Question 1

In applying the lower of cost or market method to inventory valuation, market is defined as the current selling price.

Accepted Answer

A) True 
 B)False

Question 2

A corporation uses a FIFO perpetual inventory system. August 2, 25 units were purchased at $12 per unit.
August 5, 10 units were purchased at $13 per unit.
August 15, 12 units were sold at $25 per unit.
August 18, 15 units were purchased at $14 per unit.
What was the amount of the ending inventory for the month of August?

Accepted Answer

A) $496.00 
B) $486.00 
C) $492.57 
D) $300.00 
E) $510.00 
A) $496.00 
B) $486.00 
C) $492.57 
D) $300.00 
E) $510.00

Question 3

Neither GAAP nor IFRS allow inventory to be adjusted upward beyond the original cost.

Accepted Answer

A) True 
 B)False

Question 4

Given the following information, determine the cost of goods sold for November 30 using the FIFO 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 5

A company has inventory of 15 units at a cost of $12 each on August 1. On August 5, they purchased 10 units at $13 per unit. On August 12, they purchased 20 units at $14 per unit. On August 15, they sold 30 units. Using the FIFO periodic inventory method, what is the value of the inventory at August 15 after the sale?

Accepted Answer

A) $140 
B) $160 
C) $210 
D) $380 
E) $590 
A) $140 
B) $160 
C) $210 
D) $380 
E) $590

Question 6

Acme-Jones Corporation uses a LIFO perpetual inventory system. August 2, 25 units were purchased at $12 per unit.
August 5, 10 units were purchased at $13 per unit.
August 15, 12 units were sold at $25 per unit.
August 18, 15 units were purchased at $14 per unit.
What was the amount of the cost of goods sold?

Accepted Answer

A) $184.53 
B) $163.00 
C) $174.43 
D) $154.00 
E) $144.00 
A) $184.53 
B) $163.00 
C) $174.43 
D) $154.00 
E) $144.00

Question 7

GAAP allows the use of LIFO to assign costs to inventory but IFRS does not.

Accepted Answer

A) True 
 B)False

Question 8

A company had 22 units of inventory at a cost of $26 each on March 1. On March 2, the company purchased 27 units at $27 each. On March 6, the company purchased 23 units at $28 each. On March 8, the company sold 52 units for $71 each. Given this information, determine the cost of the 52 units sold using the LIFO periodic inventory method.

Accepted Answer

A) $1,997 
B) $1,456 
C) $1,436 
D) $1,425 
E) $1,385 
A) $1,997 
B) $1,456 
C) $1,436 
D) $1,425 
E) $1,385

Question 9

Interim statements:

Accepted Answer

A) Are required by Congress. 
B) Are necessary to achieve full disclosure about a business's operations. 
C) Are usually monthly or quarterly statements prepared in between the traditional, annual statement dates. 
D) Require the use of the perpetual method for inventories. 
E) Cannot be prepared if the company follows the conservatism principle. 
A) Are required by Congress. 
B) Are necessary to achieve full disclosure about a business's operations. 
C) Are usually monthly or quarterly statements prepared in between the traditional, annual statement dates. 
D) Require the use of the perpetual method for inventories. 
E) Cannot be prepared if the company follows the conservatism principle.

Question 10

Apply the retail method to the following company information to calculate the cost of the ending inventory for the current period:

Accepted Answer

The answer of Apply the retail method to the following...

Question 11

There is no simple rule for inventory turnover, except that a high ratio is preferable provided inventory is adequate to meet demand.

Accepted Answer

A) True 
 B)False

Question 12

A corporation uses a LIFO perpetual inventory system. August 2, 25 units were purchased at $12 per unit.
August 5, 10 units were purchased at $13 per unit.
August 15, 12 units were sold at $25 per unit.
August 18, 15 units were purchased at $14 per unit.
What was the amount of the ending inventory for the month of August?

Accepted Answer

A) $496.00 
B) $486.00 
C) $492.57 
D) $300.00 
E) $510.00 
A) $496.00 
B) $486.00 
C) $492.57 
D) $300.00 
E) $510.00

Question 13

Toys "R" Us had cost of goods sold of $9,421 million, ending inventory of $2,089 million, and average inventory of $1,965 million. The inventory turnover equals:

Accepted Answer

A) 0.21 
B) 4.51 
C) 4.79 
D) 76.1 days 
E) 80.9 days 
A) 0.21 
B) 4.51 
C) 4.79 
D) 76.1 days 
E) 80.9 days

Question 14

A company had gross profit of $134,200 on net sales of $205,000. If ending inventory was $8,000 and average inventory was $7,080, what is the company's inventory turnover?

Accepted Answer

A) 10.0 
B) 8.85 
C) 16.77 
D) 18.95 
E) 28.95 
A) 10.0 
B) 8.85 
C) 16.77 
D) 18.95 
E) 28.95

Question 15

One of the most important decisions in accounting for inventory is determining the per unit costs assigned to inventory items.

Accepted Answer

A) True 
 B)False

Question 16

Goods on consignment are goods passed by their owner, called the consignee, to another party called the consignor that holds the goods for sale on behalf of the owner.

Accepted Answer

A) True 
 B)False

Question 17

If the seller ships goods FOB destination, then ownership of inventory passes when the goods are received by the buyer.

Accepted Answer

A) True 
 B)False

Question 18

Explain how the inventory turnover ratio and the days' sales in inventory ratio are used to evaluate inventory management.

Accepted Answer

A merchandiser's ability to pay its shor

Question 19

The FIFO inventory method assumes that costs for the most recently purchased items are the first to be charged to the cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 20

Identify the types of goods that a company must include when determining its merchandise inventory balance. (In your answer address the special situations of goods in transit, consigned goods, and damaged goods.)

Accepted Answer

Merchandise inventory consists of goods

In applying the lower of cost or market method to inventory valuation, market is defined as the current selling price.

Neither GAAP nor IFRS allow inventory to be adjusted upward beyond the original cost.

GAAP allows the use of LIFO to assign costs to inventory but IFRS does not.

Interim statements:

Apply the retail method to the following company information to calculate the cost of the ending inventory for the current period:

There is no simple rule for inventory turnover, except that a high ratio is preferable provided inventory is adequate to meet demand.

Toys "R" Us had cost of goods sold of $9,421 million, ending inventory of $2,089 million, and average inventory of $1,965 million. The inventory turnover equals:

A company had gross profit of $134,200 on net sales of $205,000. If ending inventory was $8,000 and average inventory was $7,080, what is the company's inventory turnover?

One of the most important decisions in accounting for inventory is determining the per unit costs assigned to inventory items.

Goods on consignment are goods passed by their owner, called the consignee, to another party called the consignor that holds the goods for sale on behalf of the owner.

If the seller ships goods FOB destination, then ownership of inventory passes when the goods are received by the buyer.

Explain how the inventory turnover ratio and the days' sales in inventory ratio are used to evaluate inventory management.

The FIFO inventory method assumes that costs for the most recently purchased items are the first to be charged to the cost of goods sold.

Identify the types of goods that a company must include when determining its merchandise inventory balance. (In your answer address the special situations of goods in transit, consigned goods, and damaged goods.)

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

In applying the lower of cost or market method to inventory valuation, market is defined as the current selling price.

Neither GAAP nor IFRS allow inventory to be adjusted upward beyond the original cost.

GAAP allows the use of LIFO to assign costs to inventory but IFRS does not.

Interim statements:

Apply the retail method to the following company information to calculate the cost of the ending inventory for the current period:

There is no simple rule for inventory turnover, except that a high ratio is preferable provided inventory is adequate to meet demand.

Toys "R" Us had cost of goods sold of $9,421 million, ending inventory of $2,089 million, and average inventory of $1,965 million. The inventory turnover equals:

A company had gross profit of $134,200 on net sales of $205,000. If ending inventory was $8,000 and average inventory was $7,080, what is the company's inventory turnover?

One of the most important decisions in accounting for inventory is determining the per unit costs assigned to inventory items.

Goods on consignment are goods passed by their owner, called the consignee, to another party called the consignor that holds the goods for sale on behalf of the owner.

If the seller ships goods FOB destination, then ownership of inventory passes when the goods are received by the buyer.

Explain how the inventory turnover ratio and the days' sales in inventory ratio are used to evaluate inventory management.

The FIFO inventory method assumes that costs for the most recently purchased items are the first to be charged to the cost of goods sold.

Identify the types of goods that a company must include when determining its merchandise inventory balance. (In your answer address the special situations of goods in transit, consigned goods, and damaged goods.)

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