Question 1

If prices were to never change,there would be no need for alternative inventory methods.

Accepted Answer

A) True 
 B)False

Question 2

Manufacturing overhead would not include which of the following costs?

Accepted Answer

A)  Packing materials 
B)  Supervisory salaries 
C)  Factory rent 
D)  Raw materials 
A)  Packing materials 
B)  Supervisory salaries 
C)  Factory rent 
D)  Raw materials

Question 3

A retail company has goods available for sale of $500,000 at retail and $200,000 at cost and ending inventory of $49,000 at retail.What is the estimated cost of goods sold?

Accepted Answer

A)  $151,000 
B)  $190,200 
C)  $180,400 
D)  $170,600 
A)  $151,000 
B)  $190,200 
C)  $180,400 
D)  $170,600

Question 4

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 on a LIFO basis?

Accepted Answer

A)  $7,696 
B)  $7,736 
C)  $3,664 
D)  $3,704 
A)  $7,696 
B)  $7,736 
C)  $3,664 
D)  $3,704

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Indirect materials and indirect labor are components of manufacturing overhead.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following costs normally would be included in the inventory cost?

Accepted Answer

A)  Ordering costs 
B)  Receiving costs 
C)  Applicable taxes 
D)  Storage costs 
A)  Ordering costs 
B)  Receiving costs 
C)  Applicable taxes 
D)  Storage costs

Question 8

In which of the following cases would the gross profit method most likely be used?

Accepted Answer

A)  In a company with good accounting records 
B)  In applying the average-cost method 
C)  In estimating the market value of inventory for application of the lower-of-cost-or-market rule 
D)  In estimating an inventory loss from fire 
A)  In a company with good accounting records 
B)  In applying the average-cost method 
C)  In estimating the market value of inventory for application of the lower-of-cost-or-market rule 
D)  In estimating an inventory loss from fire

Question 9

An assumption about cost flow is necessary

Accepted Answer

A)  because it is required by income tax regulations. 
B)  only when the flow of goods cannot be determined. 
C)  because prices usually change, and tracking which units have been sold is difficult. 
D)  even when there is no change in the purchase price of inventory. 
A)  because it is required by income tax regulations. 
B)  only when the flow of goods cannot be determined. 
C)  because prices usually change, and tracking which units have been sold is difficult. 
D)  even when there is no change in the purchase price of inventory.

Question 10

The higher the inventory turnover,the higher the days' inventory on hand.

Accepted Answer

A) True 
 B)False

Question 11

Why are the amounts determined for ending inventory and cost of goods sold the same under both the periodic and perpetual inventory systems when FIFO is used but not when LIFO is used?

Accepted Answer

FIFO will provide the same valuation res

Question 12

Inventory costing methods place primary reliance on assumptions about the flow of

Accepted Answer

A)  costs. 
B)  goods. 
C)  resale prices. 
D)  values. 
A)  costs. 
B)  goods. 
C)  resale prices. 
D)  values.

Question 13

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

The answer of Up to the date of a fire...

Question 14

Which of the following is an inventory valuation method?

Accepted Answer

A)  First-in, first-out 
B)  Average-cost 
C)  Lower-of-cost-or-market 
D)  Perpetual 
A)  First-in, first-out 
B)  Average-cost 
C)  Lower-of-cost-or-market 
D)  Perpetual

Question 15

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 16

Which of the following costs usually would not be included in the inventory cost?

Accepted Answer

A)  Storage costs 
B)  Related tariffs 
C)  Invoice price less purchases discounts 
D)  Insurance on goods in transit 
A)  Storage costs 
B)  Related tariffs 
C)  Invoice price less purchases discounts 
D)  Insurance on goods in transit

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Condensed income statements for Newlon Company are shown below for two years.
 $\begin{array}{lcc}
&2010&2009\
 \text { Net sales } & \$ 75,000 & \$ 90,000 \
\text { Cost of goods sold } & 45,000 & 54,000 \
 \text { Gross margin } & \$ 30,000 & \$ 36,000 \
 \text { Operating expenses } & 15,000 & 15,000 \
 \text {Income before income taxes } & \$ 15,000 & \$ 21,000 \
\end{array}$
 
Compute the corrected income before income taxes for 2009 and 2010 assuming that the inventory as of the end of 2009 was mistakenly understated by $3,000.

Accepted Answer

2009 = $24,000 (EI understated

Question 19

Which of the following is an inventory costing method?

Accepted Answer

A)  Perpetual 
B)  Lower-of-cost-or-market 
C)  Specific identification 
D)  Periodic 
A)  Perpetual 
B)  Lower-of-cost-or-market 
C)  Specific identification 
D)  Periodic

Question 20

If a company uses LIFO for tax purposes,it must also use LIFO for financial reporting purposes.

Accepted Answer

A) True 
 B)False

Exam 6: Inventories

If prices were to never change,there would be no need for alternative inventory methods.

Manufacturing overhead would not include which of the following costs?

A retail company has goods available for sale of $500,000 at retail and $200,000 at cost and ending inventory of $49,000 at retail.What is the estimated cost of goods sold?

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

Indirect materials and indirect labor are components of manufacturing overhead.

Which of the following costs normally would be included in the inventory cost?

In which of the following cases would the gross profit method most likely be used?

An assumption about cost flow is necessary

The higher the inventory turnover,the higher the days' inventory on hand.

Why are the amounts determined for ending inventory and cost of goods sold the same under both the periodic and perpetual inventory systems when FIFO is used but not when LIFO is used?

Inventory costing methods place primary reliance on assumptions about the flow of

Which of the following is an inventory valuation method?

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

Which of the following costs usually would not be included in the inventory cost?

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

Which of the following is an inventory costing method?

If a company uses LIFO for tax purposes,it must also use LIFO for financial reporting purposes.

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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