Question 1

Compared to dollar-value LIFO, unit LIFO is:

Accepted Answer

A) Less costly to implement. 
B) Less susceptible to LIFO liquidation. 
C) More costly to implement. 
D) More concerned with cost indexes. 
A) Less costly to implement. 
B) Less susceptible to LIFO liquidation. 
C) More costly to implement. 
D) More concerned with cost indexes.

Question 2

Dollar-value LIFO eliminates the risk of LIFO liquidations.

Accepted Answer

A) True 
 B)False

Question 3

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 4

The inventory method that will always produce the same amount for cost of goods sold in a periodic inventory system as in a perpetual inventory system would be:

Accepted Answer

A) FIFO. 
B) LIFO. 
C) Weighted average. 
D) None of the above. 
A) FIFO. 
B) LIFO. 
C) Weighted average. 
D) None of the above.

Question 5

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 6

What inventory balance should Badger report on its 12/31/13 balance sheet?

Accepted Answer

A) $126,000 
B) $121,000 
C) $120,000 
D) $100,000 
A) $126,000 
B) $121,000 
C) $120,000 
D) $100,000

Question 7

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 8

Required:
Compute the January 31 ending inventory and cost of goods sold for January, assuming Denver uses average cost and a periodic inventory system.

Accepted Answer

Periodic Average Cos

Question 9

Ending inventory using the average cost method (rounded) is:

Accepted Answer

A) $650. 
B) $1,000. 
C) $707. 
D) $600. 
A) $650. 
B) $1,000. 
C) $707. 
D) $600.

Question 10

Linguini Inc. adopted dollar-value LIFO (DVL) as of January 1, 2013, when it had an inventory of $800,000. Its inventory as of December 31, 2013, was $811,200 at year-end costs and the cost index was 1.04. What was DVL inventory on December 31, 2013?

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 11

Required:
Compute the January 31 ending inventory and cost of goods sold for January, assuming Random Creations uses LIFO and perpetual inventory system.

Accepted Answer

The answer of Required:
Compute the January 31 ending inventory and...

Question 12

Purchases equal the invoice amount:

Accepted Answer

A) Plus freight-in, plus discounts lost. 
B) Less purchase returns, plus purchase allowances. 
C) Plus freight-in, less purchase discounts. 
D) Plus discounts, less purchase returns. 
A) Plus freight-in, plus discounts lost. 
B) Less purchase returns, plus purchase allowances. 
C) Plus freight-in, less purchase discounts. 
D) Plus discounts, less purchase returns.

Question 13

Ending inventory assuming LIFO in a perpetual inventory system would be:

Accepted Answer

A) $4,960. 
B) $5,060. 
C) $5,080. 
D) $5,140. 
A) $4,960. 
B) $5,060. 
C) $5,080. 
D) $5,140.

Question 14

In a period when costs are falling and inventory quantities are stable, the lowest taxable income would be reported by using the inventory method of:

Accepted Answer

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

Question 15

Chavez Inc adopted dollar-value LIFO on January 1, 2013, when the inventory value was $850,000. The December 31, 2013, 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 (rounded) for the December 31, 2013, inventory.

Accepted Answer

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

Question 16

In periods when costs are rising, LIFO liquidations:

Accepted Answer

A) Can't occur. 
B) Are used to reduce tax liabilities. 
C) Are a source of off-balance-sheet financing. 
D) Distort the net income. 
A) Can't occur. 
B) Are used to reduce tax liabilities. 
C) Are a source of off-balance-sheet financing. 
D) Distort the net income.

Question 17

On January 1, 2012, ECT Co. adopted the dollar-value LIFO method for its one inventory pool. The pool's value on this date was $600 million. The 2012 and 2013 ending inventory valued at year-end costs were $702 million and $840 million, respectively. The appropriate cost indexes are 1.08 for 2012 and 1.20 for 2013.
Required:
Calculate the inventory balance that ECT Co. would report on its year-end balance sheets for 2012 and 2013, using the dollar-value LIFO method.

Accepted Answer

The answer of On January 1, 2012, ECT Co. adopted...

Question 18

Selected financial statement data from Western Colorado Stores is shown below.   Required:
1. Compute the gross profit ratio for 2013.
2. Compute the inventory turnover ratio for 2013.

Accepted Answer

The answer of Selected financial statement data from Western Colorado...

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

During periods when costs are rising and inventory quantities are stable, ending inventory will be:

Accepted Answer

A) Higher under LIFO than FIFO. 
B) Lower under average cost than LIFO. 
C) Higher under average cost than FIFO. 
D) Higher under FIFO than LIFO. 
A) Higher under LIFO than FIFO. 
B) Lower under average cost than LIFO. 
C) Higher under average cost than FIFO. 
D) Higher under FIFO than LIFO.

Compared to dollar-value LIFO, unit LIFO is:

Dollar-value LIFO eliminates the risk of LIFO liquidations.

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

The inventory method that will always produce the same amount for cost of goods sold in a periodic inventory system as in a perpetual inventory system would be:

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.

What inventory balance should Badger report on its 12/31/13 balance sheet?

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

Required: Compute the January 31 ending inventory and cost of goods sold for January, assuming Denver uses average cost and a periodic inventory system.

Ending inventory using the average cost method (rounded) is:

Linguini Inc. adopted dollar-value LIFO (DVL) as of January 1, 2013, when it had an inventory of $800,000. Its inventory as of December 31, 2013, was $811,200 at year-end costs and the cost index was 1.04. What was DVL inventory on December 31, 2013?

Required: Compute the January 31 ending inventory and cost of goods sold for January, assuming Random Creations uses LIFO and perpetual inventory system.

Purchases equal the invoice amount:

Ending inventory assuming LIFO in a perpetual inventory system would be:

In a period when costs are falling and inventory quantities are stable, the lowest taxable income would be reported by using the inventory method of:

In periods when costs are rising, LIFO liquidations:

Selected financial statement data from Western Colorado Stores is shown below. Required: 1. Compute the gross profit ratio for 2013. 2. Compute the inventory turnover ratio for 2013.

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

During periods when costs are rising and inventory quantities are stable, ending inventory will be:

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, Comprehensive Income, and the Statement of Cash Flows

Income Measurement and Profitability Analysis

Time Value of Money Concepts

Cash and Receivables

Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition

Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition

Property, Plant, and Equipment and Intangible 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 Key

Share-Based Compensation and Earnings Per Share

Accounting Changes and Error Corrections

The Statement of Cash Flows Revisited

Filters

Exam 8: Inventories: Measurement

Compared to dollar-value LIFO, unit LIFO is:

Dollar-value LIFO eliminates the risk of LIFO liquidations.

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

The inventory method that will always produce the same amount for cost of goods sold in a periodic inventory system as in a perpetual inventory system would be:

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.

What inventory balance should Badger report on its 12/31/13 balance sheet?

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

Required: Compute the January 31 ending inventory and cost of goods sold for January, assuming Denver uses average cost and a periodic inventory system.

Ending inventory using the average cost method (rounded) is:

Linguini Inc. adopted dollar-value LIFO (DVL) as of January 1, 2013, when it had an inventory of $800,000. Its inventory as of December 31, 2013, was $811,200 at year-end costs and the cost index was 1.04. What was DVL inventory on December 31, 2013?

Required: Compute the January 31 ending inventory and cost of goods sold for January, assuming Random Creations uses LIFO and perpetual inventory system.

Purchases equal the invoice amount:

Ending inventory assuming LIFO in a perpetual inventory system would be:

In a period when costs are falling and inventory quantities are stable, the lowest taxable income would be reported by using the inventory method of:

In periods when costs are rising, LIFO liquidations:

Selected financial statement data from Western Colorado Stores is shown below. Required: 1. Compute the gross profit ratio for 2013. 2. Compute the inventory turnover ratio for 2013.

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

During periods when costs are rising and inventory quantities are stable, ending inventory will be:

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, Comprehensive Income, and the Statement of Cash Flows

Income Measurement and Profitability Analysis

Time Value of Money Concepts

Cash and Receivables

Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition

Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition

Property, Plant, and Equipment and Intangible 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 Key

Share-Based Compensation and Earnings Per Share

Accounting Changes and Error Corrections

The Statement of Cash Flows Revisited

Filters