Exam 6: Inventories

Based on the following information,compute (a)Inventory turnover; (b)Average daily cost of merchandise sold using a 365 day year;and (c)Number of days' sales in inventory.

Generally,the lower the number of days' sales in inventory,the better.

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

Addison,Inc.uses a perpetual inventory system.The following is information about one inventory item for the month of September: If Addison uses FIFO,the cost of the ending merchandise inventory on September 30 is

The three inventory costing methods will normally each yield different amounts of net income.

Control of inventory should begin as soon as the inventory is received.Which of the following internal control steps is not done to meet this goal?

If a company mistakenly counts less items during a physical inventory than actually exist,how will the error affect the cost of merchandise sold?

Beginning inventory,purchases and sales data for hammers are as follows: Assuming the business maintains a perpetual inventory system,complete the inventory cards and calculate the cost of merchandise sold and ending inventory under the following assumptions: a.First-in,first-out b.Last-in,first-out

Three identical units of Item Magnesium XP are purchased during May,as shown below. Assume that two units are sold on May 23 for $313.Determine the gross profit for May and ending inventory on May 31 using (a)FIFO, (b)LIFO,and (c)average cost methods.

Merchandise inventory at the end of the year was inadvertently overstated.Which of the following statements correctly states the effect of the error on net income,assets,and owner's equity?

If the cost of an item of inventory is $60 and the current replacement cost is $75,the amount included in inventory according to the lower of cost or market is

A company will most likely use an estimated method of determining inventory when

If a company values inventory at the lower of cost or market,which of the following is the value of merchandise inventory on the balance sheet? Apply the lower-of-cost-or-market method to inventory as a whole.

Safeguarding inventory from damage or theft is a primary objective for the control of inventory.If you were running a clothing store,name three specific controls you would implement to guard inventory from theft.

On the basis of the following data,determine the estimated cost of the inventory as of March 31 by the retail method,presenting details of the computation in good order.

During periods of increasing costs,the use of the FIFO method of costing inventory will result in a greater amount of net income than would result from the use of the LIFO cost method.

Using the lower of cost or market,what should the total inventory value be for the following items: Apply the lower-of-cost-or-market method to inventory as a whole.

The following units of a particular item were available for sale during the year: The firm uses the perpetual inventory system and there are 240 units of the item on hand at the end of the year.What is the total cost of ending inventory according to LIFO?

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:

During the taking of its physical inventory on December 31,2011,Gentry Supplies Company incorrectly counted its inventory as $245,000 instead of the correct amount of $254,000.Indicate the affect of the misstatement on Gentry Supplies Company's balance sheet and income statement for the year ended December 31,2011.