Question 1

Which of the following is an inventory processing system?

Accepted Answer

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

Question 2

Use this information to answer the following question. $\begin{array}{ll}
\text { Beginning inventory } & 100 \text { units @ } \$ 8.00 \
\text { Purchase-Oct. } & 200 \text { units } \$ \$ .00 \
\text { Purchase-Dec. } & 100 \text { units } \$ 12.00
\end{array}$ A periodic inventory system is used; ending inventory is 140 units.
What is cost of goods sold under FIFO?

Accepted Answer

A)  $1,760 
B)  $3,160 
C)  $2,160 
D)  $4,160 
A)  $1,760 
B)  $3,160 
C)  $2,160 
D)  $4,160

Question 3

Given the following information about purchases and sales during the year, compute the cost to be assigned to ending inventory under each of three methods: (a) average-cost, (b) FIFO, and (c) LIFO. (Show your work.)
Assuming that a periodic inventory system is used

Accepted Answer

a. Average-cost: $1,120 ($2,80

Question 4

Use this inventory information for the month of September to answer the following question.   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 5

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

Accepted Answer

The chief objective of supply-chain mana

Question 6

In a period of declining prices, which of the following inventory methods generally results in the lowest balance sheet figure for inventory?

Accepted Answer

A)  LIFO 
B)  Cannot tell without more information 
C)  FIFO 
D)  Average-cost 
A)  LIFO 
B)  Cannot tell without more information 
C)  FIFO 
D)  Average-cost

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

In a period of rising prices, which of the following inventory methods generally results in the highest gross margin figure?

Accepted Answer

A)  Cannot tell without more information 
B)  LIFO 
C)  FIFO 
D)  Average-cost 
A)  Cannot tell without more information 
B)  LIFO 
C)  FIFO 
D)  Average-cost

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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 11

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 12

In general, when prices are rising, use of the FIFO method will result in a lower tax liability than the other methods.

Accepted Answer

A) True 
 B)False

Question 13

The FIFO inventory method does not produce the most up-to-date figure for ending inventory.

Accepted Answer

A) True 
 B)False

Question 14

Emil Hinkel owns and operates a large antique shop. He uses the specific identification method to account for transactions that affect inventory. Hinkel recently completed a physical inventory of the merchandise in his shop as part of his year-end work. Today, his accountant called to inform him that it would be necessary to adjust the inventory figure shown on the balance sheet, which will increase Hinkel's tax liability. Hinkel argued that the inventory had to be correct, because he counted it twice and matched every item to an invoice. Cite reasons why the accountant would find it necessary to adjust the inventory even if Hinkel's count is accurate.

Accepted Answer

The inventory could have been adjusted f

Question 15

An overstatement of ending inventory in a period will result in an understatement of gross margin in that period.

Accepted Answer

A) True 
 B)False

Question 16

Use this information to answer the following question.   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 17

Use this inventory information for the month of June to answer the following question.   Assuming that a periodic inventory system is used, what is cost of goods sold on a FIFO 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 18

During April, Leary Company sold 1000 units of Product Q. Its beginning inventory and purchases during the month were as follows:
Assume the periodic inventory system is used
   
Compute the cost of the ending inventory under each of three methods: (a) average-cost, (b) LIFO, and (c) FIFO. (Show your work.)

Accepted Answer

a. Average-cost: $700 [(200 @#LAT-DLM& $

Question 19

A company has goods available for sale of $250,000 at retail and $175,000 at cost. It also had sales of $210,000 for the period. What is the estimated cost of ending inventory, using the retail method?

Accepted Answer

A)  $38,000 
B)  $28,000 
C)  $40,000 
D)  $63,000 
A)  $38,000 
B)  $28,000 
C)  $40,000 
D)  $63,000

Question 20

Assuming that ending inventory for 2009 was understated, indicate whether each of the following will be understated (U), overstated (O), or not affected (N).
_____ 1. Beginning inventory for 2010
_____ 2. Cost of goods sold for 2009
_____ 3. Stockholders' equity at the end of 2010
_____ 4. Income before income taxes for 2010
_____ 5. Stockholders' equity at the end of 2009
_____ 6. Cost of goods sold for 2010
_____ 7. Income before income taxes for 2009

Accepted Answer

The answer of Assuming that ending inventory for 2009 was...

Exam 8: Inventories

Which of the following is an inventory processing system?

Use this information to answer the following question. Beginning inventory 100 units @ \ 8.00 Purchase-Oct. 200 units \ \ .00 Purchase-Dec. 100 units \ 12.00 A periodic inventory system is used; ending inventory is 140 units. What is cost of goods sold under FIFO?

Given the following information about purchases and sales during the year, compute the cost to be assigned to ending inventory under each of three methods: (a) average-cost, (b) FIFO, and (c) LIFO. (Show your work.) Assuming that a periodic inventory system is used

Use this inventory information for the month of September to answer the following question. Assuming that a perpetual inventory system is used, what is ending inventory on a FIFO basis?

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

In a period of declining prices, which of the following inventory methods generally results in the lowest balance sheet figure for inventory?

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

In a period of rising prices, which of the following inventory methods generally results in the highest gross margin figure?

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

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

In general, when prices are rising, use of the FIFO method will result in a lower tax liability than the other methods.

The FIFO inventory method does not produce the most up-to-date figure for ending inventory.

An overstatement of ending inventory in a period will result in an understatement of gross margin in that period.

Use this information to answer the following question. A periodic inventory system is used. Cost of goods sold under FIFO is

Use this inventory information for the month of June to answer the following question. Assuming that a periodic inventory system is used, what is cost of goods sold on a FIFO basis?

A company has goods available for sale of $250,000 at retail and $175,000 at cost. It also had sales of $210,000 for the period. What is the estimated cost of ending inventory, using the retail method?

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Completing the Accounting Cycle

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Internal Control

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Contributed Capital

Long Term Liabilities

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Partnerships

The Changing Business Environment-A Managers Pers

Cost Concepts and Cost Allocation

Costing Systems: Job Order Costing

Costing Systems Process Costing

Activity-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

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