Question 1

Valuation of inventory on the balance sheet impacts cost of goods sold on the income statement.

Accepted Answer

A) True 
 B)False

Question 2

The gross profit method requires that records be kept at both cost and retail.

Accepted Answer

A) True 
 B)False

Question 3

Ending merchandise inventory for LIFO will be the same dollar amount under a periodic inventory system as under a perpetual inventory system.

Accepted Answer

A) True 
 B)False

Question 4

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 5

Assuming a perpetual inventory system is used,use the following information to calculate cost of goods sold on an average-cost basis.

Accepted Answer

The answer of Assuming a perpetual inventory system is used,use...

Question 6

A retail store prices its goods to achieve a gross margin of 35 percent.Up to the date of a fire that destroyed the store's inventory,sales were $250,000 and cost of goods available for sale was $175,000.The estimated cost of the inventory destroyed is

Accepted Answer

A) $12,500. 
B) $43,750. 
C) $62,500. 
D) $75,000. 
A) $12,500. 
B) $43,750. 
C) $62,500. 
D) $75,000.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

McCaffy Company uses a periodic inventory system.It sold 1,000 units of Product H.Its beginning inventory and purchases during the month were as follows:
  Compute the cost of the ending inventory under each of three methods: (a)average-cost, (b)LIFO,and (c)FIFO.(Show your work. )

Accepted Answer

a.Average-cost: (200 × $1)+ (2

Question 9

Which of the following is an inventory costing method?

Accepted Answer

A) Perpetual 
B) Lower-of-cost-or-market 
C) Specific identification 
D) Periodic 
A) Perpetual 
B) Lower-of-cost-or-market 
C) Specific identification 
D) Periodic

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) Outgoing goods shipped FOB destination 
B) Goods sold but not yet delivered 
C) Incoming goods shipped FOB destination 
D) Goods held on consignment 
A) Outgoing goods shipped FOB destination 
B) Goods sold but not yet delivered 
C) Incoming goods shipped FOB destination 
D) Goods held on consignment

Question 12

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

Accepted Answer

Under FIFO,it is assumed that

Question 13

In general,in times of rising prices,using FIFO has a favorable effect on cash flows.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) Storage costs 
B) Related tariffs 
C) Invoice price less purchases discounts 
D) Insurance on goods in transit 
A) Storage costs 
B) Related tariffs 
C) Invoice price less purchases discounts 
D) Insurance on goods in transit

Question 15

Use this information to answer the following question.   
-A periodic inventory system is used;ending inventory is 147 units.
What is ending inventory under FIFO?

Accepted Answer

A) $1,382 
B) $1,582 
C) $1,282 
D) $1,482 
A) $1,382 
B) $1,582 
C) $1,282 
D) $1,482

Question 16

Use the following information to calculate cost of goods sold under each of three methods: (a)FIFO, (b)LIFO,and (c)average-cost.Assume the periodic inventory system is used.(Show your work. )

Accepted Answer

a.FIFO: $14,760 [(90 × $80)+ (

Question 17

The specific identification method is well suited for a discount department store.

Accepted Answer

A) True 
 B)False

Question 18

Given equal circumstances,which inventory method probably would be the most time consuming?

Accepted Answer

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

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

A retail store had goods available for sale during the period of $250,000 at retail and $100,000 at cost.It has ending inventory of $28,500 at retail.What is the estimated cost of goods sold?

Accepted Answer

A) $71,500 
B) $94,300 
C) $88,600 
D) $82,900 
A) $71,500 
B) $94,300 
C) $88,600 
D) $82,900

Exam 7: Inventories

Valuation of inventory on the balance sheet impacts cost of goods sold on the income statement.

The gross profit method requires that records be kept at both cost and retail.

Ending merchandise inventory for LIFO will be the same dollar amount under a periodic inventory system as under a perpetual inventory system.

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

Assuming a perpetual inventory system is used,use the following information to calculate cost of goods sold on an average-cost basis.

A retail store prices its goods to achieve a gross margin of 35 percent.Up to the date of a fire that destroyed the store's inventory,sales were $250,000 and cost of goods available for sale was $175,000.The estimated cost of the inventory destroyed is

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

McCaffy Company uses a periodic inventory system.It sold 1,000 units of Product H.Its beginning inventory and purchases during the month were as follows: Compute the cost of the ending inventory under each of three methods: (a)average-cost, (b)LIFO,and (c)FIFO.(Show your work. )

Which of the following is an inventory costing method?

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

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

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

In general,in times of rising prices,using FIFO has a favorable effect on cash flows.

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

Use this information to answer the following question. -A periodic inventory system is used;ending inventory is 147 units. What is ending inventory under FIFO?

Use the following information to calculate cost of goods sold under each of three methods: (a)FIFO, (b)LIFO,and (c)average-cost.Assume the periodic inventory system is used.(Show your work. )

The specific identification method is well suited for a discount department store.

Given equal circumstances,which inventory method probably would be the most time consuming?

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

A retail store had goods available for sale during the period of $250,000 at retail and $100,000 at cost.It has ending inventory of $28,500 at retail.What is the estimated cost of goods sold?

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

Filters