Question 1

The consistent application of an inventory costing method is essential for

Accepted Answer

A)  conservatism. 
B)  accuracy. 
C)  comparability. 
D)  efficiency.

Question 2

The specific identification method of costing inventories is used when the

Accepted Answer

A)  physical flow of units cannot be determined. 
B)  company sells large quantities of relatively low cost homogeneous items. 
C)  company sells large quantities of relatively low cost heterogeneous items. 
D)  company sells a limited quantity of high-unit cost items.

Question 3

Sawyer Company uses the perpetual inventory system and the moving-average method to value inventories. On August 1, there were 10,000 units valued at $40,000 in the beginning inventory. On August 10, 20,000 units were purchased for $8 per unit. On August 15, 24,000 units were sold for $16 per unit. The amount charged to cost of goods sold on August 15 was

Accepted Answer

A)  $40,000. 
B)  $160,000. 
C)  $192,000. 
D)  $144,000.

Question 4

______________ is calculated as cost of goods sold divided by average inventory.

Accepted Answer

The answer of ______________ is calculated as cost of goods...

Question 5

During July, the following purchases and sales were made by James Company. There was no beginning inventory. James Company uses a perpetual inventory system.  Under the FIFO method, the cost of goods sold for each sale is:

Accepted Answer

The answer of During July, the following purchases and sales...

Question 6

Cost of goods sold is computed from the following equation:

Accepted Answer

A)  beginning inventory - cost of goods purchased + ending inventory. 
B)  sales - cost of goods purchased + beginning inventory - ending inventory. 
C)  sales + gross profit - ending inventory + beginning inventory. 
D)  beginning inventory + cost of goods purchased - ending inventory

Question 7

If beginning inventory is understated by $10,000, the effect of this error in the current period is

Accepted Answer

The answer of If beginning inventory is understated by $10,000,...

Question 8

Lee Industries had the following inventory transactions occur during 2010:  The company sold 51 units at $63 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's gross profit using LIFO? (rounded to whole dollars)

Accepted Answer

A)  $2,441 
B)  $2,365 
C)  $848 
D)  $772

Question 9

Accountants believe that the write down from cost to market should not be made in the period in which the price decline occurs.

Accepted Answer

A) True 
 B)False

Question 10

Jenner Company had beginning inventory of $90,000, ending inventory of $110,000, cost of goods sold of 400,000, and sales of 660,000. Jenner's days in inventory is:

Accepted Answer

A)  55.3 days. 
B)  91.3 days. 
C)  101.4 days. 
D)  60.8 days.

Question 11

It is generally recognized that a major objective of accounting for inventory is the proper determination of ______________.

Accepted Answer

The answer of It is generally recognized that a major...

Question 12

Management may choose any inventory costing method it desires as long as the cost flow assumption chosen is consistent with the physical movement of goods in the company.

Accepted Answer

A) True 
 B)False

Question 13

Beginning inventory plus the cost of goods purchased equals

Accepted Answer

A)  cost of goods sold. 
B)  cost of goods available for sale. 
C)  net purchases. 
D)  total goods purchased.

Question 14

The more inventory a company has in stock, the greater the company's profit.

Accepted Answer

A) True 
 B)False

Question 15

Goods in transit should be included in the inventory of the buyer when the

Accepted Answer

A)  public carrier accepts the goods from the seller. 
B)  goods reach the buyer. 
C)  terms of sale are FOB destination. 
D)  terms of sale are FOB shipping point.

Question 16

Shandy Shutters has the following inventory information.  A physical count of merchandise inventory on November 30 reveals that there are 50 units on hand. Assume a periodic inventory system is used. Assuming that the specific identification method is used and that ending inventory consists of 15 units from each of the three purchases and 5 units from the November 1 inventory, cost of goods sold is

Accepted Answer

A)  $427. 
B)  $857. 
C)  $854. 
D)  $836.

Question 17

Inventory items on an assembly line in various stages of production are classified as

Accepted Answer

A)  Finished goods. 
B)  Work in process. 
C)  Raw materials. 
D)  Merchandise inventory.

Question 18

Shandy Shutters has the following inventory information.  A physical count of merchandise inventory on November 30 reveals that there are 50 units on hand. Assume a periodic inventory system is used. Ending inventory under LIFO is

Accepted Answer

A)  $438. 
B)  $421. 
C)  $846. 
D)  $863.

Question 19

Inventory is reported in the financial statements at

Accepted Answer

A)  cost. 
B)  market. 
C)  the higher-of-cost-or-market. 
D)  the lower-of-cost-or-market.

Question 20

During July, the following purchases and sales were made by James Company. There was no beginning inventory. James Company uses a perpetual inventory system.  Under the LIFO method, the cost of goods sold for each sale is:

Accepted Answer

The answer of During July, the following purchases and sales...

Exam 6: Inventories

The consistent application of an inventory costing method is essential for

The specific identification method of costing inventories is used when the

______________ is calculated as cost of goods sold divided by average inventory.

During July, the following purchases and sales were made by James Company. There was no beginning inventory. James Company uses a perpetual inventory system. Under the FIFO method, the cost of goods sold for each sale is:

Cost of goods sold is computed from the following equation:

If beginning inventory is understated by $10,000, the effect of this error in the current period is

Lee Industries had the following inventory transactions occur during 2010: The company sold 51 units at $63 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's gross profit using LIFO? (rounded to whole dollars)

Accountants believe that the write down from cost to market should not be made in the period in which the price decline occurs.

Jenner Company had beginning inventory of $90,000, ending inventory of $110,000, cost of goods sold of 400,000, and sales of 660,000. Jenner's days in inventory is:

It is generally recognized that a major objective of accounting for inventory is the proper determination of ______________.

Management may choose any inventory costing method it desires as long as the cost flow assumption chosen is consistent with the physical movement of goods in the company.

Beginning inventory plus the cost of goods purchased equals

The more inventory a company has in stock, the greater the company's profit.

Goods in transit should be included in the inventory of the buyer when the

Inventory items on an assembly line in various stages of production are classified as

Shandy Shutters has the following inventory information. A physical count of merchandise inventory on November 30 reveals that there are 50 units on hand. Assume a periodic inventory system is used. Ending inventory under LIFO is

Inventory is reported in the financial statements at

During July, the following purchases and sales were made by James Company. There was no beginning inventory. James Company uses a perpetual inventory system. Under the LIFO method, the cost of goods sold for each sale is: