Question 1

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

Accepted Answer

A) $5,040. 
B) $5,055. 
C) $5,075. 
D) $5,135. 
A) $5,040. 
B) $5,055. 
C) $5,075. 
D) $5,135.

Question 2

Tiger Inc. adopted dollar-value LIFO on January 1, 2013, when the inventory value was $360,000 and the cost index was 1.25. On December 31, 2013, the inventory was valued at year-end cost of $395,000 and the cost index was 1.30. Tiger would report a LIFO inventory of:

Accepted Answer

A) $410,800. 
B) $374,400. 
C) $379,808. 
D) $380,600. 
A) $410,800. 
B) $374,400. 
C) $379,808. 
D) $380,600.

Question 3

Ending inventory using the LIFO method is:

Accepted Answer

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

Question 4

During periods when costs are rising and inventory quantities are stable, cost of goods sold will be:

Accepted Answer

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

Question 5

The following information comes from the 2011 American Greetings Corporation (AG) Corporation annual report to shareholders:
Inventories included the following ($ in thousands):   Inventories are valued at the lower of cost or market, with cost being determined by the LIFO method for 80% of inventories. The cost of all other inventories is determined primarily by the FIFO method. AG's cost of goods sold for 2011 was $682,368 thousand.
Required:
If AG used only FIFO for all of its inventories instead of its current policy, what would its cost of goods sold have been for 2011?

Accepted Answer

Cost of goods sold for 2011 would have b

Question 6

A company that prepares its financial statements according to International Financial Reporting Standards can use all of the same inventory valuation methods as a company that prepares its statements under U.S. GAAP.

Accepted Answer

A) True 
 B)False

Question 7

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 the above 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 the above is correct.

Question 8

Hazelton Corporation uses a periodic inventory system and the LIFO method to value its inventory. The company began 2013 with $59,000 in inventory of its only product. The beginning inventory consisted of the following layers:   During 2013, 6,000 units were purchased at $8 per unit and during 2014, 7,000 units were purchased at $9 per unit. Sales, in units, were 7,000 and 12,000 during 2013 and 2014, respectively.
Required:
1. Calculate cost of goods sold for 2013 and 2014.
2. Disregarding income tax, determine the LIFO liquidation profit or loss, if any, for 2013 and 2014.

Accepted Answer

The answer of Hazelton Corporation uses a periodic inventory system...

Question 9

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

Accepted Answer

Periodic A

Question 10

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

Accepted Answer

A) $480. 
B) $288. 
C) $1,360. 
D) $144. 
A) $480. 
B) $288. 
C) $1,360. 
D) $144.

Question 11

Cost of goods sold assuming all units sold were purchased at the year 2013 price:

Accepted Answer

The answer of Cost of goods sold assuming all units...

Question 12

Modern Day Appliances, Inc. is a wholesaler of kitchen appliances. The company uses a periodic inventory system and the LIFO cost method. Modern Day's December 31, 2013, fiscal year-end inventory of its main product, double-door stainless steel refrigerators, consisted of the following (listed in chronological order of acquisition):   The replacement cost of the refrigerators throughout 2014 was $900. Modern Day sold 5,000 of these refrigerators during 2014. The company's selling price throughout 2014 was $1,200.
Required:
1. Compute the gross profit (sales minus cost of goods sold) and the gross profit ratio for 2014 assuming that Modern Day purchased 5,200 units during the year.
2. Repeat requirement 1 assuming that Modern Day purchased only 4,500 units.
3. For requirements 1 and 2, what amount of before-tax LIFO liquidation profit or loss would Modern Day report in its 2014 disclosure notes, if any, assuming any calculated amount is material?

Accepted Answer

1. @#IMG-DLM& Gross profit ratio = $1,500,000 ÷ $6

Question 13

Bond Company adopted the dollar-value LIFO inventory method on January 1, 2013. In applying the LIFO method, Bond uses internal cost indexes and the multiple-pools approach. The following data were available for Inventory Pool No. 3 for the two years following the adoption of LIFO:   Under the dollar-value LIFO method, the inventory at December 31, 2014, should be

Accepted Answer

A) $357,600. 
B) $350,000. 
C) $351,600. 
D) None of the above. 
A) $357,600. 
B) $350,000. 
C) $351,600. 
D) None of the above.

Question 14

During 2013, WW Inc. reduced its LIFO eligible inventory quantities due to a problem with its major supplier. The effect of this liquidation was to increase its cost of goods sold by approximately $50 million. WW has a 40% income tax rate. If WW had not experienced these supplier problems and the resulting liquidation:

Accepted Answer

A) Its 2013 net income would have been $30 million lower because inventory purchase prices were rising. 
B) Its 2013 net income would have been $30 million lower because inventory purchase prices were declining. 
C) Its 2013 net income would have been $30 million higher because inventory purchase prices were rising. 
D) Its 2013 net income would have been $30 million higher because inventory purchase prices were declining. 
A) Its 2013 net income would have been $30 million lower because inventory purchase prices were rising. 
B) Its 2013 net income would have been $30 million lower because inventory purchase prices were declining. 
C) Its 2013 net income would have been $30 million higher because inventory purchase prices were rising. 
D) Its 2013 net income would have been $30 million higher because inventory purchase prices were declining.

Question 15

The choice of cost flow assumption (FIFO, LIFO, or average) does not depend on the actual physical flow of the product.

Accepted Answer

A) True 
 B)False

Question 16

HH Company uses LIFO. HH disclosed that if FIFO had been used, inventory at the end of 2013 would have been $20 million lower than the difference between LIFO and FIFO at the end of 2012. Assuming HH has a 30% income tax rate:

Accepted Answer

A) Its reported cost of goods for 2013 would have been $14 million less if it had used FIFO rather than LIFO for its financial statements. 
B) Its reported cost of goods for 2013 would have been $20 million less if it had used FIFO rather than LIFO for its financial statements. 
C) Its reported cost of goods sold for 2013 would have been $14 million higher if it had used FIFO rather than LIFO for its financial statements. 
D) Its reported cost of goods sold for 2013 would have been $20 million higher if it had used FIFO rather than LIFO for its financial statements. 
A) Its reported cost of goods for 2013 would have been $14 million less if it had used FIFO rather than LIFO for its financial statements. 
B) Its reported cost of goods for 2013 would have been $20 million less if it had used FIFO rather than LIFO for its financial statements. 
C) Its reported cost of goods sold for 2013 would have been $14 million higher if it had used FIFO rather than LIFO for its financial statements. 
D) Its reported cost of goods sold for 2013 would have been $20 million higher if it had used FIFO rather than LIFO for its financial statements.

Question 17

LIFO periodic and LIFO perpetual always produce the same amounts for ending inventory.

Accepted Answer

A) True 
 B)False

Question 18

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 goods are sold. 
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 goods are sold.

Question 19

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. 
A) $126,000. 
B) $200,000. 
C) $120,000. 
D) $210,000.

Question 20

GG Inc. uses LIFO. GG disclosed that if FIFO had been used, inventory at the end of 2013 would have been $15 million higher than the difference between LIFO and FIFO at the end of 2012. Assuming GG has a 40% income tax rate:

Accepted Answer

A) Its reported cost of goods sold for 2013 would have been $9 million higher if it had used FIFO rather than LIFO for its financial statements. 
B) Its reported cost of goods sold for 2013 would have been $15 million higher if it had used FIFO rather than LIFO for its financial statements. 
C) Its reported net income for 2013 would have been $9 million higher if it had used FIFO rather than LIFO for its financial statements. 
D) Its reported net income for 2013 would have been $15 million higher if it had used FIFO rather than LIFO for its financial statements. 
A) Its reported cost of goods sold for 2013 would have been $9 million higher if it had used FIFO rather than LIFO for its financial statements. 
B) Its reported cost of goods sold for 2013 would have been $15 million higher if it had used FIFO rather than LIFO for its financial statements. 
C) Its reported net income for 2013 would have been $9 million higher if it had used FIFO rather than LIFO for its financial statements. 
D) Its reported net income for 2013 would have been $15 million higher if it had used FIFO rather than LIFO for its financial statements.

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

Tiger Inc. adopted dollar-value LIFO on January 1, 2013, when the inventory value was $360,000 and the cost index was 1.25. On December 31, 2013, the inventory was valued at year-end cost of $395,000 and the cost index was 1.30. Tiger would report a LIFO inventory of:

Ending inventory using the LIFO method is:

During periods when costs are rising and inventory quantities are stable, cost of goods sold will be:

A company that prepares its financial statements according to International Financial Reporting Standards can use all of the same inventory valuation methods as a company that prepares its statements under U.S. GAAP.

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

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

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

Cost of goods sold assuming all units sold were purchased at the year 2013 price:

The choice of cost flow assumption (FIFO, LIFO, or average) does not depend on the actual physical flow of the product.

HH Company uses LIFO. HH disclosed that if FIFO had been used, inventory at the end of 2013 would have been $20 million lower than the difference between LIFO and FIFO at the end of 2012. Assuming HH has a 30% income tax rate:

LIFO periodic and LIFO perpetual always produce the same amounts for ending inventory.

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

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?

GG Inc. uses LIFO. GG disclosed that if FIFO had been used, inventory at the end of 2013 would have been $15 million higher than the difference between LIFO and FIFO at the end of 2012. Assuming GG has a 40% income tax rate:

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

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

Tiger Inc. adopted dollar-value LIFO on January 1, 2013, when the inventory value was $360,000 and the cost index was 1.25. On December 31, 2013, the inventory was valued at year-end cost of $395,000 and the cost index was 1.30. Tiger would report a LIFO inventory of:

Ending inventory using the LIFO method is:

During periods when costs are rising and inventory quantities are stable, cost of goods sold will be:

A company that prepares its financial statements according to International Financial Reporting Standards can use all of the same inventory valuation methods as a company that prepares its statements under U.S. GAAP.

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

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

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

Cost of goods sold assuming all units sold were purchased at the year 2013 price:

The choice of cost flow assumption (FIFO, LIFO, or average) does not depend on the actual physical flow of the product.

HH Company uses LIFO. HH disclosed that if FIFO had been used, inventory at the end of 2013 would have been $20 million lower than the difference between LIFO and FIFO at the end of 2012. Assuming HH has a 30% income tax rate:

LIFO periodic and LIFO perpetual always produce the same amounts for ending inventory.

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

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?

GG Inc. uses LIFO. GG disclosed that if FIFO had been used, inventory at the end of 2013 would have been $15 million higher than the difference between LIFO and FIFO at the end of 2012. Assuming GG has a 40% income tax rate:

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