Question 1

Which,if any,of the following cost flow assumptions is NOT affected by whether a periodic or perpetual control system is used?

Accepted Answer

A)  LIFO 
B)  FIFO 
C)  Weighted average cost 
D)  Moving weighted average cost 
A)  LIFO 
B)  FIFO 
C)  Weighted average cost 
D)  Moving weighted average cost B

Question 2

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016.The following purchases and sales were made during September:  
- What was the value of cost of goods sold of Algo,using the FIFO assumption?

Accepted Answer

A)  $2640 
B)  $2700 
C)  $2720 
D)  $2400 
A)  $2640 
B)  $2700 
C)  $2720 
D)  $2400 C

Question 3

Which of the following statements about the use of the FIFO assumption is NOT true?

Accepted Answer

A)  The FIFO assumption assigns the more recent purchase costs to the balance sheet inventory asset account. 
B)  The FIFO assumption is not affected by the inventory control method. 
C)  In periods of rising prices it produces a higher profit than LIFO. 
D)  The FIFO assumption produces inventory asset values that are based on older purchase costs. 
A)  The FIFO assumption assigns the more recent purchase costs to the balance sheet inventory asset account. 
B)  The FIFO assumption is not affected by the inventory control method. 
C)  In periods of rising prices it produces a higher profit than LIFO. 
D)  The FIFO assumption produces inventory asset values that are based on older purchase costs. D

Question 4

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016.The following purchases and sales were made during September:   
-What was the value of ending inventory of Algo,using the FIFO assumption?

Accepted Answer

A)  $1460 
B)  $1480 
C)  $2400 
D)  $1400 
A)  $1460 
B)  $1480 
C)  $2400 
D)  $1400

Question 5

A company purchases and sells Roofoo.It began last year with five units of Roofoo on hand at a cost of $10 each,and during the year its purchases and sales were as follows:   
-What was the value of the ending inventory of Roofoo,using the moving weighted average assumption and a perpetual inventory system?

Accepted Answer

A)  $45 
B)  $39 
C)  $36.43 
D)  $15 
A)  $45 
B)  $39 
C)  $36.43 
D)  $15

Question 6

At 1 July 2015,Epsilon Pty Ltd had 100 items of inventory which had cost $50 each.During the year ended 30 June 2016,it purchased 1500 items at a cost of $50 each.Of these,200 were returned to the supplier as they were damaged.During the year,1200 items were sold for $80 each,but 50 were returned by customers.Overhead expenses during the year amounted to $15 000.
-What was Epsilon Pty Ltd's cost of goods sold for the year?

Accepted Answer

A)  $47 500 
B)  $57 500 
C)  $60 000 
D)  $62 500 
A)  $47 500 
B)  $57 500 
C)  $60 000 
D)  $62 500

Question 7

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016.The following purchases and sales were made during September:   
-What was the value of ending inventory of Algo,using the moving weighted average assumption and a perpetual inventory system?

Accepted Answer

A)  $1460 
B)  $1480 
C)  $1540 
D)  $1590 
A)  $1460 
B)  $1480 
C)  $1540 
D)  $1590

Question 8

Use the information below to answer the following question. Pinkerton Ltd uses a perpetual control system for its inventory.It had the following data for a recent period:
 
- If Pinkerton Ltd had employed the periodic inventory method,what would its gross profit have been?

Accepted Answer

A)  $280 000 
B)  $300 000 
C)  $320 000 
D)  $440 000 
A)  $280 000 
B)  $300 000 
C)  $320 000 
D)  $440 000

Question 9

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016.The following purchases and sales were made during September:   
-What was the value of cost of goods sold of Algo,using the LIFO assumption in a perpetual inventory system?

Accepted Answer

A)  $2600 
B)  $2700 
C)  $2720 
D)  $1400 
A)  $2600 
B)  $2700 
C)  $2720 
D)  $1400

Question 10

Inventory with a value of $300 000 was written down to $250 000 in June 2016 because of falling prices in the industry.This transaction will:

Accepted Answer

A)  decrease assets,profit and shareholders' equity. 
B)  decrease assets and profit,but not shareholders' equity. 
C)  decrease assets and shareholders' equity but not profit. 
D)  decrease assets and decrease shareholders' equity. 
A)  decrease assets,profit and shareholders' equity. 
B)  decrease assets and profit,but not shareholders' equity. 
C)  decrease assets and shareholders' equity but not profit. 
D)  decrease assets and decrease shareholders' equity.

Question 11

A company has four products and has 100 units of each in stock.The cost and net realisable value of each of the products are:   The value of inventory in the balance sheet should be:

Accepted Answer

A)  $2800. 
B)  $3100. 
C)  $3400. 
D)  none of the answers provided. 
A)  $2800. 
B)  $3100. 
C)  $3400. 
D)  none of the answers provided.

Question 12

Raw materials of inventory were purchased on credit for $200 000 on 10 June.The company uses the perpetual method.This transaction will:

Accepted Answer

A)  increase assets,liabilities and shareholders' equity. 
B)  increase assets and liabilities but reduce shareholders' equity. 
C)  increase liabilities but have no effect on assets or shareholders' equity. 
D)  increase assets and increase liabilities. 
A)  increase assets,liabilities and shareholders' equity. 
B)  increase assets and liabilities but reduce shareholders' equity. 
C)  increase liabilities but have no effect on assets or shareholders' equity. 
D)  increase assets and increase liabilities.

Question 13

Which of the following statements about the use of the LIFO assumption is true?

Accepted Answer

A)  The LIFO assumption assigns older costs to the cost of goods sold expense account. 
B)  The LIFO assumption produces inventory asset values that are close to current costs. 
C)  The LIFO assumption produces a lower inventory asset value and the highest cost of goods sold. 
D)  None of the answers provided. 
A)  The LIFO assumption assigns older costs to the cost of goods sold expense account. 
B)  The LIFO assumption produces inventory asset values that are close to current costs. 
C)  The LIFO assumption produces a lower inventory asset value and the highest cost of goods sold. 
D)  None of the answers provided.

Question 14

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016.The following purchases and sales were made during September:   
-What was the value of ending inventory of Algo,using the LIFO assumption in a periodic inventory system?

Accepted Answer

A)  $1580 
B)  $1480 
C)  $1460 
D)  $1590 
A)  $1580 
B)  $1480 
C)  $1460 
D)  $1590

Question 15

During the year ended 30 June 2016,Rico Ltd had net sales of $750 000 and net purchases of $440 000.Cost of goods sold was $475 000.What was Rico Ltd's gross profit for the year ended 30 June 2016?

Accepted Answer

A)  $240 000 
B)  $275 000 
C)  $310 000 
D)  $475 000 
A)  $240 000 
B)  $275 000 
C)  $310 000 
D)  $475 000

Question 16

In times of inflation,which cost flow assumption provides the highest inventory asset?

Accepted Answer

A)  FIFO 
B)  Moving weighted average 
C)  LIFO 
D)  It depends on the rate of inflation 
A)  FIFO 
B)  Moving weighted average 
C)  LIFO 
D)  It depends on the rate of inflation

Question 17

Which of the following is NOT an advantage of the perpetual inventory system over the periodic inventory system?

Accepted Answer

A)  The perpetual inventory system discloses inventory shortages. 
B)  The perpetual inventory system is less costly to maintain. 
C)  The perpetual inventory system provides a continuous record of cost of goods sold. 
D)  The perpetual inventory system provides better control of the asset inventory. 
A)  The perpetual inventory system discloses inventory shortages. 
B)  The perpetual inventory system is less costly to maintain. 
C)  The perpetual inventory system provides a continuous record of cost of goods sold. 
D)  The perpetual inventory system provides better control of the asset inventory.

Question 18

Which of the following is NOT an advantage of the perpetual over the periodic inventory method?

Accepted Answer

A)  A continuous record of inventory on hand is furnished. 
B)  Inventory theft may be detected. 
C)  Recording is simplified. 
D)  The perpetual inventory system provides a continuous record of cost of goods sold. 
A)  A continuous record of inventory on hand is furnished. 
B)  Inventory theft may be detected. 
C)  Recording is simplified. 
D)  The perpetual inventory system provides a continuous record of cost of goods sold.

Question 19

Use the information below to answer the following question. Pinkerton Ltd uses a perpetual control system for its inventory.It had the following data for a recent period:
 
- What was the balance of Pinkerton Ltd's accounts payable at the end of the period?

Accepted Answer

A)  $20 000 
B)  $40 000 
C)  $90 000 
D)  $100 000 
A)  $20 000 
B)  $40 000 
C)  $90 000 
D)  $100 000

Question 20

The entry to record a credit sale when the perpetual inventory method is employed will include a debit to:

Accepted Answer

A)  cost of goods sold. 
B)  sales. 
C)  purchases. 
D)  inventory. 
A)  cost of goods sold. 
B)  sales. 
C)  purchases. 
D)  inventory.

Which,if any,of the following cost flow assumptions is NOT affected by whether a periodic or perpetual control system is used?

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016.The following purchases and sales were made during September: - What was the value of cost of goods sold of Algo,using the FIFO assumption?

Which of the following statements about the use of the FIFO assumption is NOT true?

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016.The following purchases and sales were made during September: -What was the value of ending inventory of Algo,using the FIFO assumption?

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016.The following purchases and sales were made during September: -What was the value of ending inventory of Algo,using the moving weighted average assumption and a perpetual inventory system?

Use the information below to answer the following question. Pinkerton Ltd uses a perpetual control system for its inventory.It had the following data for a recent period: - If Pinkerton Ltd had employed the periodic inventory method,what would its gross profit have been?

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016.The following purchases and sales were made during September: -What was the value of cost of goods sold of Algo,using the LIFO assumption in a perpetual inventory system?

Inventory with a value of $300 000 was written down to $250 000 in June 2016 because of falling prices in the industry.This transaction will:

A company has four products and has 100 units of each in stock.The cost and net realisable value of each of the products are: The value of inventory in the balance sheet should be:

Raw materials of inventory were purchased on credit for $200 000 on 10 June.The company uses the perpetual method.This transaction will:

Which of the following statements about the use of the LIFO assumption is true?

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016.The following purchases and sales were made during September: -What was the value of ending inventory of Algo,using the LIFO assumption in a periodic inventory system?

During the year ended 30 June 2016,Rico Ltd had net sales of $750 000 and net purchases of $440 000.Cost of goods sold was $475 000.What was Rico Ltd's gross profit for the year ended 30 June 2016?

In times of inflation,which cost flow assumption provides the highest inventory asset?

Which of the following is NOT an advantage of the perpetual inventory system over the periodic inventory system?

Which of the following is NOT an advantage of the perpetual over the periodic inventory method?

Use the information below to answer the following question. Pinkerton Ltd uses a perpetual control system for its inventory.It had the following data for a recent period: - What was the balance of Pinkerton Ltd's accounts payable at the end of the period?

The entry to record a credit sale when the perpetual inventory method is employed will include a debit to:

Introduction to Financial Accounting

Measuring and Evaluating Financial Position and Financial Performance

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Financial Reporting Principles, accounting Standards and Auditing

Internal Control and Cash

Accounts Receivable and Further Record-Keeping

Noncurrent Assets

Liabilities

Completing the Balance Sheet

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Sustainability Reporting

Filters

Exam 9: Inventory

Which,if any,of the following cost flow assumptions is NOT affected by whether a periodic or perpetual control system is used?

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016.The following purchases and sales were made during September: - What was the value of cost of goods sold of Algo,using the FIFO assumption?

Which of the following statements about the use of the FIFO assumption is NOT true?

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016.The following purchases and sales were made during September: -What was the value of ending inventory of Algo,using the FIFO assumption?

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016.The following purchases and sales were made during September: -What was the value of ending inventory of Algo,using the moving weighted average assumption and a perpetual inventory system?

Use the information below to answer the following question. Pinkerton Ltd uses a perpetual control system for its inventory.It had the following data for a recent period: - If Pinkerton Ltd had employed the periodic inventory method,what would its gross profit have been?

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016.The following purchases and sales were made during September: -What was the value of cost of goods sold of Algo,using the LIFO assumption in a perpetual inventory system?

Inventory with a value of $300 000 was written down to $250 000 in June 2016 because of falling prices in the industry.This transaction will:

A company has four products and has 100 units of each in stock.The cost and net realisable value of each of the products are: The value of inventory in the balance sheet should be:

Raw materials of inventory were purchased on credit for $200 000 on 10 June.The company uses the perpetual method.This transaction will:

Which of the following statements about the use of the LIFO assumption is true?

Diligent Ltd had 5 units of the commodity Algo on hand at 1 September 2016.The following purchases and sales were made during September: -What was the value of ending inventory of Algo,using the LIFO assumption in a periodic inventory system?

During the year ended 30 June 2016,Rico Ltd had net sales of $750 000 and net purchases of $440 000.Cost of goods sold was $475 000.What was Rico Ltd's gross profit for the year ended 30 June 2016?

In times of inflation,which cost flow assumption provides the highest inventory asset?

Which of the following is NOT an advantage of the perpetual inventory system over the periodic inventory system?

Which of the following is NOT an advantage of the perpetual over the periodic inventory method?

Use the information below to answer the following question. Pinkerton Ltd uses a perpetual control system for its inventory.It had the following data for a recent period: - What was the balance of Pinkerton Ltd's accounts payable at the end of the period?

The entry to record a credit sale when the perpetual inventory method is employed will include a debit to:

Introduction to Financial Accounting

Measuring and Evaluating Financial Position and Financial Performance

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Financial Reporting Principles, accounting Standards and Auditing

Internal Control and Cash

Accounts Receivable and Further Record-Keeping

Noncurrent Assets

Liabilities

Completing the Balance Sheet

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Sustainability Reporting

Filters