Question 1

Days' inventory on hand equals the inventory turnover divided by 365.

Accepted Answer

A) True 
 B)False

Question 2

Use this information to answer the following question. $ \begin{array}{rlrl}
\text { Feb. }&1 & \text { Inventory } & 200 \text { units @ } \$ 6.00 \
&6 & \text { Purchase } & 300 \text { units @ } \$ 6.60 \
&13 & \text { Purchase } & 100 \text { units @ } \$ 7.20 \
&20 & \text { Purchase } & 200 \text { units @ } \$ 7.80 \
&25 & \text { Purchase } & 40 \text { units @ } \$ 8.40 \
&& \text { Total sales } & 620 \text { units }
\end{array}$

A periodic inventory system is used.
Using LIFO,cost of goods sold is

Accepted Answer

A)  $1,740. 
B)  $4,464. 
C)  $1,332. 
D)  $4,056. 
A)  $1,740. 
B)  $4,464. 
C)  $1,332. 
D)  $4,056.

Question 3

The specific identification method and the FIFO method produce the same results under both the perpetual and periodic inventory systems.

Accepted Answer

A) True 
 B)False

Question 4

During April,Leary Company sold 900 units of Product Q.Its beginning inventory and purchases during the month were as follows:
 $\begin{array}{rll}
\text { Apr. } &1& \text { Beginning inventory } & 200 \text { units @\$1 } \
&5 & \text { Purchases } & 200 \text { units @\$2 } \
&10 & \text { Purchases } & 200 \text { units } @  \$3 \
&15 & \text { Purchases } & 200 \text { units @ } \$4 \
&20 & \text { Purchases } & 200 \text { units }  @ \$5 \
&25 & \text { Purchases } & 200 \text { units @ } \$6
\end{array}$ 
 Compute the cost of the ending inventory under each of three methods: (a)average-cost,(b)LIFO,and (c)FIFO.Assume the periodic inventory system is used.(Show your work.)

Accepted Answer

a.Average-cost: $1,050 [(200 @#LAT-DLM&

Question 5

Both the retail method and the gross profit method are useful in estimating the inventory cost.

Accepted Answer

A) True 
 B)False

Question 6

All of the following are inventory costing methods except

Accepted Answer

A)  first-in, first-out. 
B)  average-cost. 
C)  periodic. 
D)  specific identification. 
A)  first-in, first-out. 
B)  average-cost. 
C)  periodic. 
D)  specific identification.

Question 7

During October,Tedesco Company sold 240 units of Product R.Its beginning inventory and purchases during the month were as follows:
 $\begin{array}{lll}
\text { Oct. } &1& \text { Beginning inventory } & 100 \text { units @ } \$ 20 \
&5 & \text { Purchases } & 100 \text { units @ } \$ 24 \
&10 & \text { Purchases } & 100 \text { units @ } \$ 22 \
&15 & \text { Purchases } & 100 \text { units } @ \$ 24 \
&20 & \text { Purchases } & 100 \text { units } @ \$ 28 \
&25 & \text { Purchases } & 100 \text { units @ } \$ 26
\end{array}$ 
Compute the cost of goods sold under each of three methods: (a)average-cost,(b)LIFO,and (c)FIFO.Assume the periodic inventory system is used.(Show your work.)

Accepted Answer

a.Average-cost: $5,760 [(100 @#LAT-DLM& $20)+ (100

Question 8

In verifying a claim for a loss of inventory,an insurance company might use the gross profit method.

Accepted Answer

A) True 
 B)False

Question 9

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 FIFO is

Accepted Answer

A)  $429. 
B)  $426. 
C)  $452. 
D)  $237. 
A)  $429. 
B)  $426. 
C)  $452. 
D)  $237.

Question 10

The specific identification method identifies the cost of each item in ending inventory.

Accepted Answer

A) True 
 B)False

Question 11

Use this inventory information for the month of September to answer the following question. $\begin{array}{rlll}
\text { Sept. } &1& \text { Beginning inventory } & 10 \text { units @ } \$ 120 \
&5 & \text { Purchase } & 60 \text { units @ } \$ 112 \
&14 & \text { Sale } & 40 \text { units } \
&21 & \text { Purchase } & 30 \text { units @ } \$ 116 \
&30 & \text { Sale } & 28 \text { units }
\end{array}$
 Assuming that a perpetual inventory system is used,what is ending inventory on a FIFO basis?

Accepted Answer

A)  $3,704 
B)  $7,696 
C)  More information is needed. 
D)  $3,664 
A)  $3,704 
B)  $7,696 
C)  More information is needed. 
D)  $3,664

Question 12

The costs included in work in process and finished goods inventories would properly contain manufacturing overhead costs.

Accepted Answer

A) True 
 B)False

Question 13

The matching of revenue with inventory costs is best achieved with the FIFO method.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Inventory turnover is a measure expressed in terms of a percentage.

Accepted Answer

A) True 
 B)False

Question 16

A fur dealer probably would use which of the following inventory methods?

Accepted Answer

A)  Specific identification 
B)  FIFO 
C)  Average-cost 
D)  LIFO 
A)  Specific identification 
B)  FIFO 
C)  Average-cost 
D)  LIFO

Exam 6: Inventories

Days' inventory on hand equals the inventory turnover divided by 365.

The specific identification method and the FIFO method produce the same results under both the perpetual and periodic inventory systems.

Both the retail method and the gross profit method are useful in estimating the inventory cost.

All of the following are inventory costing methods except

In verifying a claim for a loss of inventory,an insurance company might use the gross profit method.

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 FIFO is

The specific identification method identifies the cost of each item in ending inventory.

The costs included in work in process and finished goods inventories would properly contain manufacturing overhead costs.

The matching of revenue with inventory costs is best achieved with the FIFO method.

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

Inventory turnover is a measure expressed in terms of a percentage.

A fur dealer probably would use which of the following inventory methods?

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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