Question 1

Under the gross method, purchase discounts taken are:

Accepted Answer

A) Deducted from interest expense. 
B) Added to net purchases. 
C) Added to interest income. 
D) Deducted from purchases. 
A) Deducted from interest expense. 
B) Added to net purchases. 
C) Added to interest income. 
D) Deducted from purchases.

Question 2

What is cost of goods available for sale, assuming CBC uses the gross method?

Accepted Answer

A) $312,480. 
B) $326,000. 
C) $331,480. 
D) $337,000. 
A) $312,480. 
B) $326,000. 
C) $331,480. 
D) $337,000.

Question 3

On January 1, 2008, ECT Co. adopted the dollar-value LIFO method for its one inventory pool. The pool's value on this date was $600 million. The 2008 and 2009 ending inventory valued at year-end costs were $702 million and $840 million, respectively. The appropriate cost indexes are 1.08 for 2008 and 1.20 for 2009.
Required:
Calculate the inventory balance that ECT Co. would report on its year-end balance sheets for 2008 and 2009, using the dollar-value LIFO method.

Accepted Answer

The answer of On January 1, 2008, ECT Co. adopted...

Question 4

Inventory costing methods are merely means by which costs are allocated between ending inventory and cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 5

Boston Dollar Store uses the gross method to record purchase discounts, and uses a perpetual inventory system. Boston engaged in the following transactions during April:
4/12 Purchased $15,000 in merchandise subject to terms of 2/10, n30. The goods were shipped f.o.b. shipping point.
4/13 Received a billing from Orange Freight Lines for $300 for the 4/12 purchase.
4/15 Returned $1,000 of merchandise from the 4/12 purchase.
4/20 Paid balances due from 4/12 purchase.
Required:
Prepare journal entries to record the above transactions.

Accepted Answer

The answer of Boston Dollar Store uses the gross method...

Question 6

Required: Compute the ending inventory and cost of goods sold assuming Denver uses average cost and a perpetual inventory system.

Accepted Answer

The answer of Required: Compute the ending inventory and cost...

Question 7

It is the end of the accounting period, and your boss asks you to help determine the inventory balance to place in the company's balance sheet. Explain which physical quantities of inventory that you will include, and which you will exclude.

Accepted Answer

Taking a physical inventory is a necessa

Question 8

Briefly explain the advantages of dollar-value LIFO (DVL).

Accepted Answer

DVL is less costly to apply than unit LI

Question 9

Required: Compute the ending inventory and cost of goods sold assuming Random Creations uses LIFO and perpetual inventory system.

Accepted Answer

The answer of Required: Compute the ending inventory and cost...

Question 10

Ending inventory using the LIFO method is:

Accepted Answer

A) $ 650. 
B) $1,000. 
C) $ 707. 
D) $ 600.10 units $100 = $1,000. 
A) $ 650. 
B) $1,000. 
C) $ 707. 
D) $ 600.10 units $100 = $1,000.

Question 11

If a company uses LIFO, a LIFO liquidation is problematic for a company's income taxes:

Accepted Answer

A) When inventory purchase costs are rising. 
B) When inventory purchase costs are declining. 
C) Whether inventory purchase costs are declining or rising. 
D) LIFO liquidations are not problematic for a company's income taxes.When costs are rising, a liquidation causes pre-tax income and income taxes to rise. 
A) When inventory purchase costs are rising. 
B) When inventory purchase costs are declining. 
C) Whether inventory purchase costs are declining or rising. 
D) LIFO liquidations are not problematic for a company's income taxes.When costs are rising, a liquidation causes pre-tax income and income taxes to rise.

Question 12

Chavez Inc adopted dollar-value LIFO on January 1, 2009, when the inventory value was $850,000. The December 31, 2009, ending inventory at year-end cost was $950,000 and the cost index for the year is 1.08.
Required:
Compute the dollar-value LIFO inventory valuation for the December 31, 2009, inventory.

Accepted Answer

The answer of Chavez Inc adopted dollar-value LIFO on January...

Question 13

The following information is taken from the accounting records of Rapid Runner Inc. for the year 2009. Missing information has been left blank.
 
 Required: Compute the missing amounts.

-

Accepted Answer

The answer of   The following information is taken...

Question 14

In a period when costs are rising and inventory quantities are stable, the inventory method that would result in the highest ending inventory is:

Accepted Answer

A) Weighted average. 
B) Moving average. 
C) FIFO. 
D) LIFO. 
A) Weighted average. 
B) Moving average. 
C) FIFO. 
D) LIFO.

Question 15

Suppose that Badger's 2011 ending inventory, valued at year-end costs, was $153,600 and that the relative cost index for this inventory in 2011 was 1.20. What inventory balance would Badger report on its 12/31/11 balance sheet?

Accepted Answer

A) $128,000 
B) $129,800 
C) $153,600 
D) None of these is correct $153,600/1.20 = $128,000.This includes the first two layers, the first at $100,000 and the second at $20,000, plus another at $8,000 from 2010.No additional layers are added in 2011 because the inventory in base year terms actually decreased in 2011.To get the 12/31/11 balance, the three layers are multiplied by their relative price indexes of 1.00, 1.05, and 1.10, respectively. 
A) $128,000 
B) $129,800 
C) $153,600 
D) None of these is correct $153,600/1.20 = $128,000.This includes the first two layers, the first at $100,000 and the second at $20,000, plus another at $8,000 from 2010.No additional layers are added in 2011 because the inventory in base year terms actually decreased in 2011.To get the 12/31/11 balance, the three layers are multiplied by their relative price indexes of 1.00, 1.05, and 1.10, respectively.

Question 16

During periods of falling prices, LIFO ending inventory will be less than FIFO ending inventory.

Accepted Answer

A) True 
 B)False

Question 17

When reported in financial statements, a LIFO allowance account usually:

Accepted Answer

A) Is shown in the firm's income statement. 
B) Is added to LIFO cost to indicate what the inventory would cost on a FIFO basis. 
C) Indicates the effect on income if LIFO were not used. 
D) Shows the current rate of inflation for that asset. 
A) Is shown in the firm's income statement. 
B) Is added to LIFO cost to indicate what the inventory would cost on a FIFO basis. 
C) Indicates the effect on income if LIFO were not used. 
D) Shows the current rate of inflation for that asset.

Question 18

In a perpetual inventory system, the cost of inventory sold is:

Accepted Answer

A) Debited to accounts receivable. 
B) Credited to cost of goods sold. 
C) Debited to cost of goods sold. 
D) Not recorded at the time. 
A) Debited to accounts receivable. 
B) Credited to cost of goods sold. 
C) Debited to cost of goods sold. 
D) Not recorded at the time.

Question 19

The LIFO Conformity Rule states that if LIFO is used for:

Accepted Answer

A) One class of inventory, it must be used for all classes of inventory. 
B) Tax purposes, it must be used for financial reporting. 
C) One company in an affiliated group, it must be used by all companies in an affiliated group. 
D) Domestic companies, it must be used by foreign partners. 
A) One class of inventory, it must be used for all classes of inventory. 
B) Tax purposes, it must be used for financial reporting. 
C) One company in an affiliated group, it must be used by all companies in an affiliated group. 
D) Domestic companies, it must be used by foreign partners.

Question 20

The following information is taken from the accounting records of Madeline Inc. for the year 2009. Missing information has been left blank. Inventory is the only supply that Madeline purchases on credit.

Required: Compute the missing amounts.

-

Accepted Answer

The answer of  The following information is taken from...

Under the gross method, purchase discounts taken are:

What is cost of goods available for sale, assuming CBC uses the gross method?

Inventory costing methods are merely means by which costs are allocated between ending inventory and cost of goods sold.

Required: Compute the ending inventory and cost of goods sold assuming Denver uses average cost and a perpetual inventory system.

It is the end of the accounting period, and your boss asks you to help determine the inventory balance to place in the company's balance sheet. Explain which physical quantities of inventory that you will include, and which you will exclude.

Briefly explain the advantages of dollar-value LIFO (DVL).

Required: Compute the ending inventory and cost of goods sold assuming Random Creations uses LIFO and perpetual inventory system.

Ending inventory using the LIFO method is:

If a company uses LIFO, a LIFO liquidation is problematic for a company's income taxes:

The following information is taken from the accounting records of Rapid Runner Inc. for the year 2009. Missing information has been left blank. Required: Compute the missing amounts. -

In a period when costs are rising and inventory quantities are stable, the inventory method that would result in the highest ending inventory is:

Suppose that Badger's 2011 ending inventory, valued at year-end costs, was $153,600 and that the relative cost index for this inventory in 2011 was 1.20. What inventory balance would Badger report on its 12/31/11 balance sheet?

During periods of falling prices, LIFO ending inventory will be less than FIFO ending inventory.

When reported in financial statements, a LIFO allowance account usually:

In a perpetual inventory system, the cost of inventory sold is:

The LIFO Conformity Rule states that if LIFO is used for:

The following information is taken from the accounting records of Madeline Inc. for the year 2009. Missing information has been left blank. Inventory is the only supply that Madeline purchases on credit. Required: Compute the missing amounts. -

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement and Statement of Cash Flows

Income Measurement

Time Value of Money Concepts

Cash and Receivables

Inventories: Additional Issues

Operational Assets: Acquisition and Disposition

Operational Assets: Utilization and Impairment

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes

The Statement of Cash Flows

Appendix a Derivatives

Filters

Exam 8: Inventories: Measurement

Under the gross method, purchase discounts taken are:

What is cost of goods available for sale, assuming CBC uses the gross method?

Inventory costing methods are merely means by which costs are allocated between ending inventory and cost of goods sold.

Required: Compute the ending inventory and cost of goods sold assuming Denver uses average cost and a perpetual inventory system.

It is the end of the accounting period, and your boss asks you to help determine the inventory balance to place in the company's balance sheet. Explain which physical quantities of inventory that you will include, and which you will exclude.

Briefly explain the advantages of dollar-value LIFO (DVL).

Required: Compute the ending inventory and cost of goods sold assuming Random Creations uses LIFO and perpetual inventory system.

Ending inventory using the LIFO method is:

If a company uses LIFO, a LIFO liquidation is problematic for a company's income taxes:

The following information is taken from the accounting records of Rapid Runner Inc. for the year 2009. Missing information has been left blank. Required: Compute the missing amounts. -

In a period when costs are rising and inventory quantities are stable, the inventory method that would result in the highest ending inventory is:

Suppose that Badger's 2011 ending inventory, valued at year-end costs, was $153,600 and that the relative cost index for this inventory in 2011 was 1.20. What inventory balance would Badger report on its 12/31/11 balance sheet?

During periods of falling prices, LIFO ending inventory will be less than FIFO ending inventory.

When reported in financial statements, a LIFO allowance account usually:

In a perpetual inventory system, the cost of inventory sold is:

The LIFO Conformity Rule states that if LIFO is used for:

The following information is taken from the accounting records of Madeline Inc. for the year 2009. Missing information has been left blank. Inventory is the only supply that Madeline purchases on credit. Required: Compute the missing amounts. -

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement and Statement of Cash Flows

Income Measurement

Time Value of Money Concepts

Cash and Receivables

Inventories: Additional Issues

Operational Assets: Acquisition and Disposition

Operational Assets: Utilization and Impairment

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes

The Statement of Cash Flows

Appendix a Derivatives

Filters