Exam 13: Inventories

Ricardo Clothing uses a periodic inventory system and committed an error that overstated inventory at the end of Year One. Assuming no further errors occur during the following year, at the end of Year Two:

Which of the following are advantages of the weighted average method of applying costs to inventory? I. It is not subject to profit manipulation. II. The profit and closing inventory values tend to be 'smoothed' compared to other methods. III. It is simple to understand.

Which of the following statements is incorrect?

Below is an extract from an income statement. \ Beginning inventory 28000 Gross sales 36000 Freight-in 2500 Sales returns 4000 Ending inventory 25200 Purchases 31600 The cost of sales is:

Which of the following statements relating to the lower of cost and net realisable is incorrect?

Which statement is correct?

Novice Co purchased goods for $2500. While on display, the goods were damaged and it is estimated that they can now only be sold for $1800. Additional marketing and distribution costs are $200. The net realisable value of the goods is:

Which of the following is not one of the methods used to assign costs between cost of sales and closing inventory?

Marlin Co. uses a periodic inventory system with the specific identification method of cost assignment. Inventory purchases for the month of August were: Date Urits Urit Cost 5 Begirruing Irvertory 1 -Aug 2000 8.00 Purchase 8 -Aug 1000 10.00 Purchase 16 -Aug 1500 12.00 Purchase 27-Aug 1300 11.00 On 24 August 1200 units from beginning inventory and 1000 units from the 16 August purchase were sold. What was the value of ending inventory at 31 August?

Tully Sales uses a periodic inventory system with the weighted average method of cost assignment. The following data are available. The cost of sales for January is: (calculate your answer to the nearest whole dollar).

In performing a stocktake care must be taken with goods in transit. Which of the following statements is correct?

Which of the following is not a step in a properly conducted stocktake?

Which statement relating to the moving average method of costing inventories, used with the perpetual inventory system, is incorrect?

A major theoretical problem in accounting for inventory is:

Which of the following statements relating to the lower of cost and net realisable value rule is incorrect?

Which statement relating to the determination of the cost of inventory in a computerised system is not true?

The following are possible sources of error in calculating closing inventory except for:

The following information concerning inventory is required to be disclosed in the external financial reports except for:

Fairy Gardens Ltd uses a periodic inventory system with the weighted average method of cost assignment. The following data are available. Date Beginning inventory Jan 1 500 \ 10 \ 5000 Purchase Mar 15 1500 \ 12 \ 18000 Purchase June 8 2000 \ 13 \ 26000 Ending inventory Dec 31 1000 The cost of the ending inventory to the nearest dollar is:

Stanley Inc. has an historical gross profit percentage of 40%. Net purchases for six months were $2800 and sales were $4000. Inventory at the end of the previous period was $300. If Stanley Inc. prepares an interim balance sheet, the amount that can be estimated for closing inventory is: