Question 1

If the estimated rate of gross profit is 30%, what is the estimated cost of the merchandise inventory on September 30, based on the following data?

Accepted Answer

A)  $320,000 
B)  $192,500 
C)  $275,000 
D)  $105,000 
A)  $320,000 
B)  $192,500 
C)  $275,000 
D)  $105,000

Question 2

Inventory turnover measures the length of time is takes to acquire, sell and replace the inventory.

Accepted Answer

A) True 
 B)False

Question 3

During a period of consistently rising prices, the method of inventory that will result in reporting the greatest cost of merchandise sold is

Accepted Answer

A)  FIFO 
B)  LIFO 
C)  average cost 
D)  weighted average 
A)  FIFO 
B)  LIFO 
C)  average cost 
D)  weighted average

Question 4

The inventory data for an item for November are:   Using a perpetual system, what is the cost of the merchandise sold for November if the company uses LIFO?

Accepted Answer

A)  $610 
B)  $600 
C)  $590 
D)  $580 
A)  $610 
B)  $600 
C)  $590 
D)  $580

Question 5

Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items?

Accepted Answer

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

Question 6

Cost flow is in the reverse order in which costs were incurred when using

Accepted Answer

A)  weighted average 
B)  last-in, first-out 
C)  first-in, first-out 
D)  average cost 
A)  weighted average 
B)  last-in, first-out 
C)  first-in, first-out 
D)  average cost

Question 7

Under the periodic inventory system, the merchandise inventory account continuously discloses the amount of inventory on hand.

Accepted Answer

A) True 
 B)False

Question 8

When merchandise sold is assumed to be in the order in which the purchases were made, the company is using

Accepted Answer

A)  first-in, last-out 
B)  last-in, first-out 
C)  first-in, first-out 
D)  average cost 
A)  first-in, last-out 
B)  last-in, first-out 
C)  first-in, first-out 
D)  average cost

Question 9

Stevens Company started the year with an inventory cost of $145,000. During the month of January they purchased inventory that cost of $53,000. January sales totaled $140,000. Estimated gross profit is 35%. The estimated ending inventory as of January 31 is

Accepted Answer

A)  $58,000 
B)  $91,000 
C)  $107,000 
D)  $69,300 
A)  $58,000 
B)  $91,000 
C)  $107,000 
D)  $69,300

Question 10

List three different security measures taken by stores to safeguard inventory.

Accepted Answer

Answers may vary.
- Inventory should be

Question 11

Inventory errors, if not discovered, will self-correct in two years.

Accepted Answer

A) True 
 B)False

Question 12

If the revenues are correctly reported and the Gross Profit of a company is understated, what is the effect on Owner's Equity?

Accepted Answer

A)  Understated 
B)  Overstated 
C)  Correctly Stated 
D)  None of the above 
A)  Understated 
B)  Overstated 
C)  Correctly Stated 
D)  None of the above

Question 13

Based on the following data, calculate the estimated cost of the merchandise inventory on March 31 using the retail method.

Accepted Answer

The answer of Based on the following data, calculate the...

Question 14

Based on the following information: compute (a) Inventory turnover; (b) Average daily cost of merchandise sold; and (c) Number of days' sales in inventory for 2011. Use a 365-day year. (d) If an inventory turnover of 12 is average for the industry, how is this company doing?

Accepted Answer

The answer of Based on the following information: compute (a)...

Question 15

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 u

Question 16

If a company mistakenly counts more items during a physical inventory than actually exist, how will the error affect their bottom line?

Accepted Answer

A)  No change to net income. 
B)  Net income will be overstated 
C)  Net income will be understated. 
D)  Only gross profit will be affected. 
A)  No change to net income. 
B)  Net income will be overstated 
C)  Net income will be understated. 
D)  Only gross profit will be affected.

Question 17

Average inventory is computed by adding the inventory at the beginning of the period to the inventory at the end of the period and dividing by two.

Accepted Answer

A) True 
 B)False

Question 18

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 good 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 19

In the retail inventory method, the cost to retail ratio is equal to the cost of goods sold divided by the retail price of the good sold.

Accepted Answer

A) True 
 B)False

Question 20

The inventory method that assigns the most recent costs to cost of goods sold is

Accepted Answer

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

Exam 7: Inventories

If the estimated rate of gross profit is 30%, what is the estimated cost of the merchandise inventory on September 30, based on the following data?

Inventory turnover measures the length of time is takes to acquire, sell and replace the inventory.

During a period of consistently rising prices, the method of inventory that will result in reporting the greatest cost of merchandise sold is

The inventory data for an item for November are: Using a perpetual system, what is the cost of the merchandise sold for November if the company uses LIFO?

Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items?

Cost flow is in the reverse order in which costs were incurred when using

Under the periodic inventory system, the merchandise inventory account continuously discloses the amount of inventory on hand.

When merchandise sold is assumed to be in the order in which the purchases were made, the company is using

Stevens Company started the year with an inventory cost of $145,000. During the month of January they purchased inventory that cost of $53,000. January sales totaled $140,000. Estimated gross profit is 35%. The estimated ending inventory as of January 31 is

List three different security measures taken by stores to safeguard inventory.

Inventory errors, if not discovered, will self-correct in two years.

If the revenues are correctly reported and the Gross Profit of a company is understated, what is the effect on Owner's Equity?

Based on the following data, calculate the estimated cost of the merchandise inventory on March 31 using the retail method.

Based on the following information: compute (a) Inventory turnover; (b) Average daily cost of merchandise sold; and (c) Number of days' sales in inventory for 2011. Use a 365-day year. (d) If an inventory turnover of 12 is average for the industry, how is this company doing?

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.

If a company mistakenly counts more items during a physical inventory than actually exist, how will the error affect their bottom line?

Average inventory is computed by adding the inventory at the beginning of the period to the inventory at the end of the period and dividing by two.

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 good sold for the year according to the average cost method?

In the retail inventory method, the cost to retail ratio is equal to the cost of goods sold divided by the retail price of the good sold.

The inventory method that assigns the most recent costs to cost of goods sold is

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

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

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

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