Question 1

A company has cost of goods available for sale of $250,000,sales of $287,000,and a gross profit percentage of 30 percent.Using the gross profit method,what is the ending inventory?

Accepted Answer

A)  $113,000 
B)  $50,000 
C)  $49,100 
D)  $163,900 
A)  $113,000 
B)  $50,000 
C)  $49,100 
D)  $163,900

Question 2

Use this inventory information for the month of May to answer the following question. $\begin{array}{rlll}
\text { May } &1& \text { Beginning inventory } & 20 \text { units @ } \$ 76 \
&7 & \text { Purchase } & 70 \text { units @ } \$ 80 \
&18 & \text { Sale } & 25 \text { units } \
&22 & \text { Purchase } & 10 \text { units @ } \$ 88 \
&29 & \text { Sale } & 40 \text { units }
\end{array}$
 Assuming that a periodic inventory system is used,what is ending inventory (rounded)under the average-cost method?

Accepted Answer

A)  $5,200 
B)  $5,288 
C)  $2,848 
D)  $2,800 
A)  $5,200 
B)  $5,288 
C)  $2,848 
D)  $2,800

Question 3

The LIFO method agrees with the actual physical goods flow in most businesses.

Accepted Answer

A) True 
 B)False

Question 4

When the cost of inventory is written down due to a market decline,a loss must be recorded.

Accepted Answer

A) True 
 B)False

Question 5

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 6

When applying the lower-of-cost-or-market rule to inventory valuation,market generally means

Accepted Answer

A)  original cost, less physical deterioration. 
B)  replacement cost. 
C)  original cost. 
D)  resale value. 
A)  original cost, less physical deterioration. 
B)  replacement cost. 
C)  original cost. 
D)  resale value.

Question 7

Use this inventory information for the month of May to answer the following question. $\begin{array}{rlll}
\text { May } &1& \text { Beginning inventory } & 20 \text { units @ } \$ 76 \
&7 & \text { Purchase } & 70 \text { units @ } \$ 80 \
&18 & \text { Sale } & 25 \text { units } \
&22 & \text { Purchase } & 10 \text { units @ } \$ 88 \
&29 & \text { Sale } & 40 \text { units }
\end{array}$
 Assuming that a periodic inventory system is used,what is cost of goods sold on a FIFO basis?

Accepted Answer

A)  $2,880 
B)  $5,120 
C)  $5,200 
D)  $2,800 
A)  $2,880 
B)  $5,120 
C)  $5,200 
D)  $2,800

Question 8

Use this information to answer the following question. $\begin{array}{rll}
\text { Jan. } & 1 & \text { Inventory } \
& 8 & \text { Purchase } \
&17 & \text { Purchase } \
&25 & \text { Purchase } \
&& \text { Total sales }
\end{array}
\begin{array}{l}
15 \text { units@\$4.00 } \
60 \text { units } @ \$ 4.40 \
30 \text { units } @ \$ 4.20 \
45 \text { units } @ \$ 4.80\
100 \text { units }
\end{array}$

A periodic inventory system is used.
Cost of goods sold under the average-cost method is

Accepted Answer

A)  $444. 
B)  $333. 
C)  $435. 
D)  $222. 
A)  $444. 
B)  $333. 
C)  $435. 
D)  $222.

Question 9

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 10

The term cost flow refers to the association of costs with their assumed flow in the operation of a business.

Accepted Answer

A) True 
 B)False

Question 11

The computer has made the perpetual inventory system more popular and easier to apply.

Accepted Answer

A) True 
 B)False

Question 12

Under the perpetual inventory system,cost of goods sold is not recorded until the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 13

A major criticism of the FIFO method is that it magnifies the effects of the business cycle on business income.

Accepted Answer

A) True 
 B)False

Question 14

Use this inventory information for the month of June to answer the following question. $\begin{array}{rlll}
\text { June }&1 & \text { Beginning inventory } & 10 \text { units @ } \$ 120 \
&5 & \text { Purchase } & 60 \text { units @ } \$ 112 \
&14 & \text { Sale } & 40 \text { units } \
&21 & \text { Purchase } & 30 \text { units @ } \$ 116 \
&30 & \text { Sale } & 28 \text { units }
\end{array}$

Assuming that a periodic inventory system is used,what is cost of goods sold under the average-cost method?

Accepted Answer

A)  $3,648 
B)  $7,752 
C)  $3,712 
D)  $7,888 
A)  $3,648 
B)  $7,752 
C)  $3,712 
D)  $7,888

Question 15

Goods held on consignment should be included in the consignee's ending inventory.

Accepted Answer

A) True 
 B)False

Question 16

Prior to a fire that destroyed most of its inventory,Verona Company had inventory purchases during the period of $80,000 and sales of $250,000.Verona began the period with $190,000 in inventory.Verona's typical gross profit percentage is 20 percent.Inventory that cost $10,000 survived the fire.Using the gross profit method,estimate the inventory loss from the fire.(Show your work.)

Accepted Answer

The answer of Prior to a fire that destroyed most...

Question 17

Inventory methods such as LIFO and FIFO deal more with cost flow than with goods flow.

Accepted Answer

A) True 
 B)False

Question 18

The average-cost method relies on a simple average calculation.

Accepted Answer

A) True 
 B)False

Question 19

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 20

A merchandiser's inventory consists of raw materials,work in process,and finished goods.

Accepted Answer

A) True 
 B)False

Exam 6: Inventories

A company has cost of goods available for sale of $250,000,sales of $287,000,and a gross profit percentage of 30 percent.Using the gross profit method,what is the ending inventory?

The LIFO method agrees with the actual physical goods flow in most businesses.

When the cost of inventory is written down due to a market decline,a loss must be recorded.

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

When applying the lower-of-cost-or-market rule to inventory valuation,market generally means

Use this information to answer the following question. Jan. 1 Inventory 8 Purchase 17 Purchase 25 Purchase Total sales 15 units@ \4 .00 60 units @\ 4.40 30 units @\ 4.20 45 units @\ 4.80 100 units A periodic inventory system is used. Cost of goods sold under the average-cost method is

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

The term cost flow refers to the association of costs with their assumed flow in the operation of a business.

The computer has made the perpetual inventory system more popular and easier to apply.

Under the perpetual inventory system,cost of goods sold is not recorded until the end of the accounting period.

A major criticism of the FIFO method is that it magnifies the effects of the business cycle on business income.

Goods held on consignment should be included in the consignee's ending inventory.

Inventory methods such as LIFO and FIFO deal more with cost flow than with goods flow.

The average-cost method relies on a simple average calculation.

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

A merchandiser's inventory consists of raw materials,work in process,and finished goods.

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

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