Question 1

Physical inventory counts:

Accepted Answer

A) Are not necessary under the perpetual system. 
B) Are necessary to determine differences between actual inventory available and the Inventory account balance. 
C) Must be taken at least once a month. 
D) Require the use of hand-held portable computers. 
E) Are not necessary under the cost-to benefit constraint. 
A) Are not necessary under the perpetual system. 
B) Are necessary to determine differences between actual inventory available and the Inventory account balance. 
C) Must be taken at least once a month. 
D) Require the use of hand-held portable computers. 
E) Are not necessary under the cost-to benefit constraint.

Question 2

Merchandise inventory includes:

Accepted Answer

A) All goods a company owns and holds for sale. 
B) All goods in transit. 
C) All goods on consignment. 
D) Only damaged goods. 
E) Only items that are on the shelf. 
A) All goods a company owns and holds for sale. 
B) All goods in transit. 
C) All goods on consignment. 
D) Only damaged goods. 
E) Only items that are on the shelf.

Question 3

The City Store reported the following amounts on their financial statements for 2015, 2016, and 2017:   It was discovered early in 2015 that the ending inventory on December 31, 2015, was overstated by $6,000 and the ending inventory on December 31, 2016, was understated by $2,500. The ending inventory on December 31, 2017, was correct. Ignoring income taxes, determine the correct amounts of cost of goods sold, net income, total current assets, and equity for each of the years 2015, 2016, and 2017.

Accepted Answer

The answer of The City Store reported the following amounts...

Question 4

Given the following information, determine the cost of ending inventory at December 31 using the FIFO perpetual inventory method. December 2: 5 units were purchased at $7 per unit.
December 9: 10 units were purchased at $9.40 per unit.
December 11: 12 units were sold at $35 per unit.
December 15: 20 units were purchased at $10.15 per unit.
December 22: 18 units were sold at $35 per unit.

Accepted Answer

A) $51.75 
B) $83.22 
C) $41.30 
D) $94.00 
E) $50.75 
A) $51.75 
B) $83.22 
C) $41.30 
D) $94.00 
E) $50.75

Question 5

On September 30 a company needed to estimate its ending inventory to prepare its third quarter financial statements. The following information is available: Beginning inventory, July 1: $4,000
Net sales: $40,000
Net purchases: $41,000
The company's gross margin ratio is 15%. Using the gross profit method, the cost of goods sold would be:

Accepted Answer

A) $4,000 
B) $5,000 
C) $21,000 
D) $25,000 
E) $34,000 
A) $4,000 
B) $5,000 
C) $21,000 
D) $25,000 
E) $34,000

Question 6

Toys "R" Us had cost of goods sold of $8,321 million and ending inventory of $2,027 million. Based on this, its days' sales in inventory is equal to 89 days.
(2,027/8,321) × 365 = 89 days

Accepted Answer

A) True 
 B)False

Question 7

The consistency concept prescribes that a company use the same accounting methods period after period, so that financial statements are comparable across periods.

Accepted Answer

A) True 
 B)False

Question 8

The inventory turnover ratio is calculated as:

Accepted Answer

A) Cost of goods sold divided by ending inventory times 365. 
B) Sales divided by cost of goods sold. 
C) Ending inventory divided by cost of goods sold. 
D) Cost of goods sold divided by ending inventory. 
E) Cost of goods sold divided by average merchandise inventory. 
A) Cost of goods sold divided by ending inventory times 365. 
B) Sales divided by cost of goods sold. 
C) Ending inventory divided by cost of goods sold. 
D) Cost of goods sold divided by ending inventory. 
E) Cost of goods sold divided by average merchandise inventory.

Question 9

The inventory turnover ratio:

Accepted Answer

A) Is used to analyze profitability. 
B) Is used to measure solvency. 
C) Is one measure of a merchandiser's ability to pay its short term obligations. 
D) Validates the acid-test ratio. 
E) Calculation depends on the company's inventory valuation method. 
A) Is used to analyze profitability. 
B) Is used to measure solvency. 
C) Is one measure of a merchandiser's ability to pay its short term obligations. 
D) Validates the acid-test ratio. 
E) Calculation depends on the company's inventory valuation method.

Question 10

Explain the effects of the four inventory valuation methods of specific identification, FIFO, LIFO and weighted-average on ending inventory, net income, and income taxes.

Accepted Answer

The specific identification method ident

Question 11

Direct Sales, Inc. had cost of goods sold of $420,000, beginning inventory of $67,000, and ending inventory of $81,000. The days' sales in inventory equals:

Accepted Answer

A) 5.16 
B) 58.2 days 
C) 6.27 
D) 70.4 days 
E) 5.68 
A) 5.16 
B) 58.2 days 
C) 6.27 
D) 70.4 days 
E) 5.68

Question 12

The understatement of the ending inventory balance causes:

Accepted Answer

A) Cost of goods sold to be overstated and net income to be understated. 
B) Cost of goods sold to be overstated and net income to be overstated. 
C) Cost of goods sold to be understated and net income to be understated. 
D) Cost of goods sold to be understated and net income to be overstated. 
E) Cost of goods sold to be overstated and net income to be correct. 
A) Cost of goods sold to be overstated and net income to be understated. 
B) Cost of goods sold to be overstated and net income to be overstated. 
C) Cost of goods sold to be understated and net income to be understated. 
D) Cost of goods sold to be understated and net income to be overstated. 
E) Cost of goods sold to be overstated and net income to be correct.

Question 13

When taking a physical count of inventory, the use of prenumbered inventory tickets assists in the control process.

Accepted Answer

A) True 
 B)False

Question 14

The cost of an inventory item includes the _____________ of an inventory minus any _____________ plus ______________ costs necessary to put it in a place and condition for sale.

Accepted Answer

cost; disc

Question 15

A company made the following merchandise purchases and sales during the month of May. There was no beginning inventory. If the company uses the FIFO periodic inventory method, what would be the cost of goods sold for May?

Accepted Answer

The answer of A company made the following merchandise purchases...

Question 16

A company reported the following data related to its ending inventory:   Calculate the lower of cost or-market on both the:
(a) Inventory as a whole.
(b) Inventory applied separately to each product.

Accepted Answer

@#IMG-DLM& (a) LCM applied to inventory

Question 17

A company had 8 units at a cost of $12 each in inventory on November 1. On November 2, the company purchased 13 units at $13 each. On November 6, the company purchased 9 units at $14 each. On November 8, the company sold 24 units for $57 each. Given this information, determine the cost of the 6 units remaining in inventory after the November 8 sale using the LIFO periodic inventory method.

Accepted Answer

A) $78 
B) $319 
C) $336 
D) $72 
E) $84 
A) $78 
B) $319 
C) $336 
D) $72 
E) $84

Question 18

A company reported the following data related to its ending inventory:   Calculate the lower of cost or-market the inventory applied separately to each product.

Accepted Answer

@#IMG-DLM& LCM appli

Question 19

Given the following information, determine the cost of ending inventory at November 30 using the LIFO perpetual inventory method.
November 3: 15 units were purchased at $8 per unit.
November 11: 18 units were purchased at $9.50 per unit.
November 15: 15 units were sold at $45 per unit.
November 18: 30 units were purchased at $10.75 per unit.
November 30: 20 units were sold at $55 per unit.

Accepted Answer

The answer of Given the following information, determine the cost...

Question 20

Whether prices are rising or falling, FIFO always will yield the highest gross profit and net income.

Accepted Answer

A) True 
 B)False

Physical inventory counts:

Merchandise inventory includes:

Toys "R" Us had cost of goods sold of $8,321 million and ending inventory of $2,027 million. Based on this, its days' sales in inventory is equal to 89 days. (2,027/8,321) × 365 = 89 days

The consistency concept prescribes that a company use the same accounting methods period after period, so that financial statements are comparable across periods.

The inventory turnover ratio is calculated as:

The inventory turnover ratio:

Explain the effects of the four inventory valuation methods of specific identification, FIFO, LIFO and weighted-average on ending inventory, net income, and income taxes.

Direct Sales, Inc. had cost of goods sold of $420,000, beginning inventory of $67,000, and ending inventory of $81,000. The days' sales in inventory equals:

The understatement of the ending inventory balance causes:

When taking a physical count of inventory, the use of prenumbered inventory tickets assists in the control process.

The cost of an inventory item includes the _______ of an inventory minus any _ plus ________ costs necessary to put it in a place and condition for sale.

A company made the following merchandise purchases and sales during the month of May. There was no beginning inventory. If the company uses the FIFO periodic inventory method, what would be the cost of goods sold for May?

A company reported the following data related to its ending inventory: Calculate the lower of cost or-market on both the: (a) Inventory as a whole. (b) Inventory applied separately to each product.

A company reported the following data related to its ending inventory: Calculate the lower of cost or-market the inventory applied separately to each product.

Whether prices are rising or falling, FIFO always will yield the highest gross profit and net income.

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters

Exam 5: Reporting and Analyzing Inventories

Physical inventory counts:

Merchandise inventory includes:

Toys "R" Us had cost of goods sold of $8,321 million and ending inventory of $2,027 million. Based on this, its days' sales in inventory is equal to 89 days. (2,027/8,321) × 365 = 89 days

The consistency concept prescribes that a company use the same accounting methods period after period, so that financial statements are comparable across periods.

The inventory turnover ratio is calculated as:

The inventory turnover ratio:

Explain the effects of the four inventory valuation methods of specific identification, FIFO, LIFO and weighted-average on ending inventory, net income, and income taxes.

Direct Sales, Inc. had cost of goods sold of $420,000, beginning inventory of $67,000, and ending inventory of $81,000. The days' sales in inventory equals:

The understatement of the ending inventory balance causes:

When taking a physical count of inventory, the use of prenumbered inventory tickets assists in the control process.

The cost of an inventory item includes the _____________ of an inventory minus any _____________ plus ______________ costs necessary to put it in a place and condition for sale.

A company made the following merchandise purchases and sales during the month of May. There was no beginning inventory. If the company uses the FIFO periodic inventory method, what would be the cost of goods sold for May?

A company reported the following data related to its ending inventory: Calculate the lower of cost or-market on both the: (a) Inventory as a whole. (b) Inventory applied separately to each product.

A company reported the following data related to its ending inventory: Calculate the lower of cost or-market the inventory applied separately to each product.

Whether prices are rising or falling, FIFO always will yield the highest gross profit and net income.

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters

The cost of an inventory item includes the _______ of an inventory minus any _ plus ________ costs necessary to put it in a place and condition for sale.