Question 1

Most companies do not take a physical count of inventory each year,but rather rely on inventory records to determine the inventory value.

Accepted Answer

A) True 
 B)False

Question 2

Acceptable methods of assigning specific costs to inventory and cost of goods sold include all of the following except:

Accepted Answer

A)  LIFO method.
B)  FIFO method.
C)  Specific identification method.
D)  Weighted average method.
E)  Retail method.F) C) and D)
G) A) and D)

Question 3

The understatement of the ending inventory balance causes:

Accepted Answer

A)  Cost of goods sold to be overstated and net income to be understated.
B)  Cost of goods sold to be overstated and net income to be overstated.
C)  Cost of goods sold to be understated and net income to be understated.
D)  Cost of goods sold to be understated and net income to be overstated.
E)  Cost of goods sold to be overstated and net income to be correct.F) A) and D)
G) All of the above

Question 4

Damaged and obsolete goods that can be sold:

Accepted Answer

A)  Are never counted as inventory.
B)  Are included in inventory at their full cost.
C)  Are included in inventory at their net realizable value.
D)  Should be disposed of immediately.
E)  Are assigned a value of zero.F) A) and B)
G) B) and E)

Question 5

On December 31 of the current year,Plunkett Company reported an ending inventory balance of $215,000.The following additional information is also available: 
•Plunkett sold and shipped goods costing $38,000 to Savannah Enterprises on December 28 with shipping terms of FOB shipping point.The goods were not included in the ending inventory amount of $215,000.
•Plunkett purchased goods costing $44,000 on December 29.The goods were shipped FOB destination and were received by Plunkett on January 2 of the following year.The shipment was a rush order that was supposed to arrive by December 31.These goods were included in the ending inventory balance of $215,000.
•Plunkett's ending inventory balance of $215,000 included $15,000 of goods being held on consignment from Carole Company.(Plunkett Company is the consignee.) 
•Plunkett's ending inventory balance of $215,000 did not include goods costing $95,000 that were shipped to Plunkett on December 27 with shipping terms of FOB destination and were still in transit at year-end.
Based on the above information,the amount that Plunkett should report in ending inventory on December 31 is:

Accepted Answer

A)  $194,000
B)  $209,000
C)  $200,000
D)  $171,000
E)  $156,000F) B) and C)
G) B) and D)

Question 6

A company's cost of goods sold was $15,500 and its average merchandise inventory was $4,500.Its inventory turnover equals 3.4.

Accepted Answer

A) True 
 B)False

Question 7

A company's total cost of FIFO inventory was $329,000 and its current replacement cost is $307,000.Under the lower cost or market,the amount reported should be $329,000.

Accepted Answer

A) True 
 B)False

Question 8

An error in ending inventory causes an error in the next period's:

Accepted Answer

A)  Sales.
B)  Beginning inventory.
C)  Accounts payable.
D)  Accounts receivable.
E)  Shipping costs.F) A) and C)
G) C) and D)

Question 9

Use the information below to determine the sales revenue,cost of goods sold and gross profit that would be reported for the company related to the March 16 sale assuming the company uses FIFO inventory valuation and a perpetual inventory system.

Accepted Answer

Sales = 40 * $16 = $...

Question 10

The cost of an inventory item includes the ________,plus ________ costs necessary to put it in a place and condition for sale.

Accepted Answer

invoice price minus ...

Question 11

Match between columns
                        Premises: The method that will tend to smooth out erratic changes in costs.
The method that will assign a value to inventory that approximates current cost.
The method that is used if each inventory item can be matched with a specific purchase and invoice.
The method that will cause the company to have the lowest income taxes.
The method that will cause the company to have the lowest cost of goods sold.

Accepted Answer

The Answer of WA(Weighted average) and SI(Specific identification) and FIFO(First is...

Question 12

A company normally sells its product for $20 per unit.However,the selling price has fallen to $15 per unit.This company's current FIFO inventory consists of 200 units purchased at $16 per unit.Net realizable value has now fallen to $13 per unit.What is the amount of the lower cost of market adjustment the company must make as a result of this decline in value?

Accepted Answer

A)  $1,000.
B)  $1,400.
C)  $400.
D)  $600.
E)  $800.F) B) and D)
G) B) and E)

Question 13

Evaluate each inventory error separately and determine whether it overstates or understates cost of goods sold and net income.

Accepted Answer

The answer of Evaluate each inventory error separately and determine...

Question 14

Oxford Packing Company reported net sales in November of the current year of $1,000,000.At the beginning of November,the company reported beginning inventory of $368,000.Cost of goods purchased during November amounted to $217,500.The company reported ending inventory at the end of November of $226,750. The company's gross profit rate for November of the current year was:

Accepted Answer

A)  35.9%
B)  18.8%
C)  81.2%
D)  64.1%
E)  58.6%F) B) and D)
G) B) and C)

Question 15

Identify and describe the four inventory valuation methods.

Accepted Answer

The specific identification method assig...

Question 16

In a period of rising purchase costs,LIFO usually gives a lower taxable income and therefore,yields a tax advantage.

Accepted Answer

A) True 
 B)False

Question 17

On March 31 a company needed to estimate its ending inventory to prepare its first quarter financial statements.The following information is available: Beginning inventory,January 1: $4,000
Net sales: $80,000
Net purchases: $78,000
The company's gross margin ratio is 25%.Using the gross profit method,the cost of goods sold would be:

Accepted Answer

A)  $60,000.
B)  $20,000.
C)  $58,500.
D)  $63,000.
E)  $19,500.F) A) and B)
G) A) and C)

Question 18

A company had the following purchases and sales during its first year of operations:  On December 31,there were 26 units remaining in ending inventory.
-Using the periodic FIFO inventory costing method.What is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)

Accepted Answer

A)  $3,405.
B)  $3,200.
C)  $3,445.
D)  $3,540.
E)  $3,270.F) C) and D)
G) B) and C)

Question 19

A company has inventory with a selling price of $451,000,a market value of $223,000,and a cost of $241,000.According to the lower of cost or market,the inventory should be written down to $223,000.

Accepted Answer

A) True 
 B)False

Question 20

One application of internal control when taking a physical count of inventory is the use of pre-numbered inventory tickets.

Accepted Answer

A) True 
 B)False

Exam 5: Inventories and Cost of Sales

Correct Answer
verified

Use the information below to determine the sales revenue,cost of goods sold and gross profit that would be reported for the company related to the March 16 sale assuming the company uses FIFO inventory valuation and a perpetual inventory system.

Correct Answer
verified
Sales = 40 * $16 = $...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

In a period of rising purchase costs,LIFO usually gives a lower taxable income and therefore,yields a tax advantage.

Correct Answer
verified

Identify and describe the four inventory valuation methods.

Correct Answer
verified
The specific identification method assig...
View Answer

One application of internal control when taking a physical count of inventory is the use of pre-numbered inventory tickets.

Correct Answer
verified

Correct Answer
verified

A company has inventory with a selling price of $451,000,a market value of $223,000,and a cost of $241,000.According to the lower of cost or market,the inventory should be written down to $223,000.

Correct Answer
verified

Match the inventory costing method from each situation

A company's total cost of FIFO inventory was $329,000 and its current replacement cost is $307,000.Under the lower cost or market,the amount reported should be $329,000.

Correct Answer
verified

Damaged and obsolete goods that can be sold:

Correct Answer
verified

An error in ending inventory causes an error in the next period's:

Correct Answer
verified

The cost of an inventory item includes the ,plus costs necessary to put it in a place and condition for sale.

Correct Answer
verified
invoice price minus ...
View Answer

The understatement of the ending inventory balance causes:

Correct Answer
verified

Acceptable methods of assigning specific costs to inventory and cost of goods sold include all of the following except:

Correct Answer
verified

Evaluate each inventory error separately and determine whether it overstates or understates cost of goods sold and net income.

Correct Answer
verified

Most companies do not take a physical count of inventory each year,but rather rely on inventory records to determine the inventory value.

Correct Answer
verified

A company's cost of goods sold was $15,500 and its average merchandise inventory was $4,500.Its inventory turnover equals 3.4.

Correct Answer
verified

Exam 5: Inventories and Cost of Sales

Correct AnswerverifiedShow Answer

Use the information below to determine the sales revenue,cost of goods sold and gross profit that would be reported for the company related to the March 16 sale assuming the company uses FIFO inventory valuation and a perpetual inventory system.

Correct AnswerverifiedSales = 40 * $16 = $...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a period of rising purchase costs,LIFO usually gives a lower taxable income and therefore,yields a tax advantage.

Correct AnswerverifiedShow Answer

Identify and describe the four inventory valuation methods.

Correct AnswerverifiedThe specific identification method assig...View AnswerShow Answer

One application of internal control when taking a physical count of inventory is the use of pre-numbered inventory tickets.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A company has inventory with a selling price of $451,000,a market value of $223,000,and a cost of $241,000.According to the lower of cost or market,the inventory should be written down to $223,000.

Correct AnswerverifiedShow Answer

Match the inventory costing method from each situation

A company's total cost of FIFO inventory was $329,000 and its current replacement cost is $307,000.Under the lower cost or market,the amount reported should be $329,000.

Correct AnswerverifiedShow Answer

Damaged and obsolete goods that can be sold:

Correct AnswerverifiedShow Answer

An error in ending inventory causes an error in the next period's:

Correct AnswerverifiedShow Answer

The cost of an inventory item includes the ________,plus ________ costs necessary to put it in a place and condition for sale.

Correct Answerverifiedinvoice price minus ...View AnswerShow Answer

The understatement of the ending inventory balance causes:

Correct AnswerverifiedShow Answer

Acceptable methods of assigning specific costs to inventory and cost of goods sold include all of the following except:

Correct AnswerverifiedShow Answer

Evaluate each inventory error separately and determine whether it overstates or understates cost of goods sold and net income.

Correct AnswerverifiedShow Answer

Most companies do not take a physical count of inventory each year,but rather rely on inventory records to determine the inventory value.

Correct AnswerverifiedShow Answer

A company's cost of goods sold was $15,500 and its average merchandise inventory was $4,500.Its inventory turnover equals 3.4.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
Sales = 40 * $16 = $...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The specific identification method assig...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The cost of an inventory item includes the ,plus costs necessary to put it in a place and condition for sale.

Correct Answer
verified
invoice price minus ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified