Question 1

In a periodic inventory system,the cost of goods sold is determined as follows:

Accepted Answer

A)  Year-end inventory,plus purchases during the year,less the inventory at the beginning of the year.
B)  Net sales,less the balance in the Gross Profit account.
C)  Cost of goods available for sale during the year,less the ending inventory.
D)  A physical count is made of all items sold throughout the year,and a cost flow assumption is applied at year-end.E) A) and B)
F) All of the above

Question 2

During periods of inflation,which method will yield the smallest ending inventory and the largest cost of goods sold?

Accepted Answer

A)  LIFO.
B)  FIFO.
C)  Average cost.
D)  Specific identification.E) None of the above
F) B) and C)

Question 3

During periods of rising prices,and being primarily concerned with tax implications,most of the companies would select:

Accepted Answer

A)  LIFO.
B)  FIFO.
C)  Specific identification.
D)  The inventory valuation does not affect taxation.E) B) and D)
F) B) and C)

Question 4

If the ending inventory is overstated in the current year:

Accepted Answer

A)  Net income will be understated in the current year.
B)  Next year's beginning inventory will also be overstated.
C)  Next year's net income will be overstated.
D)  Next year's beginning inventory will be understated.E) A) and B)
F) A) and C)

Question 5

The lower-of-cost-or-market rule may be applied by comparing the market value of the inventory to the cost of the inventory based on:

Accepted Answer

A)  Individual inventory items.
B)  Major inventory categories.
C)  The entire inventory.
D)  Any of the three: individual inventory items,major inventory categories,or the entire inventory.E) None of the above
F) B) and C)

Question 6

Green Leaf Company had the following information available on December 31:  Management applies the LCM rule on the basis of inventory category and includes wheelbarrows and hoses in the large implement category and shovels and gloves in the small implement category.What is the write-down required?

Accepted Answer

A)  $864.
B)  $556.
C)  $576.
D)  $710.E) None of the above
F) B) and C)

Question 7

Companies with perpetual inventories need not take physical inventory counts because inventory amounts are perpetually available.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following results in the inventory being stated at the most current acquisition costs?

Accepted Answer

A)  Specific identification.
B)  LIFO.
C)  FIFO.
D)  Average cost.E) C) and D)
F) B) and C)

Question 9

The choice of inventory valuation method can help achieve each of the following independent goals,except:

Accepted Answer

A)  Reduce cost of merchandise acquired from suppliers.
B)  Increase reported net income.
C)  Increase the inventory turnover rate.
D)  Reduce the amount of income taxes owed.E) None of the above
F) A) and B)

Question 10

Which of the following inventory approaches is not in accord with the physical flow of merchandise in most businesses?

Accepted Answer

A)  LIFO.
B)  FIFO.
C)  Specific identification.
D)  Average cost.E) All of the above
F) C) and D)

Question 11

If the beginning inventory of the current year and the ending inventory of the past year were overstated by the same amount:

Accepted Answer

A)  Retained earnings at the end of the current year would be correct.
B)  Retained earnings at the end of the current year would be overstated.
C)  Retained earnings at the end of the current year would be understated.
D)  Net income for the current year would be correct.E) None of the above
F) B) and D)

Question 12

Retail method
Omega Signs uses the retail method to estimate ending inventory in its monthly financial statements.The following information is available for the month ended April 30:  Using the retail method:

Accepted Answer

The answer of Retail method
Omega Signs uses the retail method...

Question 13

Inventory flow assumptions
Arrow,Inc.uses a perpetual inventory system.On January 22,2015,the company had 200 units of a particular product on hand,with a total cost of $2,400.The per-unit costs were:  On January 24,2015,Arrow sold 65 units of this product.
Using the three flow assumptions listed below,compute (1)the cost of goods sold,and (2)the cost of the inventory of this product on hand after this sale.Show your computations as per below format.

Accepted Answer

The answer of Inventory flow assumptions
Arrow,Inc.uses a perpetual inventory system.On...

Question 14

During a period of steadily falling prices,which of the following methods of measuring the cost of goods sold is likely to result in the lowest taxable income?

Accepted Answer

A)  LIFO.
B)  FIFO.
C)  Average cost.
D)  Specific identification.E) A) and B)
F) C) and D)

Question 15

Many companies state in their annual reports that inventory is shown at the lower of its cost or market value.This means that the inventory:

Accepted Answer

A)  Is obsolete.
B)  Has been written down to a carrying value below cost.
C)  Is shown at the lesser of cost or sales value.
D)  Is valued at current replacement cost or historical cost,whichever is less.E) C) and D)
F) A) and B)

Question 16

Gross profit rate is equal to:

Accepted Answer

A)  Net sales divided by gross profit.
B)  Gross sales divided by gross profit.
C)  Gross profit divided by net sales.
D)  Gross profit divided by gross sales.E) All of the above
F) B) and C)

Question 17

In a period of rising prices,a company is most likely to use the specific identification method of pricing inventory if:

Accepted Answer

A)  Each item in the inventory is unique.
B)  Management wants the same unit cost assigned to items sold and items remaining in inventory.
C)  Management's primary objective is to minimize income taxes.
D)  Management wants the company's income statement to indicate the highest possible amounts of gross profit and net income.E) B) and D)
F) None of the above

Question 18

As a result of taking an annual physical inventory,it usually is necessary in a perpetual inventory system to make an entry:

Accepted Answer

A)  Reducing assets and increasing the cost of goods sold.
B)  Reducing assets and increasing liabilities.
C)  Reducing the cost of goods sold.
D)  Increasing assets and increasing the cost of goods sold.E) B) and D)
F) B) and C)

Question 19

Inventory turnover
In the spaces provided,indicate the likely effect of each of the following events or strategies upon the inventory turnover rate.Use the following code letters: I for Increase,D for Decrease,and NE for No Effect.
______ (a)Switched from the LIFO flow assumption to FIFO during a period of rising prices.
______ (b)Dramatically increased advertising expense.
______ (c)Increased the sales price of merchandise that is so popular it is difficult to keep in stock.
______ (d)Implemented internal control procedures to reduce a serious inventory shrinkage problem.
______ (e)Switched from a restrictive credit policy to offering liberal terms to credit customers.

Accepted Answer

The answer of Inventory turnover
In the spaces provided,indicate the likely...

Question 20

The Multi-Tech Company uses the gross profit method to estimate inventories.Fill in the missing amounts.

Accepted Answer

(a)$304,750 (b)$235,...

Exam 8: Inventories and the Cost of Goods Sold

During periods of inflation,which method will yield the smallest ending inventory and the largest cost of goods sold?

Correct Answer
verified

The Multi-Tech Company uses the gross profit method to estimate inventories.Fill in the missing amounts.

Correct Answer
verified
(a)$304,750 (b)$235,...
View Answer

The lower-of-cost-or-market rule may be applied by comparing the market value of the inventory to the cost of the inventory based on:

Correct Answer
verified

Which of the following results in the inventory being stated at the most current acquisition costs?

Correct Answer
verified

In a periodic inventory system,the cost of goods sold is determined as follows:

Correct Answer
verified

During a period of steadily falling prices,which of the following methods of measuring the cost of goods sold is likely to result in the lowest taxable income?

Correct Answer
verified

Green Leaf Company had the following information available on December 31: Management applies the LCM rule on the basis of inventory category and includes wheelbarrows and hoses in the large implement category and shovels and gloves in the small implement category.What is the write-down required?

Correct Answer
verified

During periods of rising prices,and being primarily concerned with tax implications,most of the companies would select:

Correct Answer
verified

Correct Answer
verified

Companies with perpetual inventories need not take physical inventory counts because inventory amounts are perpetually available.

Correct Answer
verified

If the beginning inventory of the current year and the ending inventory of the past year were overstated by the same amount:

Correct Answer
verified

Which of the following inventory approaches is not in accord with the physical flow of merchandise in most businesses?

Correct Answer
verified

If the ending inventory is overstated in the current year:

Correct Answer
verified

The choice of inventory valuation method can help achieve each of the following independent goals,except:

Correct Answer
verified

Many companies state in their annual reports that inventory is shown at the lower of its cost or market value.This means that the inventory:

Correct Answer
verified

As a result of taking an annual physical inventory,it usually is necessary in a perpetual inventory system to make an entry:

Correct Answer
verified

Gross profit rate is equal to:

Correct Answer
verified

Correct Answer
verified

In a period of rising prices,a company is most likely to use the specific identification method of pricing inventory if:

Correct Answer
verified

Retail method Omega Signs uses the retail method to estimate ending inventory in its monthly financial statements.The following information is available for the month ended April 30: Using the retail method:

Correct Answer
verified

Exam 8: Inventories and the Cost of Goods Sold

During periods of inflation,which method will yield the smallest ending inventory and the largest cost of goods sold?

Correct AnswerverifiedShow Answer

The Multi-Tech Company uses the gross profit method to estimate inventories.Fill in the missing amounts.

Correct Answerverified(a)$304,750 (b)$235,...View AnswerShow Answer

The lower-of-cost-or-market rule may be applied by comparing the market value of the inventory to the cost of the inventory based on:

Correct AnswerverifiedShow Answer

Which of the following results in the inventory being stated at the most current acquisition costs?

Correct AnswerverifiedShow Answer

In a periodic inventory system,the cost of goods sold is determined as follows:

Correct AnswerverifiedShow Answer

During a period of steadily falling prices,which of the following methods of measuring the cost of goods sold is likely to result in the lowest taxable income?

Correct AnswerverifiedShow Answer

Green Leaf Company had the following information available on December 31: Management applies the LCM rule on the basis of inventory category and includes wheelbarrows and hoses in the large implement category and shovels and gloves in the small implement category.What is the write-down required?

Correct AnswerverifiedShow Answer

During periods of rising prices,and being primarily concerned with tax implications,most of the companies would select:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Companies with perpetual inventories need not take physical inventory counts because inventory amounts are perpetually available.

Correct AnswerverifiedShow Answer

If the beginning inventory of the current year and the ending inventory of the past year were overstated by the same amount:

Correct AnswerverifiedShow Answer

Which of the following inventory approaches is not in accord with the physical flow of merchandise in most businesses?

Correct AnswerverifiedShow Answer

If the ending inventory is overstated in the current year:

Correct AnswerverifiedShow Answer

The choice of inventory valuation method can help achieve each of the following independent goals,except:

Correct AnswerverifiedShow Answer

Many companies state in their annual reports that inventory is shown at the lower of its cost or market value.This means that the inventory:

Correct AnswerverifiedShow Answer

As a result of taking an annual physical inventory,it usually is necessary in a perpetual inventory system to make an entry:

Correct AnswerverifiedShow Answer

Gross profit rate is equal to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a period of rising prices,a company is most likely to use the specific identification method of pricing inventory if:

Correct AnswerverifiedShow Answer

Retail method Omega Signs uses the retail method to estimate ending inventory in its monthly financial statements.The following information is available for the month ended April 30: Using the retail method:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
(a)$304,750 (b)$235,...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified