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Exam 17: Merchandise Inventory

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Question 41

True/False

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With the onset of universal product codes and bar-code scanners that track inventory purchased and sold,a physical inventory is no longer necessary to verify inventory on hand.

A) True
B) False

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Question 42

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Under the gross profit method,the cost of the ending inventory is determined by applying the gross profit ratio to net sales and then subtracting the cost of goods sold from the cost of goods available for sale.

A) True
B) False

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Question 43

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The use of the LIFO method of inventory valuation

The price the business would have to pay to buy an item of inventory through usual channels in usual quantities is either market price or __________________ cost.

When the ____________________ method is used,the cost of the ending inventory is computed by using the cost of the latest purchases.

The merchandise available for sale cost a company $90,000 and was marked to sell at a retail price of $125,000.Sales during the period totaled $80,000.If the retail method is used,the estimated cost of the ending inventory is

Following the consistency principle,once a firm adopts a method of inventory valuation,it should use that method consistently from one period to the next.

A firm that sells a single product had a beginning inventory of 4,000 units with a total cost of $28,000.Early in the year,10,000 units were purchased at $9 each.Using FIFO,what is the value of the ending inventory of 3,000 units?

Many retail stores take a periodic inventory at retail values,using the sales price marked on the merchandise.

A company reported the following information regarding its inventory: Beginning inventory: cost of $63,000;retail of $140,000 Net purchases: cost $42,000;retail $84,000 Sales at retail: $160,000 The year end inventory showed $64,000 worth of merchandise available at retail prices.What is the cost of the ending inventory?

In highly competitive businesses where inventory is subject to price fluctuations and model or style upgrades,it is desirable to utilize the weighted average method costing method.

To safeguard its inventory,organizations implement various types of controls.List some general internal controls that may be in place in a business.

What is RFID? What is the benefit to RFID?

The ________________ method of inventory costing must be used for financial accounting purposes if it is chosen for federal income tax purposes.

Inventory cannot be valued at the lower of cost or market if the inventory cost was determined using the FIFO methods.

An assumption necessary to the use of the Gross Profit method is that the

An increase above the initial retail price of merchandise is

Inventory valuation methods acceptable internationally include all of the following except:

A company has inventory with a sales value of $34,000,current market value of $22,000 and a total cost of $23,400.Since the sales value exceeds both cost and market,no write down in inventory value is required.

To calculate the cost-to-retail ratio,merchandise available for sale at retail prices is divided by the merchandise available for sale at cost.