Question 1

A jeweler 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

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Use this information to answer the following question.   
A periodic inventory system is used.
-Using the specific identification method and assuming that 50 of the items left are from the October 13 purchase and the rest are from the October 20 purchase,the cost assigned to ending inventory is

Accepted Answer

A) $3,840. 
B) $3,312. 
C) $3,372. 
D) $3,176. 
A) $3,840. 
B) $3,312. 
C) $3,372. 
D) $3,176.

Question 4

Atwood Company uses a periodic inventory system.During the first quarter of 2014,it sold 12,000 cases of Product A for $120,000.Facts related to its beginning inventory and purchases are as follows:
   For the quarter ended March 31,2014,compute the ending inventory,cost of goods sold,and gross margin under three methods: (a)average-cost, (b)FIFO,and (c)LIFO.(Show your work. )

Accepted Answer

@#IMG-DLM&
1. (5,000 × $4) + (3,000 × $5) + (8,000

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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?

Accepted Answer

A) $128,000 
B) $160,000 
C) $110,000 
D) $88,000 
A) $128,000 
B) $160,000 
C) $110,000 
D) $88,000

Question 7

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 8

In practice,why is it often difficult to apply the retail method in determining the cost of ending inventory?

Accepted Answer

The retail method is often made complica

Question 9

Days' inventory on hand equals 365 divided by

Accepted Answer

A) inventory turnover. 
B) cost of goods sold. 
C) goods available for sale. 
D) average inventory. 
A) inventory turnover. 
B) cost of goods sold. 
C) goods available for sale. 
D) average inventory.

Question 10

Which of the following terms best describes the assumption made in applying the four inventory methods?

Accepted Answer

A) Cost flow 
B) Goods flow 
C) Asset flow 
D) Physical flow 
A) Cost flow 
B) Goods flow 
C) Asset flow 
D) Physical flow

Question 11

If a company uses LIFO for tax purposes,it need not use LIFO for financial reporting purposes.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is an inventory valuation method?

Accepted Answer

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

Question 13

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 14

An understatement of year 1's beginning inventory will

Accepted Answer

A) cause year 2's gross margin to be overstated. 
B) cause year 1's cost of goods sold to be understated. 
C) cause year 2's gross margin to be understated. 
D) have no effect on year 1's gross margin. 
A) cause year 2's gross margin to be overstated. 
B) cause year 1's cost of goods sold to be understated. 
C) cause year 2's gross margin to be understated. 
D) have no effect on year 1's gross margin.

Question 15

Use this inventory information for the month of August to answer the following question.   Assuming that a perpetual inventory system is used.
-What is ending inventory (rounded)under the average-cost method?

Accepted Answer

A) $3,764 
B) $3,826 
C) $3,968 
D) $3,986 
A) $3,764 
B) $3,826 
C) $3,968 
D) $3,986

Question 16

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 17

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

Accepted Answer

A) $444. 
B) $333. 
C) $435. 
D) $222. 
A) $444. 
B) $333. 
C) $435. 
D) $222.

Question 18

An overstatement of beginning inventory results in

Accepted Answer

A) no effect on the period's gross margin. 
B) an overstatement of gross margin. 
C) an understatement of gross margin. 
D) a need to adjust purchases. 
A) no effect on the period's gross margin. 
B) an overstatement of gross margin. 
C) an understatement of gross margin. 
D) a need to adjust purchases.

Question 19

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

Accepted Answer

A) $3,648 
B) $7,752 
C) $3,712 
D) $7,888 
A) $3,648 
B) $7,752 
C) $3,712 
D) $7,888

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 6: Inventories

A jeweler probably would use which of the following inventory methods?

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

Use this information to answer the following question. A periodic inventory system is used. -Using the specific identification method and assuming that 50 of the items left are from the October 13 purchase and the rest are from the October 20 purchase,the cost assigned to ending inventory is

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

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?

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

In practice,why is it often difficult to apply the retail method in determining the cost of ending inventory?

Days' inventory on hand equals 365 divided by

Which of the following terms best describes the assumption made in applying the four inventory methods?

If a company uses LIFO for tax purposes,it need not use LIFO for financial reporting purposes.

Which of the following is an inventory valuation method?

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

An understatement of year 1's beginning inventory will

Use this inventory information for the month of August to answer the following question. Assuming that a perpetual inventory system is used. -What is ending inventory (rounded)under the average-cost method?

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

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

An overstatement of beginning inventory results in

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

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

Uses of Accounting Information and the Financial Statements

Measurement Concepts: Recording Business Transactions

Measuring Business Income: Adjusting the Accounts

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Cash and Internal Control

Receivables

Long-Term Assets

Current Liabilities and Fair Value Accounting

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems: Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, including Target Costing and Transfer Pricing

Quality Management and Measurement

Accounting for Unincorporated Businesses

Accounting for Investments

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