Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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 3

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 4

Use this information to answer the following question.   A periodic inventory system is used; ending inventory is 150 units.
What is ending inventory under the average-cost method?

Accepted Answer

A)  $900 
B)  $1,050 
C)  $1,350 
D)  $1,200 
A)  $900 
B)  $1,050 
C)  $1,350 
D)  $1,200

Question 5

Assume that during the physical count of the inventory of a large corporation for this year, $900,000 of merchandise was counted twice. The error was not detected, and the financial statements were prepared. Identify the individual statements that would be affected and explain the effect the count error would have on each. (Omit income tax consideration.)

Accepted Answer

The double-counting of merchandise would

Question 6

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 7

Supply-chain management helps companies maintain lower levels of inventory.

Accepted Answer

A) True 
 B)False

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

Freight charges associated with the purchase of inventory normally are not included in inventory cost.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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 12

Use this information to answer the following question.   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 13

Use this information to answer the following question.   A periodic inventory system is used.
Ending inventory under LIFO is

Accepted Answer

A)  $452. 
B)  $429. 
C)  $214. 
D)  $237. 
A)  $452. 
B)  $429. 
C)  $214. 
D)  $237.

Question 14

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 15

The LIFO method is rarely used because most companies do not sell the last goods they purchase first.

Accepted Answer

A) True 
 B)False

Question 16

Winer & Daughters reports income before income taxes of $10,000 during 2010. If beginning inventory was understated by $3,000 and ending inventory was overstated by $1,200, calculate corrected income before income taxes for the year. (Show your work.)

Accepted Answer

$5,800 ($1

Question 17

During periods of consistently falling prices, the FIFO inventory method will produce the highest possible amount of net income.

Accepted Answer

A) True 
 B)False

Question 18

Inventory turnover is expressed in terms of

Accepted Answer

A)  days. 
B)  a percentage. 
C)  dollars. 
D)  times. 
A)  days. 
B)  a percentage. 
C)  dollars. 
D)  times.

Question 19

Merchandise inventory is valued on the balance sheet at the expected resale price.

Accepted Answer

A) True 
 B)False

Question 20

Inventory is an example of a long-term asset.

Accepted Answer

A) True 
 B)False

Exam 8: Inventories

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

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

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

Use this information to answer the following question. A periodic inventory system is used; ending inventory is 150 units. What is ending inventory under the average-cost method?

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

Supply-chain management helps companies maintain lower levels of inventory.

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

Freight charges associated with the purchase of inventory normally are not included in inventory cost.

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

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

Use this information to answer the following question. A periodic inventory system is used. Using LIFO, cost of goods sold is

Use this information to answer the following question. A periodic inventory system is used. Ending inventory under LIFO is

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

The LIFO method is rarely used because most companies do not sell the last goods they purchase first.

Winer & Daughters reports income before income taxes of $10,000 during 2010. If beginning inventory was understated by $3,000 and ending inventory was overstated by $1,200, calculate corrected income before income taxes for the year. (Show your work.)

During periods of consistently falling prices, the FIFO inventory method will produce the highest possible amount of net income.

Inventory turnover is expressed in terms of

Merchandise inventory is valued on the balance sheet at the expected resale price.

Inventory is an example of a long-term asset.

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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