Question 1

Boulder,Inc.is computing its inventory at December 31,2019.The following information relates to the five major inventory items regularly stocked for resale:
  Using the lower of cost or net realizable value,compute the total valuation for each inventory item at December 31,2019,and the total inventory valuation.

Accepted Answer

The answer of Boulder,Inc.is computing its inventory at December 31,2019.The...

Question 2

Atomic Company did not record a December 2019 purchase of inventory on credit until January 2020.Assume that the December 31,2019 ending inventory was correctly determined. 
-What is the effect of this error on the financial statements for the year ended December 31,2019?

Accepted Answer

A) Net income is correct. 
B) Stockholders' equity is understated. 
C) Net income is overstated. 
D) Current assets are understated.

Question 3

Freeman Company uses LIFO inventory costing.At the end of the annual accounting period,December 31,2019,the accounting records in inventory showed:
  Calculate the following:
1.Cost of goods available for sale
2.Ending inventory
3.Cost of goods sold

Accepted Answer

The answer of Freeman Company uses LIFO inventory costing.At the...

Question 4

On December 31,2019,Cruise Company has 10,000 units of an inventory item,which cost $40 per unit when purchased on June 15,2019.The selling price was $60 per unit.On December 30,2019,it was determined that the cost to sell is $24 per unit.At what amount should the 10,000 units of inventory be reported at on the December 31,2019 balance sheet?

Accepted Answer

A) $400,000. 
B) $360,000. 
C) $160,000. 
D) $40,000.

Question 5

Barrington Company must write down its inventory from its cost of $260,000 to its net realizable value of $248,000 at December 31,2018.The inventory will all be sold in the year 2019.Which of the following provides a correct effect of the write-down?

Accepted Answer

A) The 2018 gross profit decreases by $12,000. 
B) The 2019 cost of goods sold increases by $12,000. 
C) The 2019 ending inventory increases by $12,000. 
D) The 2019 gross profit is not affected if the inventory is sold during 2019.

Question 6

In a period of increasing costs,the LIFO Reserve would be deducted from the ending inventory under LIFO costing to convert it to ending inventory under FIFO costing.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements does not accurately describe the lower of cost or net realizable value valuation method for inventory?

Accepted Answer

A) The journal entry to write down inventory decreases gross profit. 
B) The journal entry to write down inventory decreases current assets. 
C) The journal entry to write down inventory does not affect pretax income. 
D) The journal entry to write down inventory increases cost of goods sold.

Question 8

During periods of increasing unit costs,the LIFO inventory method results in lower income taxes.

Accepted Answer

A) True 
 B)False

Question 9

What is the net adjustment to net income with respect to the determination of cash flows from operating activities when inventory increases $100,000 and accounts payable increases $20,000?

Accepted Answer

A) An increase of $120,000. 
B) A decrease of $120,000. 
C) An increase of $80,000. 
D) A decrease of $80,000.

Question 10

When a company uses the periodic inventory system,which of the following is true?

Accepted Answer

A) Purchases are recorded in the cost of goods sold account. 
B) The inventory account is updated after each sale. 
C) Cost of goods sold is computed at the end of the accounting period rather than at each sale date. 
D) The inventory account is updated throughout the year as purchases are made.

Question 11

The records of Atlantis Company reflected the following for the month of February:
  Determine the amount of ending inventory and cost of goods sold using the following periodic system inventory costing methods:

Accepted Answer

The answer of The records of Atlantis Company reflected the...

Question 12

RJ Corporation has provided the following information about one of its inventory items:  During the year,RJ sold 3,000 units.
-
What was ending inventory using the FIFO cost flow assumption?

Accepted Answer

A) $640,000. 
B) $840,000. 
C) $960,000. 
D) $880,000.

Question 13

Cutting Edge Technologies reported the following information in its 2019 annual report:
  1.Determine the inventory turnover ratio.(Round your answer to two decimal places. )
2.Determine the average days to sell inventory.(Round your answer to a whole number. )
3.Explain the meaning of each ratio.

Accepted Answer

The answer of Cutting Edge Technologies reported the following information...

Question 14

Carr Corporation has provided the following information for its most recent month of operation: sales $8,000;beginning inventory $1,000;ending inventory $2,000 and gross profit $5,000.How much were Carr's inventory purchases during the period?

Accepted Answer

A) $9,000. 
B) $5,000. 
C) $6,000. 
D) $4,000.

Question 15

The records of Jimmy Company show 2019 purchases of $90,000.An actual count revealed a 2019 ending inventory of $8,000.The 2019 beginning inventory was $5,000.What was cost of goods sold for 2019?

Accepted Answer

The answer of The records of Jimmy Company show 2019...

Question 16

LIFO liquidation results when a company has a lower level of inventory at the end of the year than it had at the beginning of the year.

Accepted Answer

A) True 
 B)False

Question 17

Manufactured goods transferred out of work in process become part of finished goods inventory.

Accepted Answer

A) True 
 B)False

Exam 7: Reporting and Interpreting Cost of Goods Sold and Inventory

Atomic Company did not record a December 2019 purchase of inventory on credit until January 2020.Assume that the December 31,2019 ending inventory was correctly determined. -What is the effect of this error on the financial statements for the year ended December 31,2019?

Freeman Company uses LIFO inventory costing.At the end of the annual accounting period,December 31,2019,the accounting records in inventory showed: Calculate the following: 1.Cost of goods available for sale 2.Ending inventory 3.Cost of goods sold

Barrington Company must write down its inventory from its cost of $260,000 to its net realizable value of $248,000 at December 31,2018.The inventory will all be sold in the year 2019.Which of the following provides a correct effect of the write-down?

In a period of increasing costs,the LIFO Reserve would be deducted from the ending inventory under LIFO costing to convert it to ending inventory under FIFO costing.

Which of the following statements does not accurately describe the lower of cost or net realizable value valuation method for inventory?

During periods of increasing unit costs,the LIFO inventory method results in lower income taxes.

What is the net adjustment to net income with respect to the determination of cash flows from operating activities when inventory increases $100,000 and accounts payable increases $20,000?

When a company uses the periodic inventory system,which of the following is true?

The records of Atlantis Company reflected the following for the month of February: Determine the amount of ending inventory and cost of goods sold using the following periodic system inventory costing methods:

RJ Corporation has provided the following information about one of its inventory items: During the year,RJ sold 3,000 units. - What was ending inventory using the FIFO cost flow assumption?

Cutting Edge Technologies reported the following information in its 2019 annual report: 1.Determine the inventory turnover ratio.(Round your answer to two decimal places. ) 2.Determine the average days to sell inventory.(Round your answer to a whole number. ) 3.Explain the meaning of each ratio.

Carr Corporation has provided the following information for its most recent month of operation: sales $8,000;beginning inventory $1,000;ending inventory $2,000 and gross profit $5,000.How much were Carr's inventory purchases during the period?

The records of Jimmy Company show 2019 purchases of $90,000.An actual count revealed a 2019 ending inventory of $8,000.The 2019 beginning inventory was $5,000.What was cost of goods sold for 2019?

LIFO liquidation results when a company has a lower level of inventory at the end of the year than it had at the beginning of the year.

Manufactured goods transferred out of work in process become part of finished goods inventory.