Question 1

The gross profit ratio is calculated by dividing gross profit by average inventory.

Accepted Answer

A) True 
 B)False

Question 2

The use of LIFO in accounting for a firm's inventory:

Accepted Answer

A) Usually matches the physical flow of goods through the business. 
B) Is usually used for internal management purposes. 
C) Usually provides a better match of expenses with revenues. 
D) None of these is correct. 
A) Usually matches the physical flow of goods through the business. 
B) Is usually used for internal management purposes. 
C) Usually provides a better match of expenses with revenues. 
D) None of these is correct.

Question 3

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

Accepted Answer

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

Question 4

Ramen Inc. adopted dollar-value LIFO (DVL) as of January 1, 2009, when it had a cost inventory of $600,000. Its inventory as of December 31, 2009, was $667,800 at year-end costs and the cost index was 1.06. What was DVL inventory on December 31, 2009?

Accepted Answer

A) $630,000. 
B) $631,800. 
C) $636,000. 
D) None of these is correct. 
A) $630,000. 
B) $631,800. 
C) $636,000. 
D) None of these is correct.

Question 5

In a perpetual average cost system:

Accepted Answer

A) A new weighted-average unit cost is calculated each time additional units are purchased. 
B) The cost allocated to ending inventory is generally the same as it would be in a periodic inventory system. 
C) The moving-average unit cost is determined following each sale. 
D) The average is determined by dividing the total number of units sold by the cost of units purchased during the period. 
A) A new weighted-average unit cost is calculated each time additional units are purchased. 
B) The cost allocated to ending inventory is generally the same as it would be in a periodic inventory system. 
C) The moving-average unit cost is determined following each sale. 
D) The average is determined by dividing the total number of units sold by the cost of units purchased during the period.

Question 6

Ending inventory is equal to the cost of items on hand plus:

Accepted Answer

A) Items in transit sold f.o.b.shipping point. 
B) Purchases in transit f.o.b.destination. 
C) Items in transit sold f.o.b.destination. 
D) None of these. 
A) Items in transit sold f.o.b.shipping point. 
B) Purchases in transit f.o.b.destination. 
C) Items in transit sold f.o.b.destination. 
D) None of these.

Question 7

The ending inventory assuming FIFO is:

Accepted Answer

A) $5,140. 
B) $5,080. 
C) $5,060. 
D) $5,050.Ending inventory is assumed to consist of 600 gallons from Mar.23 purchase: 600 $7.35 = $4,410
+ 100 from the Mar.16 purchase:
100 $7.30 = $730;
Total = $5,140. 
A) $5,140. 
B) $5,080. 
C) $5,060. 
D) $5,050.Ending inventory is assumed to consist of 600 gallons from Mar.23 purchase: 600 $7.35 = $4,410
+ 100 from the Mar.16 purchase:
100 $7.30 = $730;
Total = $5,140.

Question 8

The ending inventory assuming LIFO and a perpetual inventory system is:

Accepted Answer

A) $1,545. 
B) $1,470. 
C) $1,580. 
D) $1,510. 
A) $1,545. 
B) $1,470. 
C) $1,580. 
D) $1,510.

Question 9

Using the gross method, purchase discounts lost are:

Accepted Answer

A) Included in purchases. 
B) Added to accounts payable. 
C) Included in interest expense. 
D) Deducted from discount income. 
A) Included in purchases. 
B) Added to accounts payable. 
C) Included in interest expense. 
D) Deducted from discount income.

Question 10

The largest expense on a retailer's income statement is typically:

Accepted Answer

A) Salaries and wages. 
B) Cost of goods sold. 
C) Income tax expense. 
D) Depreciation expense. 
A) Salaries and wages. 
B) Cost of goods sold. 
C) Income tax expense. 
D) Depreciation expense.

Question 11

In a periodic inventory system, the cost of purchases is debited to:

Accepted Answer

A) Purchases. 
B) Cost of goods sold. 
C) Inventory. 
D) Accounts payable. 
A) Purchases. 
B) Cost of goods sold. 
C) Inventory. 
D) Accounts payable.

Question 12

Assuming Northwest uses the gross method to record purchases, what is the cost of goods available for sale?

Accepted Answer

A) $492,500. 
B) $496,500. 
C) $490,500. 
D) $492,550. 
A) $492,500. 
B) $496,500. 
C) $490,500. 
D) $492,550.

Question 13

The following information comes from the 2007 Occidental Petroleum Corporation annual report to shareholders:
NOTE 5 INVENTORIES
Inventories of approximately $190 million and $204 million were valued under the LIFO method at December 31, 2007 and 2006, respectively. Inventories ($ in millions) were:
Also, the footnote indicated that the LIFO reserve was $102 million and $74 million at the end of 2007 and 2006, respectively. The LIFO reserve indicates that inventories would have been $102 million and $74 million higher at the end of 2007 and 2006, respectively, if Occidental Petroleum had used FIFO to value its entire inventory.
Required:
If Occidental Petroleum had used FIFO to value its entire inventory how would its 2007 pre-tax income be affected?
 $$\begin{array}{l}
&2007&2006\
\text { Total }&\$910&\$825
\end{array}$$

Accepted Answer

Cost of goods sold for 2007 would have b

Question 14

The table below contains selected financial information from recent financial statements of KBI Toys, and Little Tikes Adventure Toys, Inc., two toy manufacturing companies ($ in thousands):
Required:
Calculate the gross profit ratio, the inventory turnover ratio, and the average days in inventory for the two companies, using the most recent fiscal year data.

Accepted Answer

The answer of The table below contains selected financial information...

Question 15

What is Nueva's net income if it elects FIFO?

Accepted Answer

A) $440. 
B) $264. 
C) $620. 
D) $372. 
A) $440. 
B) $264. 
C) $620. 
D) $372.

Question 16

Linguini Inc. adopted dollar-value LIFO (DVL) as of January 1, 2009, when it had an inventory of $800,000. Its inventory as of December 31, 2009, was $811,200 at year-end costs and the cost index was 1.04. What was DVL inventory on December 31, 2009?

Accepted Answer

A) $780,000. 
B) $800,000. 
C) $811,200. 
D) $832,000. 
A) $780,000. 
B) $800,000. 
C) $811,200. 
D) $832,000.

Question 17

Robertson Corporation's inventory balance was $22,000 at the beginning of the year and $20,000 at the end. The inventory turnover ratio for the year was 6.0 and the gross profit ratio 40%. What were net sales for the year?

Accepted Answer

A) $126,000 
B) $200,000 
C) $120,000 
D) $210,000 Average inventory = $21,000 6.0 = $126,000 = cost of goods sold
$126,000 (1 .40) = $210,000 
A) $126,000 
B) $200,000 
C) $120,000 
D) $210,000 Average inventory = $21,000 6.0 = $126,000 = cost of goods sold
$126,000 (1 .40) = $210,000

Question 18

What is Nueva's net income if it elects LIFO?

Accepted Answer

A) $440. 
B) $264. 
C) $620. 
D) $372. 
A) $440. 
B) $264. 
C) $620. 
D) $372.

Question 19

Assuming CBC uses the gross method to record purchases, ending inventory would be:

Accepted Answer

A) $6,480. 
B) $15,400. 
C) $15,480. 
D) $21,000. 
A) $6,480. 
B) $15,400. 
C) $15,480. 
D) $21,000.

Question 20

In a periodic inventory system, the cost of inventories 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 of sale. 
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 of sale.

The gross profit ratio is calculated by dividing gross profit by average inventory.

The use of LIFO in accounting for a firm's inventory:

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

Ramen Inc. adopted dollar-value LIFO (DVL) as of January 1, 2009, when it had a cost inventory of $600,000. Its inventory as of December 31, 2009, was $667,800 at year-end costs and the cost index was 1.06. What was DVL inventory on December 31, 2009?

In a perpetual average cost system:

Ending inventory is equal to the cost of items on hand plus:

The ending inventory assuming FIFO is:

The ending inventory assuming LIFO and a perpetual inventory system is:

Using the gross method, purchase discounts lost are:

The largest expense on a retailer's income statement is typically:

In a periodic inventory system, the cost of purchases is debited to:

Assuming Northwest uses the gross method to record purchases, what is the cost of goods available for sale?

What is Nueva's net income if it elects FIFO?

Linguini Inc. adopted dollar-value LIFO (DVL) as of January 1, 2009, when it had an inventory of $800,000. Its inventory as of December 31, 2009, was $811,200 at year-end costs and the cost index was 1.04. What was DVL inventory on December 31, 2009?

Robertson Corporation's inventory balance was $22,000 at the beginning of the year and $20,000 at the end. The inventory turnover ratio for the year was 6.0 and the gross profit ratio 40%. What were net sales for the year?

What is Nueva's net income if it elects LIFO?

Assuming CBC uses the gross method to record purchases, ending inventory would be:

In a periodic inventory system, the cost of inventories sold is:

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

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Exam 8: Inventories: Measurement

The gross profit ratio is calculated by dividing gross profit by average inventory.

The use of LIFO in accounting for a firm's inventory:

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

Ramen Inc. adopted dollar-value LIFO (DVL) as of January 1, 2009, when it had a cost inventory of $600,000. Its inventory as of December 31, 2009, was $667,800 at year-end costs and the cost index was 1.06. What was DVL inventory on December 31, 2009?

In a perpetual average cost system:

Ending inventory is equal to the cost of items on hand plus:

The ending inventory assuming FIFO is:

The ending inventory assuming LIFO and a perpetual inventory system is:

Using the gross method, purchase discounts lost are:

The largest expense on a retailer's income statement is typically:

In a periodic inventory system, the cost of purchases is debited to:

Assuming Northwest uses the gross method to record purchases, what is the cost of goods available for sale?

What is Nueva's net income if it elects FIFO?

Linguini Inc. adopted dollar-value LIFO (DVL) as of January 1, 2009, when it had an inventory of $800,000. Its inventory as of December 31, 2009, was $811,200 at year-end costs and the cost index was 1.04. What was DVL inventory on December 31, 2009?

Robertson Corporation's inventory balance was $22,000 at the beginning of the year and $20,000 at the end. The inventory turnover ratio for the year was 6.0 and the gross profit ratio 40%. What were net sales for the year?

What is Nueva's net income if it elects LIFO?

Assuming CBC uses the gross method to record purchases, ending inventory would be:

In a periodic inventory system, the cost of inventories sold is:

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