Question 1

Merchandise inventory at the end of the year is overstated.Which of the following statements correctly states the effect of the error?

Accepted Answer

A) Owner's equity is overstated. 
B) Cost of merchandise sold is overstated. 
C) Gross profit is understated. 
D) Net income is understated. 
A) Owner's equity is overstated. 
B) Cost of merchandise sold is overstated. 
C) Gross profit is understated. 
D) Net income is understated.

Question 2

Beginning inventory,purchases,and sales data for widgets are as follows:​   Complete the inventory cost card assuming the business maintains a perpetual inventory system and calculates the cost of merchandise sold and ending inventory using FIFO.

Accepted Answer

The answer of Beginning inventory,purchases,and sales data for widgets are...

Question 3

Determine the total value of the merchandise using net realizable value.​

Accepted Answer

The answer of Determine the total value of the merchandise...

Question 4

The lower-of-cost-or-market method of determining the value of ending inventory can be applied on an item-by-item basis,by major classification of inventory,or by the total inventory.

Accepted Answer

A) True 
 B)False

Question 5

It is not unusual for large companies to use different inventory costing methods for different segments of their inventory.

Accepted Answer

A) True 
 B)False

Question 6

The average cost method will always yield results between FIFO and LIFO.

Accepted Answer

A) True 
 B)False

Question 7

Use the information below to answer the following questions.
​
The following lots of a particular commodity were available for sale during the year:
​
   The firm uses the periodic system, and there are 20 units of the commodity on hand at the end of the year.
​​
-What is the amount of cost of merchandise sold for the year according to the average cost method?

Accepted Answer

A) $1,380 
B) $1,375 
C) $1,510 
D) $1,250 
A) $1,380 
B) $1,375 
C) $1,510 
D) $1,250

Question 8

Three identical units of merchandise were purchased during May,as follows:​​   Assume that two units are sold on May 23 for $313 total.Determine the gross profit for May and ending inventory on May 31 using 
(a)FIFO,
(b)LIFO,and 
(c)average cost methods.

Accepted Answer

The answer of Three identical units of merchandise were purchased...

Question 9

During periods of rapidly rising costs,the use of the LIFO method results in illusory or inventory profits.

Accepted Answer

A) True 
 B)False

Question 10

Use the information below to answer the following questions.
​
The following units of an inventory item were available for sale during the year:
The firm uses the periodic inventory system. During the year, 60 units of the item were sold.   ​
-The value of ending inventory using FIFO is​

Accepted Answer

A) $1,250 
B) $1,350 
C) $1,375 
D) $1,150 
A) $1,250 
B) $1,350 
C) $1,375 
D) $1,150

Question 11

​
Match each description to the appropriate cost flow assumption (a-c).
-Produces the highest ending inventory when costs are increasing

Accepted Answer

A) FIFO 
B) LIFO 
C) Weighted average 
A) FIFO 
B) LIFO 
C) Weighted average

Question 12

Match each situation to its impact (a-c) on the current year's net income.
-Merchandise that was sold and shipped FOB shipping point on the last day of the year was not included in the seller's ending inventory.

Accepted Answer

A) Net income for the current year will be overstated. 
B) Net income for the current year will be understated. 
C) There will be no error effect on net income. 
A) Net income for the current year will be overstated. 
B) Net income for the current year will be understated. 
C) There will be no error effect on net income.

Question 13

On the basis of the following data,what is the estimated cost of the merchandise inventory on May 31 using the retail method?​

Accepted Answer

A) $250,000 
B) $360,000 
C) $172,500 
D) $187,500 
A) $250,000 
B) $360,000 
C) $172,500 
D) $187,500

Question 14

Use the information below to answer the following questions.
Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1.
​
   ​
-Assuming that the company uses the perpetual inventory system,determine the ending inventory for the month of May using the LIFO inventory cost method.

Accepted Answer

A) $324 
B) $372 
C) $320 
D) $364 
A) $324 
B) $372 
C) $320 
D) $364

Question 15

FIFO reports higher gross profit and net income than the LIFO method when ​

Accepted Answer

A) ​prices are increasing 
B) ​prices are decreasing 
C) ​prices remain stable 
D) ​prices are reduced by 50% 
A) ​prices are increasing 
B) ​prices are decreasing 
C) ​prices remain stable 
D) ​prices are reduced by 50%

Question 16

The use of the lower-of-cost-or-market method of inventory valuation increases net income for the period in which the inventory replacement price declined.

Accepted Answer

A) True 
 B)False

Question 17

Under a periodic inventory system

Accepted Answer

A) accounting records continuously disclose the amount of inventory 
B) a separate account for each type of merchandise is maintained in a subsidiary ledger 
C) a physical inventory is taken at the end of the period 
D) Merchandise Inventory is debited when goods are returned to vendors 
A) accounting records continuously disclose the amount of inventory 
B) a separate account for each type of merchandise is maintained in a subsidiary ledger 
C) a physical inventory is taken at the end of the period 
D) Merchandise Inventory is debited when goods are returned to vendors

Question 18

Which document authorizes the purchase of inventory from an approved vendor?

Accepted Answer

A) purchase order 
B) petty cash voucher 
C) receiving report 
D) vendor's invoice 
A) purchase order 
B) petty cash voucher 
C) receiving report 
D) vendor's invoice

Question 19

The units of an item available for sale during the year were as follows:​   There are 19 units of the item in the physical inventory at December 31.The periodic inventory system is used.Determine the ending inventory cost using LIFO.

Accepted Answer

$466 
(10

Question 20

On the basis of the following data for Sanford Industries as of December 31,determine the value of the inventory at the lower of cost or market.Also,show how the merchandise inventory would appear on the balance sheet 
(assume that the cost was determined by the FIFO method).Apply lower of cost or market to each inventory item.

Accepted Answer

Inventory

Merchandise inventory at the end of the year is overstated.Which of the following statements correctly states the effect of the error?

Beginning inventory,purchases,and sales data for widgets are as follows: Complete the inventory cost card assuming the business maintains a perpetual inventory system and calculates the cost of merchandise sold and ending inventory using FIFO.

Determine the total value of the merchandise using net realizable value.

The lower-of-cost-or-market method of determining the value of ending inventory can be applied on an item-by-item basis,by major classification of inventory,or by the total inventory.

It is not unusual for large companies to use different inventory costing methods for different segments of their inventory.

The average cost method will always yield results between FIFO and LIFO.

Three identical units of merchandise were purchased during May,as follows: Assume that two units are sold on May 23 for $313 total.Determine the gross profit for May and ending inventory on May 31 using (a)FIFO, (b)LIFO,and (c)average cost methods.

During periods of rapidly rising costs,the use of the LIFO method results in illusory or inventory profits.

Use the information below to answer the following questions. The following units of an inventory item were available for sale during the year: The firm uses the periodic inventory system. During the year, 60 units of the item were sold. -The value of ending inventory using FIFO is

Match each description to the appropriate cost flow assumption (a-c). -Produces the highest ending inventory when costs are increasing

Match each situation to its impact (a-c) on the current year's net income. -Merchandise that was sold and shipped FOB shipping point on the last day of the year was not included in the seller's ending inventory.

On the basis of the following data,what is the estimated cost of the merchandise inventory on May 31 using the retail method?

FIFO reports higher gross profit and net income than the LIFO method when

The use of the lower-of-cost-or-market method of inventory valuation increases net income for the period in which the inventory replacement price declined.

Under a periodic inventory system

Which document authorizes the purchase of inventory from an approved vendor?

The units of an item available for sale during the year were as follows: There are 19 units of the item in the physical inventory at December 31.The periodic inventory system is used.Determine the ending inventory cost using LIFO.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 7: Inventories

Merchandise inventory at the end of the year is overstated.Which of the following statements correctly states the effect of the error?

Beginning inventory,purchases,and sales data for widgets are as follows:​ Complete the inventory cost card assuming the business maintains a perpetual inventory system and calculates the cost of merchandise sold and ending inventory using FIFO.

Determine the total value of the merchandise using net realizable value.​

The lower-of-cost-or-market method of determining the value of ending inventory can be applied on an item-by-item basis,by major classification of inventory,or by the total inventory.

It is not unusual for large companies to use different inventory costing methods for different segments of their inventory.

The average cost method will always yield results between FIFO and LIFO.

Three identical units of merchandise were purchased during May,as follows:​​ Assume that two units are sold on May 23 for $313 total.Determine the gross profit for May and ending inventory on May 31 using (a)FIFO, (b)LIFO,and (c)average cost methods.

During periods of rapidly rising costs,the use of the LIFO method results in illusory or inventory profits.

Use the information below to answer the following questions. ​ The following units of an inventory item were available for sale during the year: The firm uses the periodic inventory system. During the year, 60 units of the item were sold. ​ -The value of ending inventory using FIFO is​

​ Match each description to the appropriate cost flow assumption (a-c). -Produces the highest ending inventory when costs are increasing

Match each situation to its impact (a-c) on the current year's net income. -Merchandise that was sold and shipped FOB shipping point on the last day of the year was not included in the seller's ending inventory.

On the basis of the following data,what is the estimated cost of the merchandise inventory on May 31 using the retail method?​

FIFO reports higher gross profit and net income than the LIFO method when ​

The use of the lower-of-cost-or-market method of inventory valuation increases net income for the period in which the inventory replacement price declined.

Under a periodic inventory system

Which document authorizes the purchase of inventory from an approved vendor?

The units of an item available for sale during the year were as follows:​ There are 19 units of the item in the physical inventory at December 31.The periodic inventory system is used.Determine the ending inventory cost using LIFO.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters

Beginning inventory,purchases,and sales data for widgets are as follows: Complete the inventory cost card assuming the business maintains a perpetual inventory system and calculates the cost of merchandise sold and ending inventory using FIFO.

Determine the total value of the merchandise using net realizable value.

Three identical units of merchandise were purchased during May,as follows: Assume that two units are sold on May 23 for $313 total.Determine the gross profit for May and ending inventory on May 31 using (a)FIFO, (b)LIFO,and (c)average cost methods.

Use the information below to answer the following questions. The following units of an inventory item were available for sale during the year: The firm uses the periodic inventory system. During the year, 60 units of the item were sold. -The value of ending inventory using FIFO is

Match each description to the appropriate cost flow assumption (a-c). -Produces the highest ending inventory when costs are increasing

On the basis of the following data,what is the estimated cost of the merchandise inventory on May 31 using the retail method?

FIFO reports higher gross profit and net income than the LIFO method when

The units of an item available for sale during the year were as follows: There are 19 units of the item in the physical inventory at December 31.The periodic inventory system is used.Determine the ending inventory cost using LIFO.