Question 1

When shipping FOB shipping point the buyer has economic control of the inventory and must record the goods in its inventory accounts.

Accepted Answer

A) True 
 B)False

Question 2

There are many different methods available for costing inventory. Therefore, the decision on which method to select should involve some serious thought as to the consequences involved.
Required:

Accepted Answer

@#IMG-DLM&_TB6205_00

Question 3

The information below is provided for the only two inventory items held by Hammond, Inc.:  
 The company uses double-extension dollar-value LIFO with only one pool.
Required:
a. Calculate the cost index for 2013. Round to the nearest hundredth for decimals.
b. Calculate the December 31, 2013 ending inventory for Hammond using dollar-value LIFO. Round to the nearest dollar.

Accepted Answer

@#IMG-DLM&_TB6205_00_TB6205_00

Question 4

For the year in which prices rise, adoption of a "just-in-time" inventory system will most likely result in

Accepted Answer

A)  a permanent increase in the size of the inventory 
B)  a reduction in income taxes 
C)  an increase in total assets 
D)  an increase in income 
A)  a permanent increase in the size of the inventory 
B)  a reduction in income taxes 
C)  an increase in total assets 
D)  an increase in income

Question 5

Because the specific identification method seems simple and matches actual costs against revenues, it may appear to be the ideal cost flow assumption to be used in any situation.
Required:
Indicate whether a periodic or perpetual inventory system is more appropriate for this cost flow assumption, indicate when its use is practical, and discuss the practical and theoretical objections to its use.

Accepted Answer

The specific identification method is mo

Question 6

Which inventory cost flow assumption is not allowed for financial reporting in many foreign countries?

Accepted Answer

A)  specific identification 
B)  average 
C)  FIFO 
D)  LIFO 
A)  specific identification 
B)  average 
C)  FIFO 
D)  LIFO

Question 7

The following information is available for Quest Company:

Required:
Answer the following questions for Quest Company: 
a.If FIFO is in use, what is the ending inventory in dollars?
b.If periodic LIFO is in use, what is the cost of goods sold?
c.If moving average is in use, what is the ending inventory in dollars (round calculations to the nearest cent)?
d.If weighted average is in use, what is the ending inventory in dollars (round unit cost to the nearest cent)?

Accepted Answer

The answer of The following information is available for Quest...

Question 8

On July 1, Maxwell Company had 40 units of inventory at a cost of $6 per unit. July purchases and sales were as follows:   
The cost of goods sold during July was $272. Maxwell must use:

Accepted Answer

A)  FIFO 
B)  LIFO perpetual 
C)  weighted average 
D)  LIFO periodic 
A)  FIFO 
B)  LIFO perpetual 
C)  weighted average 
D)  LIFO periodic

Question 9

IFRS and GAAP are similar for all of the following inventory accounting standards except IFRS

Accepted Answer

A)  do not allow the inclusion of overhead in inventory 
B)  have provisions for use of the LIFO cost flow assumption 
C)  exclude the weighted average approach to inventory valuation 
D)  require the same cost flow assumption for all inventories that are similar in nature and use 
A)  do not allow the inclusion of overhead in inventory 
B)  have provisions for use of the LIFO cost flow assumption 
C)  exclude the weighted average approach to inventory valuation 
D)  require the same cost flow assumption for all inventories that are similar in nature and use

Question 10

Trip Corp. began business in 2013. On December 31, 2013, Trip's single pool of inventory was valued at $300,000, using the dollar-value LIFO inventory method. On December 31, 2014, the value of Trip's inventory at current costs was $450,000. The 2014 year-end cost index was 120. What was the value of Trip's inventory at the end of 2014, using the dollar-value LIFO method?

Accepted Answer

A)  $375,000 
B)  $390,000 
C)  $480,000 
D)  $540,000 
A)  $375,000 
B)  $390,000 
C)  $480,000 
D)  $540,000

Question 11

The cost of goods sold model for a manufacturer is:

Accepted Answer

A) True 
 B)False

Question 12

Eller Company uses a periodic inventory system. Relevant inventory information for the year follows:   
At year-end, 50 units remain in inventory. What is the cost of the ending inventory on a LIFO basis?

Accepted Answer

A)  $7,950 
B)  $7,100 
C)  $8,750 
D)  $8,450 
A)  $7,950 
B)  $7,100 
C)  $8,750 
D)  $8,450

Question 13

Management's choice to use LIFO or FIFO can make a financial analyst's efforts to compare companies difficult. The financial analyst's job is made easier because of the

Accepted Answer

A)  requirement that the financial statements and tax return must use the same inventory valuation methodology 
B)  fact that most companies in an industry use the specific identification method 
C)  use of the weighed average method 
D)  disclosure of the LIFO reserve 
A)  requirement that the financial statements and tax return must use the same inventory valuation methodology 
B)  fact that most companies in an industry use the specific identification method 
C)  use of the weighed average method 
D)  disclosure of the LIFO reserve

Question 14

Listed below are several terms connected with inventory valuation. Following the list is a series of descriptive statements.     Required:
Match the terms to their respective descriptive statements by placing the appropriate letter in the space provided.

Accepted Answer

@#IMG-DLM&_TB6205_00

Question 15

What are the differences between the perpetual and periodic inventory systems?

Accepted Answer

The perpetual inventory system keeps a c

Question 16

Richardson's Flower Depot uses FIFO for internal reporting purposes and LIFO for financial and income tax purposes. At the end of 2015, the following information was obtained from the inventory records:  
 Required:
1) Prepare the necessary entry to convert to LIFO at the end of 2015.
2) How much would Richardson's cost of goods sold differ in 2015 if it used FIFO for external reporting?

Accepted Answer

1) @#IMG-DLM& 
2) If the company used FI

Question 17

For only a merchandiser, the sum of beginning inventory and net purchases, or production costs, of inventory represents the cost of goods available for sale.

Accepted Answer

A) True 
 B)False

Question 18

The use of inventory pools with dollar-value LIFO overcomes the issues associated with keeping numerous detailed records of individual quantities of each item.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following cannot be used as the current cost in dollar-value LIFO calculations?

Accepted Answer

A)  the cost of the first acquisitions in a year 
B)  the cost of the last acquisitions in a year 
C)  the cost of the acquisitions in the middle of a year 
D)  the average cost of all acquisitions in a year 
A)  the cost of the first acquisitions in a year 
B)  the cost of the last acquisitions in a year 
C)  the cost of the acquisitions in the middle of a year 
D)  the average cost of all acquisitions in a year

Question 20

The Purchases Discounts Taken account may appear in the accounting records if which one of the following methods is used to account for purchase discounts?

Accepted Answer

A)  net price method 
B)  gross price method 
C)  allowance method 
D)  sales price method 
A)  net price method 
B)  gross price method 
C)  allowance method 
D)  sales price method

When shipping FOB shipping point the buyer has economic control of the inventory and must record the goods in its inventory accounts.

There are many different methods available for costing inventory. Therefore, the decision on which method to select should involve some serious thought as to the consequences involved. Required:

For the year in which prices rise, adoption of a "just-in-time" inventory system will most likely result in

Which inventory cost flow assumption is not allowed for financial reporting in many foreign countries?

On July 1, Maxwell Company had 40 units of inventory at a cost of $6 per unit. July purchases and sales were as follows: The cost of goods sold during July was $272. Maxwell must use:

IFRS and GAAP are similar for all of the following inventory accounting standards except IFRS

The cost of goods sold model for a manufacturer is:

Eller Company uses a periodic inventory system. Relevant inventory information for the year follows: At year-end, 50 units remain in inventory. What is the cost of the ending inventory on a LIFO basis?

Management's choice to use LIFO or FIFO can make a financial analyst's efforts to compare companies difficult. The financial analyst's job is made easier because of the

Listed below are several terms connected with inventory valuation. Following the list is a series of descriptive statements. Required: Match the terms to their respective descriptive statements by placing the appropriate letter in the space provided.

What are the differences between the perpetual and periodic inventory systems?

For only a merchandiser, the sum of beginning inventory and net purchases, or production costs, of inventory represents the cost of goods available for sale.

The use of inventory pools with dollar-value LIFO overcomes the issues associated with keeping numerous detailed records of individual quantities of each item.

Which of the following cannot be used as the current cost in dollar-value LIFO calculations?

The Purchases Discounts Taken account may appear in the accounting records if which one of the following methods is used to account for purchase discounts?

The Demand for and Supply of Financial Accounting Information

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows

Cash and Receivables

Inventories: Special Valuation Issues

Current Liabilities and Contingencies

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Intangibles

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Notes Payable

Contributed Capital

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Postretirement Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

Filters

Exam 7: Inventories: Cost Measurement and Flow Assumptions

When shipping FOB shipping point the buyer has economic control of the inventory and must record the goods in its inventory accounts.

There are many different methods available for costing inventory. Therefore, the decision on which method to select should involve some serious thought as to the consequences involved. Required:

For the year in which prices rise, adoption of a "just-in-time" inventory system will most likely result in

Which inventory cost flow assumption is not allowed for financial reporting in many foreign countries?

On July 1, Maxwell Company had 40 units of inventory at a cost of $6 per unit. July purchases and sales were as follows: The cost of goods sold during July was $272. Maxwell must use:

IFRS and GAAP are similar for all of the following inventory accounting standards except IFRS

The cost of goods sold model for a manufacturer is:

Eller Company uses a periodic inventory system. Relevant inventory information for the year follows: At year-end, 50 units remain in inventory. What is the cost of the ending inventory on a LIFO basis?

Management's choice to use LIFO or FIFO can make a financial analyst's efforts to compare companies difficult. The financial analyst's job is made easier because of the

Listed below are several terms connected with inventory valuation. Following the list is a series of descriptive statements. Required: Match the terms to their respective descriptive statements by placing the appropriate letter in the space provided.

What are the differences between the perpetual and periodic inventory systems?

For only a merchandiser, the sum of beginning inventory and net purchases, or production costs, of inventory represents the cost of goods available for sale.

The use of inventory pools with dollar-value LIFO overcomes the issues associated with keeping numerous detailed records of individual quantities of each item.

Which of the following cannot be used as the current cost in dollar-value LIFO calculations?

The Purchases Discounts Taken account may appear in the accounting records if which one of the following methods is used to account for purchase discounts?

The Demand for and Supply of Financial Accounting Information

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows

Cash and Receivables

Inventories: Special Valuation Issues

Current Liabilities and Contingencies

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Intangibles

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Notes Payable

Contributed Capital

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Postretirement Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

Filters