Exam 5: Reporting and Analyzing Inventories

A company made the following merchandise purchases and sales during the month of May: There was no beginning inventory. If the company uses the weighted average perpetual inventory method, what would be the cost of its ending inventory?

Incidental costs added to the costs of inventory can include import tariffs, freight, storage, and insurance.

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

The full disclosure principle prescribes that the notes to the financial statements report a change in accounting method for inventory costing.

Goods in transit are included in a purchaser's inventory:

On December 31, a company needed to estimate its ending inventory to prepare its fourth quarter financial statements. The following information is currently available: Inventory as of October 1: $12,500 Net sales for fourth quarter: $40,000 Net purchases for fourth quarter: $27,500 The company typically achieves a gross profit ratio of 15%. Ending Inventory under the gross profit method would be:

When LIFO is used with the periodic inventory system, cost of goods sold is assigned costs from the most recent purchases.

In the retail inventory method of inventory valuation, the retail amount of inventory refers to the dollar amount measured using selling prices of inventory items.

The four methods of inventory valuation are SIFO, FIFO, LIFO, and average cost.

A company had inventory of 5 units at a cost of $20 each on November 1. On November 2, they purchased 10 units at $22 each. On November 6, they purchased 6 units at $25 each. On November 8, they sold 18 units for $54 each. Using the LIFO perpetual inventory method, what was the cost of the 18 units sold?

If the shipping terms are _______________, ownership of the shipped goods passes from the seller to the buyer when the goods reach the buyer's location.

The _____________________ method of assigning costs to inventory and cost of goods sold assumes that the inventory items are sold in the order acquired.

A company's store was destroyed by a fire on February 10 of this year. The only information for the current period that could be salvaged included the following: Historically, the company's gross profit ratio has been 30%. Estimate the value of the destroyed inventory using the gross profit method.

Describe the internal controls that are applied when taking a physical count of inventory.

A corporation has provided the following information about one of its products: During the year, 510 units were sold. What is ending inventory using the weighted average periodic inventory method? (Round the weighted average cost per unit to two decimal points; round the ending inventory to the nearest whole dollar.)

A company had the following purchases during the current year: On December 31, there were 26 units remaining in ending inventory. These 26 units consisted of 2 from January, 4 from February, 6 from May, 4 from September and 10 from November. Using the specific identification method, what is the cost of the ending inventory?

According to IRS requirements, companies are allowed to use FIFO for financial reporting and LIFO for tax reporting.

Goods on consignment:

The ____________________ ratio reflects how much inventory is available in terms of the number of days' sales.

An inventory error is sometimes said to be self-correcting because it causes an offsetting error in the next period.