Question 1

Which costing method will produce the same result under both a perpetual and periodic system?

Accepted Answer

A) Specific identification 
B) Average-cost 
C) FIFO 
D) Both FIFO and specific identification 
A) Specific identification 
B) Average-cost 
C) FIFO 
D) Both FIFO and specific identification

Question 2

Valuation of inventory on the balance sheet impacts cost of goods sold on the income statement.

Accepted Answer

A) True 
 B)False

Question 3

Use this inventory information for the month of May to answer the following question.   Assuming that a perpetual inventory system is used,what is cost of goods sold (rounded)under the average-cost method?

Accepted Answer

A) $5,620 
B) $6,420 
C) $10,380 
D) $12,040 
A) $5,620 
B) $6,420 
C) $10,380 
D) $12,040

Question 4

Which inventory method generally best follows the matching principle?

Accepted Answer

A) Average-cost 
B) LIFO 
C) Whichever method is used for tax purposes 
D) FIFO 
A) Average-cost 
B) LIFO 
C) Whichever method is used for tax purposes 
D) FIFO

Question 5

The specific identification method is well suited for a discount department store.

Accepted Answer

A) True 
 B)False

Question 6

Under rising prices,why will the FIFO method produce a higher ending inventory than LIFO?

Accepted Answer

Under FIFO,it is assumed that

Question 7

An understatement of year 1's ending inventory will

Accepted Answer

A) cause year 2's cost of goods sold to be overstated. 
B) result in an understatement of year 2's beginning inventory. 
C) not affect year 2's ending owner's equity. 
D) have no effect on year 2's gross margin. 
A) cause year 2's cost of goods sold to be overstated. 
B) result in an understatement of year 2's beginning inventory. 
C) not affect year 2's ending owner's equity. 
D) have no effect on year 2's gross margin.

Question 8

The costs of an automated perpetual inventory system are considerable because they include the costs of automating the system,maintaining the system,and taking a physical inventory.

Accepted Answer

A) True 
 B)False

Question 9

An understatement of ending inventory in one period results in

Accepted Answer

A) an overstatement of the ending inventory of the next period. 
B) an understatement of gross margin of the next period. 
C) an overstatement of gross margin of the next period. 
D) no effect on gross margin of the next period. 
A) an overstatement of the ending inventory of the next period. 
B) an understatement of gross margin of the next period. 
C) an overstatement of gross margin of the next period. 
D) no effect on gross margin of the next period.

Question 10

Freight charges associated with the purchase of inventory normally are not included in inventory cost.

Accepted Answer

A) True 
 B)False

Question 11

Days' inventory on hand equals 365 divided by

Accepted Answer

A) inventory turnover. 
B) cost of goods sold. 
C) goods available for sale. 
D) average inventory. 
A) inventory turnover. 
B) cost of goods sold. 
C) goods available for sale. 
D) average inventory.

Question 12

Portocall Sailboats reports income before income taxes of $160,000 during 2014.If beginning inventory was overstated by $14,000 and ending inventory was understated by $16,000,calculate corrected income before income taxes for the year.(Show your work.)

Accepted Answer

$190,000 (

Question 13

Goods held on consignment are

Accepted Answer

A) kept for sale on the premises of the consignee. 
B) included as part of no one's ending inventory. 
C) owned by the consignee. 
D) included in the consignee's ending inventory. 
A) kept for sale on the premises of the consignee. 
B) included as part of no one's ending inventory. 
C) owned by the consignee. 
D) included in the consignee's ending inventory.

Question 14

If a company uses LIFO for tax purposes,it need not use LIFO for financial reporting purposes.

Accepted Answer

A) True 
 B)False

Question 15

In practice,why is it often difficult to apply the retail method in determining the cost of ending inventory?

Accepted Answer

The retail method is often made complica

Question 16

Market is the amount that a merchandising company would pay at the present time for the same goods as are in the inventory and from the usual suppliers in the usual quantities

Accepted Answer

A) True 
 B)False

Question 17

Use this information to answer the following question.   A periodic inventory system is used.
Using FIFO,the cost assigned to ending inventory is

Accepted Answer

A) $8,112. 
B) $2,664. 
C) $3,480. 
D) $8,928. 
A) $8,112. 
B) $2,664. 
C) $3,480. 
D) $8,928.

Question 18

Use this inventory information for the month of July to answer the following question.   What is cost of goods sold under the specific identification method?

Accepted Answer

A) More information is needed. 
B) $3,704 
C) $7,696 
D) $7,736 
A) More information is needed. 
B) $3,704 
C) $7,696 
D) $7,736

Question 19

During periods of consistently falling prices,the FIFO inventory method will produce the highest possible amount of net income.

Accepted Answer

A) True 
 B)False

Question 20

Supply-chain management helps companies maintain lower levels of inventory.

Accepted Answer

A) True 
 B)False

Which costing method will produce the same result under both a perpetual and periodic system?

Valuation of inventory on the balance sheet impacts cost of goods sold on the income statement.

Use this inventory information for the month of May to answer the following question. Assuming that a perpetual inventory system is used,what is cost of goods sold (rounded)under the average-cost method?

Which inventory method generally best follows the matching principle?

The specific identification method is well suited for a discount department store.

Under rising prices,why will the FIFO method produce a higher ending inventory than LIFO?

An understatement of year 1's ending inventory will

The costs of an automated perpetual inventory system are considerable because they include the costs of automating the system,maintaining the system,and taking a physical inventory.

An understatement of ending inventory in one period results in

Freight charges associated with the purchase of inventory normally are not included in inventory cost.

Days' inventory on hand equals 365 divided by

Portocall Sailboats reports income before income taxes of $160,000 during 2014.If beginning inventory was overstated by $14,000 and ending inventory was understated by $16,000,calculate corrected income before income taxes for the year.(Show your work.)

Goods held on consignment are

If a company uses LIFO for tax purposes,it need not use LIFO for financial reporting purposes.

In practice,why is it often difficult to apply the retail method in determining the cost of ending inventory?

Market is the amount that a merchandising company would pay at the present time for the same goods as are in the inventory and from the usual suppliers in the usual quantities

Use this information to answer the following question. A periodic inventory system is used. Using FIFO,the cost assigned to ending inventory is

Use this inventory information for the month of July to answer the following question. What is cost of goods sold under the specific identification method?

During periods of consistently falling prices,the FIFO inventory method will produce the highest possible amount of net income.

Supply-chain management helps companies maintain lower levels of inventory.

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Supplement: Accounting for Merchandising Operations

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Supplement: the Statement of Cash Flows

Financial Statement Analysis

Accounting for Investments

Filters

Exam 7: Inventories

Which costing method will produce the same result under both a perpetual and periodic system?

Valuation of inventory on the balance sheet impacts cost of goods sold on the income statement.

Use this inventory information for the month of May to answer the following question. Assuming that a perpetual inventory system is used,what is cost of goods sold (rounded)under the average-cost method?

Which inventory method generally best follows the matching principle?

The specific identification method is well suited for a discount department store.

Under rising prices,why will the FIFO method produce a higher ending inventory than LIFO?

An understatement of year 1's ending inventory will

The costs of an automated perpetual inventory system are considerable because they include the costs of automating the system,maintaining the system,and taking a physical inventory.

An understatement of ending inventory in one period results in

Freight charges associated with the purchase of inventory normally are not included in inventory cost.

Days' inventory on hand equals 365 divided by

Portocall Sailboats reports income before income taxes of $160,000 during 2014.If beginning inventory was overstated by $14,000 and ending inventory was understated by $16,000,calculate corrected income before income taxes for the year.(Show your work.)

Goods held on consignment are

If a company uses LIFO for tax purposes,it need not use LIFO for financial reporting purposes.

In practice,why is it often difficult to apply the retail method in determining the cost of ending inventory?

Market is the amount that a merchandising company would pay at the present time for the same goods as are in the inventory and from the usual suppliers in the usual quantities

Use this information to answer the following question. A periodic inventory system is used. Using FIFO,the cost assigned to ending inventory is

Use this inventory information for the month of July to answer the following question. What is cost of goods sold under the specific identification method?

During periods of consistently falling prices,the FIFO inventory method will produce the highest possible amount of net income.

Supply-chain management helps companies maintain lower levels of inventory.

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Supplement: Accounting for Merchandising Operations

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Supplement: the Statement of Cash Flows

Financial Statement Analysis

Accounting for Investments

Filters