Question 1

Given the following information,determine the cost of goods sold at November 30 using the LIFO perpetual inventory method.
November 3: 15 units were purchased at $8 per unit.
November 11: 18 units were purchased at $9.50 per unit.
November 15: 15 units were sold at $45 per unit
November 18: 30 units were purchased at $10.75 per unit
November 30: 20 units were sold at $55 per

Accepted Answer

The answer of Given the following information,determine the cost of...

Question 2

The inventory valuation method that results in the lowest taxable income in a period of inflation is:

Accepted Answer

A) LIFO method 
B) FIFO method 
C) Weighted-average cost method 
D) Specific identification method 
E) Gross profit method

Question 3

A company sells a climbing kit and uses the periodic inventory system to account for its merchandise.The beginning balance of the inventory and its transactions during January were as follows:
$$\begin{array} { | l | l | } 
\hline \text { January 1: } & \text { Beginning balance of } 18 \text { units at } \$ 13 \text { each } \
\hline \text { January 12: } & \text { Purchased } 30 \text { units at } \$ 14 \text { each } \
\hline \text { January 19: } & \text { Sold } 24 \text { units at a selling price of } \$ 30 \text { each } \
\hline \text { January 20: } & \text { Purchased } 24 \text { units at } \$ 17 \text { each } \
\hline \text { January } 27 : & \text { Sold } 27 \text { units at a selling price of } \$ 30 \text { each } \
\hline
\end{array}$$
If the ending inventory is reported at $357,what inventory method was used?

Accepted Answer

A) LIFO 
B) FIFO 
C) Weighted average 
D) Specific identification 
E) Retail inventory method

Question 4

The understatement of the beginning inventory balance causes:

Accepted Answer

A) Cost of goods sold to be understated and net income to be understated 
B) Cost of goods sold to be understated and net income to be overstated 
C) Cost of goods sold to be overstated and net income to be overstated 
D) Cost of goods sold to be overstated and net income to be understated 
E) Cost of goods sold to be overstated and net income to be correct

Question 5

Given the following information,determine the cost of ending inventory at December 31 using the LIFO perpetual inventory method.
December 2: 5 units were purchased at $7 per unit.
December 9: 10 units were purchased at $9.40 per unit.
December 11: 12 units were sold at $35 per unit
December 15: 20 units were purchased at $10.15 per unit
December 22: 18 units were sold at $35 per unit

Accepted Answer

A) $51.75 
B) $83.22 
C) $41.30 
D) $94.00 
E) $50.75

Question 6

A company had inventory of 5 units at a cost of $20 each on November 1.On November 2,they purchased 10 units at $22 each.On November 6 they purchased 6 units at $25 each.On November 8,they sold 18 units for $54 each.Using the LIFO perpetual inventory method,what was the cost of the 18 units sold?

Accepted Answer

A) $395 
B) $410 
C) $450 
D) $510 
E) $520

Question 7

Given the following information,determine the cost of goods sold at December 31 using the LIFO periodic inventory method.
December 2: 5 units were purchased at $7 per unit.
December 9: 10 units were purchased at $9.40 per unit.
December 11: 12 units were sold at $35 per unit
December 15: 20 units were purchased at $10.15 per unit
December 22: 18 units were sold at $35 per unit

Accepted Answer

A) $284.70 
B) $332.10 
C) $281.25 
D) $290.70 
E) $297.00

Question 8

A company has inventory of 15 units at a cost of $12 each on August 1.On August 5,they purchased 10 units at $13 per unit.On August 12 they purchased 20 units at $14 per unit.On August 15,they sold 30 units.Using the FIFO periodic inventory method,what is the value of the inventory at August 15 after the sale?

Accepted Answer

A) $140 
B) $160 
C) $210 
D) $380 
E) $590

Question 9

The conservatism principle requires that when more than one estimate of the amounts that are to be received or paid in the future exist and these estimates are about equally likely,then the less optimistic amount is used.

Accepted Answer

A) True 
 B)False

Question 10

A company had the following purchases during the current year:
$\begin{array}{|l|l|}
\hline \text { January: } & 10 \text { units at } \$ 120 \
\hline \text { February: } & 20 \text { units at } \$ 130 \
\hline \text { May: } & 15 \text { units at } \$ 140 \
\hline \text { September: } & 12 \text { units at } \$ 150 \
\hline \text { November: } & 10 \text { units at } \$ 160\
\hline
\end{array}$
On December 31,there were 26 units remaining in ending inventory.These 26 units consisted of 2 from January,4 from February,6 from May,4 from September and 10 from November.Using the specific identification method,what is the cost of the ending inventory?

Accepted Answer

A) $3,500 
B) $3,800 
C) $3,960 
D) $3,280 
E) $3,640

Question 11

A company had inventory on November 1 of 5 units at a cost of $20 each.On November 2,they purchased 10 units at $22 each.On November 6 they purchased 6 units at $25 each.On November 8,8 units were sold for $55 each.Using the LIFO perpetual inventory method,what was the value of the inventory on November 8 after the sale?

Accepted Answer

A) $304 
B) $296 
C) $288 
D) $280 
E) $276

Question 12

Toys "R" Us had cost of goods sold of $9,421 million,ending inventory of $2,089 million and average inventory of $1,965 million.The inventory turnover equals:

Accepted Answer

A) 0.21 
B) 4.51 
C) 4.79 
D) 76.1 days 
E) 80.9 days

Question 13

A company made the following merchandise purchases and sales during the month of May:
 $\begin{array}{|l|l|l|l|}
\hline\text { May 1 purchased } & 380 & \text { units at } & \$ 15 \text { each } \
\hline \text { May 5 purchased } & 270 & \text { units at } & \$ 17 \text { each } \
\hline \text { May 10 sold } & 400 & \text { units at } & \$ 50 \text { each } \
\hline \text { May 20 purchased } & 300 & \text { units at } & \$ 22 \text { each } \
\hline \text { May 25 sold } & 400 & \text { units at } & \$ 50 \text { each }\
\hline
\end{array}$
 
There was no beginning inventory.If the company uses the LIFO periodic inventory method,what would be the cost of the ending inventory?

Accepted Answer

The answer of A company made the following merchandise purchases...

Question 14

Given the following items and costs as of the balance sheet date,determine the value of Light Company's merchandise inventory.
$2,000 goods sold by Light to another company.The goods are in transit and shipping terms are FOB shipping point.
$3,000 goods sold by another company to Light.The goods are in transit and shipping terms are FOB shipping point.
$4,000 owned by Light but in the possession of another company the consignee.
Damaged goods owned by Light which originally cost $5,000,but which now have an $800 net realizable value.

Accepted Answer

A) $7,000 
B) $7,800 
C) $9,800 
D) $9,000 
E) $6,800

Question 15

The lower of cost or market rule for inventory valuation must be applied to each individual unit separately and not to major categories of inventory or to the entire inventory.

Accepted Answer

A) True 
 B)False

Question 16

The dollar value assigned to goods purchased will differ under the different inventory valuation methods of specific identification,FIFO,LIFO and weighted average.

Accepted Answer

A) True 
 B)False

Question 17

Goods in transit are included in a purchaser's inventory:

Accepted Answer

A) At any time during transit 
B) When the purchaser is responsible for paying freight charges 
C) When the supplier is responsible for freight charges 
D) If the goods are shipped FOB destination 
E) After the half-way point between the buyer and seller

Question 18

_______________________ is the estimated sales price of damaged goods minus the cost of making the sale.

Accepted Answer

The answer of _______________________ is the estimated sales price of...

Question 19

How do the consistency principle and the full disclosure principle affect inventory valuation?

Accepted Answer

The answer of How do the consistency principle and the...

Question 20

The ____________________ ratio reflects how much inventory is available in terms of days' sales.

Accepted Answer

The answer of The ____________________ ratio reflects how much inventory...

Exam 5: Reporting and Analyzing Inventories

The inventory valuation method that results in the lowest taxable income in a period of inflation is:

The understatement of the beginning inventory balance causes:

A company had inventory of 5 units at a cost of $20 each on November 1.On November 2,they purchased 10 units at $22 each.On November 6 they purchased 6 units at $25 each.On November 8,they sold 18 units for $54 each.Using the LIFO perpetual inventory method,what was the cost of the 18 units sold?

The conservatism principle requires that when more than one estimate of the amounts that are to be received or paid in the future exist and these estimates are about equally likely,then the less optimistic amount is used.

Toys "R" Us had cost of goods sold of $9,421 million,ending inventory of $2,089 million and average inventory of $1,965 million.The inventory turnover equals:

The lower of cost or market rule for inventory valuation must be applied to each individual unit separately and not to major categories of inventory or to the entire inventory.

The dollar value assigned to goods purchased will differ under the different inventory valuation methods of specific identification,FIFO,LIFO and weighted average.

Goods in transit are included in a purchaser's inventory:

_______________________ is the estimated sales price of damaged goods minus the cost of making the sale.

How do the consistency principle and the full disclosure principle affect inventory valuation?

The ____________________ ratio reflects how much inventory is available in terms of days' sales.