merchandise destroyed.

The following data were taken from Castle, Inc. Determine the inventory turnover ratio and the number of days' sales in inventory for Castle Inc. Round to two decimal places.

In the retail inventory method, the cost to retail ratio is equal to the cost of goods sold divided by the retail price of the goods sold.

List the internal control objectives illustrated by the following:

What is the amount of cost of goods sold for the year according to the LIFO method?

Inventory at the end of the year was inadvertently overstated. Which of the following statements correctly states the effect of the error on net income, assets, and stockholders' equity?

On the basis of the following data, estimate the cost of the inventory at March 31 by the retail method.

If the revenues are correctly reported and the gross profit of a company is understated, what is the effect on stockholders' equity?

Based on the following information: what is the company's (1) inventory turnover; (2) average daily cost of goods sold; and (3) number of days' sales in inventory for the current year? Use a 365-day year. ​

Beginning inventory, purchases, and sales data for widgets are as follows: ​ Complete the inventory cost card assuming the business maintains a perpetual inventory system and determine the cost of goods sold and ending inventory using FIFO.

Excess inventory results in all of the following except

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

On the basis of the following data, what is the estimated cost of the inventory on May 31 using the retail method? Cost Retail May 1 Inventory \ 125,000 \ 166,667 May 1-31 Purchases 235,000 313,333 May 1-31 Sales 230,000

Under a perpetual inventory system, the amount of each type of merchandise on hand is available in the

Stevens Company started the year with an inventory cost of $145,000. During the month of January, Stevens purchased inventory that cost $53,000. January sales totaled $140,000. Estimated gross profit is 35%. The estimated ending inventory as of January 31 is

When inventory is shown on the balance sheet, both the method of determining the cost of the inventory and the method of valuing the inventory should be shown.

Accounting and Business

Double-Entry Accounting

Adjustments: Accruals and Deferrals

The Accounting Cycle

Accounting for Retail Businesses

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current, Installment Notes, and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, Stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Investments

Filters

Based on the following information: what is the company's (1) inventory turnover; (2) average daily cost of goods sold; and (3) number of days' sales in inventory for the current year? Use a 365-day year.

Beginning inventory, purchases, and sales data for widgets are as follows: Complete the inventory cost card assuming the business maintains a perpetual inventory system and determine the cost of goods sold and ending inventory using FIFO.