Question 1

An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the ending inventory valuation is

Accepted Answer

A) FIFO. 
B) LIFO. 
C) specific identification. 
D) weighted-average.

Question 2

In a period of falling prices, which inventory method generally provides the lowest amount of net income?

Accepted Answer

A) Average cost. 
B) Moving average. 
C) FIFO. 
D) Specific identification.

Question 3

Which of the following inventories carried by a manufacturer is similar to the merchandise inventory of a retailer?

Accepted Answer

A) Raw materials. 
B) Work-in-process. 
C) Finished goods. 
D) Supplies.

Question 4

Which of the following is a characteristic of a perpetual inventory system?

Accepted Answer

A) Inventory purchases are debited to a Purchases account. 
B) Inventory records are not kept for every item. 
C) Cost of goods sold is recorded with each sale. 
D) Cost of goods sold is determined as the amount of purchases less the change in inventory.

Question 5

How is a significant amount of consignment inventory reported in the statement of financial position?

Accepted Answer

A) The inventory is reported separately on the consignor's statement of financial position. 
B) The inventory is combined with other inventory on the consignor's statement of financial position. 
C) The inventory is reported separately on the consignee's statement of financial position. 
D) The inventory is combined with other inventory on the consignee's statement of financial position.

Question 6

Which of the following is included in inventory costs?

Accepted Answer

A) Product costs. 
B) Period costs. 
C) Product and period costs. 
D) Neither product or period costs.

Question 7

Use the following information for questions 
During 2015 Carne Corporation transferred inventory to Nolan Corporation and agreed to repurchase the merchandise early in 2016.Nolan then used the inventory as collateral to borrow from Norwalk Bank, remitting the proceeds to Carne.In 2016 when Carne repurchased the inventory, Nolan used the proceeds to repay its bank loan.
-On whose books should the cost of the inventory appear at the December 31, 2015 statement of financial position date?

Accepted Answer

A) Carne Corporation 
B) Nolan Corporation 
C) Norwalk Bank 
D) Nolan Corporation, with Carne making appropriate note disclosure of the transaction

Question 8

When inventory is misstated, its presentation lacks?

Accepted Answer

A) Relevance. 
B) Faithful representation. 
C) Comparability. 
D) All of the choices are correct.

Question 9

What is consigned inventory?

Accepted Answer

A) Goods that are shipped, but title transfers to the receiver. 
B) Goods that are sold, but payment is not required until the goods are sold. 
C) Goods that are shipped, but title remains with the shipper. 
D) Goods that have been segregated for shipment to a customer.

Question 10

The International Accounting Standards Board requires the specific identification method in certain circumstances.Which of the following is likely to be a circumstance where the specific identification criteria can be met?

Accepted Answer

A) Unit price is low. 
B) Inventory turnover is low. 
C) Inventory quantities are large. 
D) All of the choices are circumstances where the criteria are likely to be met.

Question 11

The LIFO perpetual method results in the same ending inventory and cost of goods sold amounts as under the LIFO periodic method.

Accepted Answer

A) True 
 B)False

Question 12

In a period of rising prices, the inventory method which tends to give the highest reported net income is

Accepted Answer

A) moving-average. 
B) first-in, first-out. 
C) specific identification. 
D) weighted-average.

Question 13

Homes 4 You builds single-family homes throughout the United States and Europe.The International Accounting Standards Board (IASB) Requires Homes 4 You to use which of the following cost flow assumptions for its inventory?

Accepted Answer

A) FIFO (first-in, first-out). 
B) Specific identification. 
C) Weighted-average. 
D) The IASB allows any of these cost flow assumptions as long as the company uses it consistently.

Question 14

Dolan Co.received merchandise on consignment.As of March 31, Dolan had recorded the transaction as a purchase and included the goods in inventory.The effect of this on its financial statements for March 31 would be

Accepted Answer

A) no effect. 
B) net income was correct and current assets and current liabilities were overstated. 
C) net income, current assets, and current liabilities were overstated. 
D) net income and current liabilities were overstated.

Question 15

A manufacturing concern would report the cost of units only partially processed as inventory in the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 16

On June 15, 2015, Wynne Corporation accepted delivery of merchandise which it
Purchased on account.As of June 30, Wynne had not recorded the transaction or included the merchandise in its inventory.The effect of this on its statement of financial position for June 30, 2015 would be

Accepted Answer

A) assets and equity were overstated but liabilities were not affected. 
B) equity was the only item affected by the omission. 
C) assets, liabilities, and equity were understated. 
D) None of these answers are correct.

Exam 8: Valuation of Inventories: a Cost-Basis Approach

An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the ending inventory valuation is

In a period of falling prices, which inventory method generally provides the lowest amount of net income?

Which of the following inventories carried by a manufacturer is similar to the merchandise inventory of a retailer?

Which of the following is a characteristic of a perpetual inventory system?

How is a significant amount of consignment inventory reported in the statement of financial position?

Which of the following is included in inventory costs?

When inventory is misstated, its presentation lacks?

What is consigned inventory?

The International Accounting Standards Board requires the specific identification method in certain circumstances.Which of the following is likely to be a circumstance where the specific identification criteria can be met?

The LIFO perpetual method results in the same ending inventory and cost of goods sold amounts as under the LIFO periodic method.

In a period of rising prices, the inventory method which tends to give the highest reported net income is

Homes 4 You builds single-family homes throughout the United States and Europe.The International Accounting Standards Board (IASB) Requires Homes 4 You to use which of the following cost flow assumptions for its inventory?

Dolan Co.received merchandise on consignment.As of March 31, Dolan had recorded the transaction as a purchase and included the goods in inventory.The effect of this on its financial statements for March 31 would be

A manufacturing concern would report the cost of units only partially processed as inventory in the statement of financial position.

On June 15, 2015, Wynne Corporation accepted delivery of merchandise which it Purchased on account.As of June 30, Wynne had not recorded the transaction or included the merchandise in its inventory.The effect of this on its statement of financial position for June 30, 2015 would be