Question 1

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

Accepted Answer

A) $3,480. 
B) $8,928. 
C) $2,664. 
D) $8,112. 
A) $3,480. 
B) $8,928. 
C) $2,664. 
D) $8,112. B

Question 2

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

Accepted Answer

The chief objective of supply-chain management is the reduction of levels of inventory.It is accomplished by business-to-business purchasing conducted over the Internet in a just-in-time operating environment.

Question 3

Inventory turnover is a measure expressed in terms of a percentage.

Accepted Answer

A) True 
 B)False  False

Question 4

Use this information to answer the following question.   
A periodic inventory system is used.
-Using the average-cost method,the cost assigned to ending inventory is

Accepted Answer

A) $3,036. 
B) $3,168. 
C) $3,384. 
D) $8,556. 
A) $3,036. 
B) $3,168. 
C) $3,384. 
D) $8,556.

Question 5

Use this information to answer the following question.   
-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 6

Applying the lower-of-cost-or-market rule follows which of the following accounting conventions?

Accepted Answer

A) Full disclosure 
B) Matching 
C) Materiality 
D) Conservatism 
A) Full disclosure 
B) Matching 
C) Materiality 
D) Conservatism

Question 7

When the cost of inventory is written down due to a market decline,a loss must be recorded.

Accepted Answer

A) True 
 B)False

Question 8

Condensed income statements for Marlin Company are shown below for two years.
  Compute the corrected income before income taxes for 2013 and 2014,assuming that the inventory as of the end of 2013 was mistakenly understated by $26,000.

Accepted Answer

2013 = $68,000 (EI understated

Question 9

The determination of the balance sheet cost of merchandise inventory is not important to the determination of net income.

Accepted Answer

A) True 
 B)False

Question 10

In a period of rising prices,the liquidation of base-layer inventory will result in an unusually high income tax liability under which of the following methods?

Accepted Answer

A) Specific identification 
B) Average-cost 
C) LIFO 
D) FIFO 
A) Specific identification 
B) Average-cost 
C) LIFO 
D) FIFO

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) $2,079 
B) $2,685 
C) $3,861 
D) $5,940 
A) $2,079 
B) $2,685 
C) $3,861 
D) $5,940

Question 13

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 14

When applying the lower-of-cost-or-market rule to inventory valuation,market generally means

Accepted Answer

A) original cost,less physical deterioration. 
B) replacement cost. 
C) original cost. 
D) resale value. 
A) original cost,less physical deterioration. 
B) replacement cost. 
C) original cost. 
D) resale value.

Question 15

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 16

Which inventory method generally best follows the matching principle?

Accepted Answer

A) Average-cost 
B) LIFO 
C) Whichever method is used for tax purposes 
D) FIFO 
A) Average-cost 
B) LIFO 
C) Whichever method is used for tax purposes 
D) FIFO

Question 17

The most important accounting problem in dealing with merchandise inventory is the application of which of the following conventions or rules?

Accepted Answer

A) Materiality 
B) Full disclosure 
C) Matching 
D) Conservatism 
A) Materiality 
B) Full disclosure 
C) Matching 
D) Conservatism

Question 18

Why is the LIFO cost flow assumption an acceptable valuation method for merchandise inventory when it rarely matches the physical movement of the product?

Accepted Answer

LIFO is an acceptable inventory valuatio

Question 19

In which of the following cases would the gross profit method most likely be used?

Accepted Answer

A) In a company with good accounting records 
B) In applying the average-cost method 
C) In estimating the market value of inventory for application of the lower-of-cost-or-market rule 
D) In estimating an inventory loss from fire 
A) In a company with good accounting records 
B) In applying the average-cost method 
C) In estimating the market value of inventory for application of the lower-of-cost-or-market rule 
D) In estimating an inventory loss from fire

Question 20

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

Accepted Answer

A) Invoice price 
B) Cost of goods held on consignment 
C) Freight-in 
D) Sales tax 
A) Invoice price 
B) Cost of goods held on consignment 
C) Freight-in 
D) Sales tax

Exam 7: Inventories

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

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

Inventory turnover is a measure expressed in terms of a percentage.

Use this information to answer the following question. A periodic inventory system is used. -Using the average-cost method,the cost assigned to ending inventory is

Use this information to answer the following question. -A periodic inventory system is used;ending inventory is 140 units. What is cost of goods sold under FIFO?

Applying the lower-of-cost-or-market rule follows which of the following accounting conventions?

When the cost of inventory is written down due to a market decline,a loss must be recorded.

Condensed income statements for Marlin Company are shown below for two years. Compute the corrected income before income taxes for 2013 and 2014,assuming that the inventory as of the end of 2013 was mistakenly understated by $26,000.

The determination of the balance sheet cost of merchandise inventory is not important to the determination of net income.

In a period of rising prices,the liquidation of base-layer inventory will result in an unusually high income tax liability under which of the following methods?

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

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

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?

When applying the lower-of-cost-or-market rule to inventory valuation,market generally means

Which of the following is an inventory valuation method?

Which inventory method generally best follows the matching principle?

The most important accounting problem in dealing with merchandise inventory is the application of which of the following conventions or rules?

Why is the LIFO cost flow assumption an acceptable valuation method for merchandise inventory when it rarely matches the physical movement of the product?

In which of the following cases would the gross profit method most likely be used?

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

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

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

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

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 and Capital Budgeting

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