Question 1

During periods of increasing costs, an advantage of the LIFO inventory cost method is that it matches more recent costs against current revenues.

Accepted Answer

A) True 
 B)False

Question 2

If a company mistakenly counts less items during a physical inventory than actually exist, how will the error affect the cost of goods sold?

Accepted Answer

A)  understated 
B)  overstated 
C)  no change 
D)  only inventory will be affected 
A)  understated 
B)  overstated 
C)  no change 
D)  only inventory will be affected

Question 3

Complete the following table using the perpetual FIFO method of inventory flow.

Accepted Answer

The answer of Complete the following table using the perpetual...

Question 4

The units of an item available for sale during the year were as follows:   ​
There are 50 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the ending inventory cost by (a) the first-in, first-out method, (b) the last-in, first-out method, and (c) the average cost method. Show your work.

Accepted Answer

@#IMG-DLM&_TB2281_00

Question 5

Taking a physical count of inventory

Accepted Answer

A)  is not necessary when a periodic inventory system is used 
B)  should be done near year-end 
C)  has no internal control relevance 
D)  is not necessary when a perpetual inventory system is used 
A)  is not necessary when a periodic inventory system is used 
B)  should be done near year-end 
C)  has no internal control relevance 
D)  is not necessary when a perpetual inventory system is used

Question 6

If a company mistakenly counts more items during a physical inventory than actually exist, how will the error affect their bottom line?

Accepted Answer

A)  no change to net income 
B)  net income will be overstated 
C)  net income will be understated 
D)  only gross profit will be affected 
A)  no change to net income 
B)  net income will be overstated 
C)  net income will be understated 
D)  only gross profit will be affected

Question 7

The units of Manganese Plus available for sale during the year were as follows:   ​
There are 15 units of the product in the physical inventory at November 30. The periodic inventory system is used. Determine the difference in gross profit between the LIFO and FIFO inventory cost systems.

Accepted Answer

The answer of The units of Manganese Plus available for...

Question 8

Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items?

Accepted Answer

A)  FIFO 
B)  LIFO 
C)  average 
D)  specific identification 
A)  FIFO 
B)  LIFO 
C)  average 
D)  specific identification

Question 9

If the estimated rate of gross profit is 30%, what is the estimated cost of the inventory on September 30, based on the following data? $$\begin{array} { l l r } 
\text { Sep. } 1 & \text { Inventory (at cost) } & \$ 125,000 \
\text { Sep. 1-30 } & \text { Purchases, net (at cost) } & 300,000 \
\text { Sep. 1-30 } & \text { Sales } & 150,000
\end{array}$$

Accepted Answer

A)  $320,000 
B)  $192,500 
C)  $275,000 
D)  $105,000 
A)  $320,000 
B)  $192,500 
C)  $275,000 
D)  $105,000

Question 10

The inventory data for an item for November are: $$\begin{array} { r l l } 
\text { Nov. } 1 & \text { Inventory } & 20 \text { units at } \$ 19 \
4 & \text { Sold } & 10 \text { units } \
10 & \text { Purchased } & 30 \text { units at } \$ 20 \
17 & \text { Sold } & 20 \text { units } \
30 & \text { Purchased } & 10 \text { units at } \$ 21
\end{array}$$ Using a perpetual system, what is the cost of the goods sold for November if the company uses FIFO?

Accepted Answer

A)  $610 
B)  $600 
C)  $590 
D)  $580 
A)  $610 
B)  $600 
C)  $590 
D)  $580

Question 11

During a period of consistently rising prices, the method of inventory that will result in reporting the greatest cost of goods sold is

Accepted Answer

A)  FIFO 
B)  LIFO 
C)  average cost 
D)  weighted average 
A)  FIFO 
B)  LIFO 
C)  average cost 
D)  weighted average

Question 12

Brutus Corporation, a newly formed corporation, has the following transactions during May, its first month of operations.
​
May 1 Purchased 500 units @ $25.00 each
4 Purchased 300 units @ $24.00 each
6 Sold 400 units @ $38.00 each
8 Purchased 700 units @ $23.00 each
13 Sold 450 units @ $37.50 each
20 Purchased 250 units @ $25.25 each
22 Sold 275 units @ $36.00 each
27 Sold 300 units @ $37.00 each
28 Purchased 550 units @ $26.00 each
30 Sold 100 units @ $39.00 each
​
Calculate total sales, cost of goods sold, gross profit, and ending inventory using each of the following inventory methods:
1. FIFO perpetual
2. FIFO periodic
3. LIFO perpetual
4. LIFO periodic
5. Average cost periodic (round average to nearest cent)

Accepted Answer

Total sales (not dependent on inventory

Question 13

When using a perpetual inventory system, the journal entry to record the cost of goods sold is:

Accepted Answer

A)  debit Cost of Goods Sold; credit Sales 
B)  debit Cost of Goods Sold; credit Inventory 
C)  debit Inventory; credit Cost of Goods Sold 
D)  No journal entry is made to record the cost of goods sold. 
A)  debit Cost of Goods Sold; credit Sales 
B)  debit Cost of Goods Sold; credit Inventory 
C)  debit Inventory; credit Cost of Goods Sold 
D)  No journal entry is made to record the cost of goods sold.

Question 14

If Addison uses LIFO, the September 30 inventory balance is

Accepted Answer

A)  $800 
B)  $650 
C)  $750 
D)  $700 
A)  $800 
B)  $650 
C)  $750 
D)  $700

Question 15

During periods of rapidly rising costs, the use of the LIFO method results in illusory or inventory profits.

Accepted Answer

A) True 
 B)False

Question 16

The following lots of a Commodity P were available for sale during the year. Use this information to answer the questions that follow.
​
   ​
The firm uses the periodic system, and there are 20 units of the commodity on hand at the end of the year.
-What is the year-end inventory balance using the FIFO method? Use the information provided in the table to answer this question

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 17

A perpetual inventory system is an effective means of control over inventory.

Accepted Answer

A) True 
 B)False

Question 18

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 using FIFO is

Accepted Answer

A)  $1,250 
B)  $1,350 
C)  $1,375 
D)  $1,150 
A)  $1,250 
B)  $1,350 
C)  $1,375 
D)  $1,150

Question 19

When using the FIFO inventory costing method, the most recent costs are assigned to the cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following measures the relationship between cost of goods sold and the amount of inventory carried during the period?

Accepted Answer

A)  inventory turnover 
B)  fixed asset turnover 
C)  retail method of inventory costing 
D)  gross profit method of inventory costing 
A)  inventory turnover 
B)  fixed asset turnover 
C)  retail method of inventory costing 
D)  gross profit method of inventory costing

During periods of increasing costs, an advantage of the LIFO inventory cost method is that it matches more recent costs against current revenues.

If a company mistakenly counts less items during a physical inventory than actually exist, how will the error affect the cost of goods sold?

Complete the following table using the perpetual FIFO method of inventory flow.

Taking a physical count of inventory

If a company mistakenly counts more items during a physical inventory than actually exist, how will the error affect their bottom line?

The units of Manganese Plus available for sale during the year were as follows: There are 15 units of the product in the physical inventory at November 30. The periodic inventory system is used. Determine the difference in gross profit between the LIFO and FIFO inventory cost systems.

Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items?

If the estimated rate of gross profit is 30%, what is the estimated cost of the inventory on September 30, based on the following data? Sep. 1 Inventory (at cost) \ 125,000 Sep. 1-30 Purchases, net (at cost) 300,000 Sep. 1-30 Sales 150,000

The inventory data for an item for November are: Nov. 1 Inventory 20 units at \ 19 4 Sold 10 units 10 Purchased 30 units at \ 20 17 Sold 20 units 30 Purchased 10 units at \ 21 Using a perpetual system, what is the cost of the goods sold for November if the company uses FIFO?

During a period of consistently rising prices, the method of inventory that will result in reporting the greatest cost of goods sold is

When using a perpetual inventory system, the journal entry to record the cost of goods sold is:

If Addison uses LIFO, the September 30 inventory balance is

During periods of rapidly rising costs, the use of the LIFO method results in illusory or inventory profits.

A perpetual inventory system is an effective means of control over inventory.

When using the FIFO inventory costing method, the most recent costs are assigned to the cost of goods sold.

Which of the following measures the relationship between cost of goods sold and the amount of inventory carried during the period?

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

During periods of increasing costs, an advantage of the LIFO inventory cost method is that it matches more recent costs against current revenues.

If a company mistakenly counts less items during a physical inventory than actually exist, how will the error affect the cost of goods sold?

Complete the following table using the perpetual FIFO method of inventory flow.

Taking a physical count of inventory

If a company mistakenly counts more items during a physical inventory than actually exist, how will the error affect their bottom line?

The units of Manganese Plus available for sale during the year were as follows: ​ There are 15 units of the product in the physical inventory at November 30. The periodic inventory system is used. Determine the difference in gross profit between the LIFO and FIFO inventory cost systems.

Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items?

If the estimated rate of gross profit is 30%, what is the estimated cost of the inventory on September 30, based on the following data? Sep. 1 Inventory (at cost) \ 125,000 Sep. 1-30 Purchases, net (at cost) 300,000 Sep. 1-30 Sales 150,000

The inventory data for an item for November are: Nov. 1 Inventory 20 units at \ 19 4 Sold 10 units 10 Purchased 30 units at \ 20 17 Sold 20 units 30 Purchased 10 units at \ 21 Using a perpetual system, what is the cost of the goods sold for November if the company uses FIFO?

During a period of consistently rising prices, the method of inventory that will result in reporting the greatest cost of goods sold is

When using a perpetual inventory system, the journal entry to record the cost of goods sold is:

If Addison uses LIFO, the September 30 inventory balance is

During periods of rapidly rising costs, the use of the LIFO method results in illusory or inventory profits.

A perpetual inventory system is an effective means of control over inventory.

When using the FIFO inventory costing method, the most recent costs are assigned to the cost of goods sold.

Which of the following measures the relationship between cost of goods sold and the amount of inventory carried during the period?

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

The units of Manganese Plus available for sale during the year were as follows: There are 15 units of the product in the physical inventory at November 30. The periodic inventory system is used. Determine the difference in gross profit between the LIFO and FIFO inventory cost systems.