Question 1

Which of the following accounts would not appear as an asset on a manufacturer's balance sheet?

Accepted Answer

A)  Finished Goods 
B)  Work in Process 
C)  Factory Overhead 
D)  Raw Materials 
A)  Finished Goods 
B)  Work in Process 
C)  Factory Overhead 
D)  Raw Materials

Question 2

Realizable value is the amount for which an inventory item can be resold.

Accepted Answer

A) True 
 B)False

Question 3

The determination of the balance sheet cost of merchandise inventory is important to the determination of net income.

Accepted Answer

A) True 
 B)False

Question 4

The LIFO method is rarely used because most companies do not sell the last goods they purchase first.

Accepted Answer

A) True 
 B)False

Question 5

How does the perpetual inventory system differ from the periodic inventory system in the determination of cost of goods sold?

Accepted Answer

Under the perpetual system,cost of goods

Question 6

In periods of rising prices,the FIFO method will result in a larger gross margin than the LIFO method.

Accepted Answer

A) True 
 B)False

Question 7

Goods in transit shipped FOB shipping point should be included in the seller's ending inventory.

Accepted Answer

A) True 
 B)False

Question 8

Which inventory method generally best follows the matching principle?

Accepted Answer

A)  Average-cost 
B)  LIFO 
C)  Whichever method is used for tax purposes 
D)  FIFO 
A)  Average-cost 
B)  LIFO 
C)  Whichever method is used for tax purposes 
D)  FIFO

Question 9

In periods of falling prices,LIFO will result in a higher ending inventory valuation than FIFO.

Accepted Answer

A) True 
 B)False

Question 10

The gross profit method requires that records be kept at both cost and retail.

Accepted Answer

A) True 
 B)False

Question 11

In periods of rising inventory prices,the LIFO method will result in a higher inventory valuation than will the average-cost method.

Accepted Answer

A) True 
 B)False

Question 12

The portion of cost of goods available for sale that is not assigned to ending inventory is assigned to cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 13

Use the following figures (stated in millions of dollars)to compute the inventory
turnover and the days' inventory on hand: (Round answers to one decimal place).
 $\begin{array}{lr}
\text {Cost of goods sold: }&\$6,584\
\text {Beginning inventory: }&\$915\
\text {Ending inventory: }&\$1,177\
\end{array}$
 
a. Inventory turnover = ___________________
b. Days' inventory on hand = ___________________

Accepted Answer

a.6.3 time

Question 14

What is the chief objective of supply-chain management? How is it accomplished?

Accepted Answer

The chief objective of supply-chain mana

Question 15

Use this inventory information for the month of March to answer the following questions. $\begin{array}{llll}
\text { Mar. } & 1 & \text { Beginning inventory } & 20 \text { units @ } \$ 76 \
& 7 & \text { Purchase } & 70 \text { units @ } \$ 80\
&18 & \text { Sale } & 25 \text { units } \
&22 & \text { Purchase } & 10 \text { units @ } \$ 88 \
&29 & \text { Sale } & 40 \text { units } 
\end{array}$
 Assuming that a perpetual inventory system is used,what is ending inventory on a LIFO basis?

Accepted Answer

A)  More information is needed. 
B)  $5,120 
C)  $2,720 
D)  $2,880 
A)  More information is needed. 
B)  $5,120 
C)  $2,720 
D)  $2,880

Question 16

Up to the date of a fire that completely destroyed Singer's inventory,Singer had sales of $2,000,000,purchases of $1,800,000,and freight-in of $80,000.The cost of beginning inventory was $140,000 and the company's typical gross profit was 40 percent.Using the gross profit method,estimate Singer's inventory loss from the fire.(Show your work.)

Accepted Answer

None

Question 17

An overstatement of beginning inventory in a period will result in an overstatement of gross margin in the next period.

Accepted Answer

A) True 
 B)False

Question 18

Average inventory equals $100,000,and cost of goods sold equals $216,000.Days' inventory on hand equals

Accepted Answer

A)  168.98 days. 
B)  170.0 days. 
C)  157.9 days. 
D)  193.1 days. 
A)  168.98 days. 
B)  170.0 days. 
C)  157.9 days. 
D)  193.1 days.

Question 19

Use this information to answer the following question. $$\begin{array} { l l } 
\text { Begrning inventory } & \text { 100 units @ \$8.00 } \
\text { Purchase-Oct. } & \text { 200 units @ } \$ 6.00 \
\text { Purchase-Dec. } & \text { 100 units } @ \$ 12.00
\end{array}$$ A periodic inventory system is used; ending inventory is 150 units.
What is ending inventory under the average-cost method?

Accepted Answer

A)  $900 
B)  $1,050 
C)  $1,350 
D)  $1,200 
A)  $900 
B)  $1,050 
C)  $1,350 
D)  $1,200

Question 20

In accounting for inventory,the assumed cost flow need not match the physical goods flow.

Accepted Answer

A) True 
 B)False

Exam 6: Inventories

Which of the following accounts would not appear as an asset on a manufacturer's balance sheet?

Realizable value is the amount for which an inventory item can be resold.

The determination of the balance sheet cost of merchandise inventory is important to the determination of net income.

The LIFO method is rarely used because most companies do not sell the last goods they purchase first.

How does the perpetual inventory system differ from the periodic inventory system in the determination of cost of goods sold?

In periods of rising prices,the FIFO method will result in a larger gross margin than the LIFO method.

Goods in transit shipped FOB shipping point should be included in the seller's ending inventory.

Which inventory method generally best follows the matching principle?

In periods of falling prices,LIFO will result in a higher ending inventory valuation than FIFO.

The gross profit method requires that records be kept at both cost and retail.

In periods of rising inventory prices,the LIFO method will result in a higher inventory valuation than will the average-cost method.

The portion of cost of goods available for sale that is not assigned to ending inventory is assigned to cost of goods sold.

What is the chief objective of supply-chain management? How is it accomplished?

An overstatement of beginning inventory in a period will result in an overstatement of gross margin in the next period.

Average inventory equals $100,000,and cost of goods sold equals $216,000.Days' inventory on hand equals

Use this information to answer the following question. Begrning inventory 100 units @ \8 .00 Purchase-Oct. 200 units @ \ 6.00 Purchase-Dec. 100 units @\ 12.00 A periodic inventory system is used; ending inventory is 150 units. What is ending inventory under the average-cost method?

In accounting for inventory,the assumed cost flow need not match the physical goods flow.

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Contributed Capital

Investments

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

The Changing Business Environment - a Managers Perspective

Cost Concepts and Cost Allocation

Costing Systems- Job Order Costing

Costing Systems- Process Costing

Value-Based Systems- Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

Pricing Decisions,incltarget Costing and Transfer Pricing

Quality Management and Measurement

Financial Analysis of Performance

Filters