Exam 8: Inventories

Use this information to answer the following question. Beginning 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 147 units. What is ending inventory under FIFO?

An understatement of year 1's beginning inventory will

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

An overstatement of beginning inventory results in

Use this inventory information for the month of March to answer the following question. Assuming that a perpetual inventory system is used, what is cost of goods sold (rounded) under the average-cost method?

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

A retail company has goods available for sale of $500,000 at retail and $200,000 at cost and ending inventory of $57,000 at retail. What is the estimated cost of goods sold?

A retail store has goods available for sale of $2 million at retail and $1,100,000 at cost, and ending inventory of $160,000 at retail. What is the estimated cost of ending inventory?

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

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

Braxton Company uses the retail method to estimate the cost of ending inventory. Use the following information to estimate the cost of Braxton's ending inventory on December 31, 2010, using the retail method. Show your answer in good form.

How is the matching rule applied when accounting for merchandise inventory?

Supply-chain management works well in a just-in-time operating environment.

Use the following information to calculate ending inventory on (a) a LIFO basis, (b) a FIFO basis, and (c) an average-cost basis. Assume a perpetual inventory system.

Under rising prices, why will the FIFO method produce a higher ending inventory than LIFO?

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

The higher the value assigned to ending inventory, the lower the gross margin.

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

Assuming that ending inventory for 2009 was overstated, 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

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