Question 1

In a period of rising prices,the inventory costing method that will cause the company to have the lowest income tax expense is:

Accepted Answer

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

Question 2

King Costume uses a periodic inventory system.The company started the month with 8 masks in its beginning inventory that cost $10 each.During the month,King Costume purchased 40 additional masks for $12 each.At the end of the month,King counted its inventory and found that 5 masks remained unsold.Using the LIFO method,its cost of goods sold for the month is:

Accepted Answer

A)  $510.
B)  $516.
C)  $50.
D)  $500.E) C) and D)
F) B) and C)

Question 3

Amiable Inc.uses a perpetual inventory system.The following transactions took place during the month of August:   August 225 units were purchased at $12 per unit  August 510 units were purchased at $13 per unit  August 1512 units were sold at $25 per unit  August 1815 units were purchased at $14 per unit \begin{array}{|l|l|}\hline 	ext { August } 2 & 25 	ext { units were purchased at } \$ 12 	ext { per unit } \\hline 	ext { August } 5 & 10 	ext { units were purchased at } \$ 13 	ext { per unit } \\hline 	ext { August } 15 & 12 	ext { units were sold at } \$ 25 	ext { per unit } \\hline 	ext { August } 18 & 15 	ext { units were purchased at } \$ 14 	ext { per unit } \\hline\end{array} August 2 August 5 August 15 August 18​25 units were purchased at $12 per unit 10 units were purchased at $13 per unit 12 units were sold at $25 per unit 15 units were purchased at $14 per unit ​​  If Amiable uses the LIFO method,what is the ending inventory at August 31?

Accepted Answer

A)  $496.00
B)  $486.00
C)  $492.57
D)  $300.00
E)  $510.00 F) None of the above
G) A) and D)

Question 4

If inventory is updated perpetually,which of the equations is correct?

Accepted Answer

A)  Cost of goods sold = Beginning inventory − Purchases − Ending inventory
B)  Cost of goods sold = Beginning inventory + Purchases + Ending inventory
C)  Ending inventory = Beginning inventory + Purchases − Cost of goods sold
D)  Ending inventory = Beginning inventory + Purchases + Cost of goods soldE) All of the above
F) B) and D)

Question 5

An understatement of the ending inventory balance will cause:

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

Question 6

Which of the following statements is correct?

Accepted Answer

A)  Specific identification is the most practical,but least accurate,measure of cost and net income.
B)  When unit costs are increasing,the weighted average cost method yields a cost of goods sold between that of FIFO and LIFO.
C)  FIFO will lead to the highest net income if unit costs are falling.
D)  LIFO will always yield a smaller net income than FIFO.E) B) and D)
F) B) and C)

Question 7

LIFO and weighted average results will be the same using either a perpetual or periodic system.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following kinds of inventory would be the best suited for the specific identification method?

Accepted Answer

A)  Ice cream
B)  Business jets
C)  Biking helmets
D)  Potato chipsE) None of the above
F) A) and B)

Question 9

Goods placed in inventory are initially recorded at:

Accepted Answer

A)  market value.
B)  the amount paid to acquire the asset.
C)  the amount paid to prepare the asset for sale to customers.
D)  the amount paid to acquire the asset and prepare it for sale.E) B) and D)
F) A) and C)

Question 10

Which of the following is not a primary goal of inventory management?

Accepted Answer

A)  Obtaining the lowest cost of inventory.
B)  Ensuring sufficient quantities of inventory are available to meet customers' needs.
C)  Ensuring inventory quality meets customers' expectations and company standards.
D)  Minimizing the costs of acquiring and carrying inventory.E) A) and D)
F) B) and C)

Question 11

Beryl Co.uses a periodic inventory system and has the following information in regard to its inventory:  There are 1,000 units in ending inventory.What is the amount of the ending inventory using the LIFO method?

Accepted Answer

A)  $6,000
B)  $14,400
C)  $15,600
D)  $17,800E) A) and B)
F) A) and C)

Question 12

Which of the following is merchandise inventory?

Accepted Answer

A)  Goods held for sale in the normal course of business
B)  Office supplies that a company plans to use in the next few months
C)  Equipment used to manufacture products which will be sold later
D)  Raw materials and work in processE) C) and D)
F) None of the above

Question 13

Schoop,Inc.has 100 units in inventory,purchased at $8 per unit.These units have a current market value of $7.The entry to write-down the inventory will include a:

Accepted Answer

A)  credit to Cost of Goods Sold for $100.
B)  debit to Cost of Goods Sold for $700.
C)  credit to Inventory for $100.
D)  debit to Inventory for $700.E) B) and C)
F) B) and D)

Question 14

Coachlight Inc.has a periodic inventory system.The company purchased 200 units of inventory at $9 per unit and 300 units at $10 per unit.What is the weighted average unit cost for these purchases of inventory?

Accepted Answer

A)  $9.00.
B)  $9.50.
C)  $9.60.
D)  $10.00.E) All of the above
F) None of the above

Question 15

Which company will have the lower number of days to sell?

Accepted Answer

A)  Company A whose cost of goods sold equals $8,000 and whose average inventory is $500.
B)  Company B whose cost of goods sold equals $4,000 and whose average inventory is $200.
C)  Company C whose cost of goods sold equals $2,000 and whose average inventory is $200.
D)  There is not enough information to answer this question.E) All of the above
F) C) and D)

Question 16

Inventory is reported on the balance sheet as a current asset.

Accepted Answer

A) True 
 B)False

Question 17

When a company sells goods,it removes their cost from the Inventory account and reports the cost on the income statement as Cost of Goods Sold.

Accepted Answer

A) True 
 B)False

Question 18

Match the term to the appropriate definition.There are more definitions than terms.
-Ending Inventory Equation

Accepted Answer

A)  Inventory costing method that identifies the cost of the specific item that was sold.
B)  Inventory costing method that assumes that the costs of the first goods purchased are the costs of the first goods sold.
C)  The difference between net sales and cost of goods sold.
D)  The inventory that starts the manufacturing process.
E)  Inventory items being transported.F) Consists of products acquired in a finished condition,ready for sale without further processing.G) A valuation rule that requires Inventory to be written down when its market value falls below its cost.H) The expense that follows directly after Net Sales on a multiple step income statement.I) Beginning Inventory + Purchases - Cost of Goods SoldJ) Goods a company is holding on behalf of the goods' owner.K) Inventory costing method that assumes that the costs of the last goods purchased are the costs of the first goods sold.L) Requires that if LIFO is used on the income tax return,it also must be used in financial statement reporting.M) Beginning Inventory + Purchases - Ending InventoryN) Goods that are in the process of being manufactured.O) Inventory costing method that uses the weighted average unit cost of the goods available for sale for both cost of goods sold and ending inventory.P) Goods that are held for sale in the normal course of business or are used to produce other goods for sale.Q) How many times (on average) that inventory has been bought or sold.R) Inventory that was in process and now is completed and ready for sale.S) A measure of the average number of days from the time inventory is bought to the time it is sold.T) L) and R)
U) A) and E)

Exam 7: Inventory and Cost of Goods Sold

Which of the following kinds of inventory would be the best suited for the specific identification method?

Correct Answer
verified

Beryl Co.uses a periodic inventory system and has the following information in regard to its inventory: There are 1,000 units in ending inventory.What is the amount of the ending inventory using the LIFO method?

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Match the term to the appropriate definition.There are more definitions than terms. -Ending Inventory Equation

Correct Answer
verified

LIFO and weighted average results will be the same using either a perpetual or periodic system.

Correct Answer
verified

Schoop,Inc.has 100 units in inventory,purchased at $8 per unit.These units have a current market value of $7.The entry to write-down the inventory will include a:

Correct Answer
verified

Inventory is reported on the balance sheet as a current asset.

Correct Answer
verified

Which company will have the lower number of days to sell?

Correct Answer
verified

Which of the following is merchandise inventory?

Correct Answer
verified

An understatement of the ending inventory balance will cause:

Correct Answer
verified

When a company sells goods,it removes their cost from the Inventory account and reports the cost on the income statement as Cost of Goods Sold.

Correct Answer
verified

Goods placed in inventory are initially recorded at:

Correct Answer
verified

In a period of rising prices,the inventory costing method that will cause the company to have the lowest income tax expense is:

Correct Answer
verified

Correct Answer
verified

Which of the following is not a primary goal of inventory management?

Correct Answer
verified

If inventory is updated perpetually,which of the equations is correct?

Correct Answer
verified

Correct Answer
verified

Coachlight Inc.has a periodic inventory system.The company purchased 200 units of inventory at $9 per unit and 300 units at $10 per unit.What is the weighted average unit cost for these purchases of inventory?

Correct Answer
verified

Exam 7: Inventory and Cost of Goods Sold

Which of the following kinds of inventory would be the best suited for the specific identification method?

Correct AnswerverifiedShow Answer

Beryl Co.uses a periodic inventory system and has the following information in regard to its inventory: There are 1,000 units in ending inventory.What is the amount of the ending inventory using the LIFO method?

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Match the term to the appropriate definition.There are more definitions than terms. -Ending Inventory Equation

Correct AnswerverifiedShow Answer

LIFO and weighted average results will be the same using either a perpetual or periodic system.

Correct AnswerverifiedShow Answer

Schoop,Inc.has 100 units in inventory,purchased at $8 per unit.These units have a current market value of $7.The entry to write-down the inventory will include a:

Correct AnswerverifiedShow Answer

Inventory is reported on the balance sheet as a current asset.

Correct AnswerverifiedShow Answer

Which company will have the lower number of days to sell?

Correct AnswerverifiedShow Answer

Which of the following is merchandise inventory?

Correct AnswerverifiedShow Answer

An understatement of the ending inventory balance will cause:

Correct AnswerverifiedShow Answer

When a company sells goods,it removes their cost from the Inventory account and reports the cost on the income statement as Cost of Goods Sold.

Correct AnswerverifiedShow Answer

Goods placed in inventory are initially recorded at:

Correct AnswerverifiedShow Answer

In a period of rising prices,the inventory costing method that will cause the company to have the lowest income tax expense is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not a primary goal of inventory management?

Correct AnswerverifiedShow Answer

If inventory is updated perpetually,which of the equations is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Coachlight Inc.has a periodic inventory system.The company purchased 200 units of inventory at $9 per unit and 300 units at $10 per unit.What is the weighted average unit cost for these purchases of inventory?

Correct AnswerverifiedShow Answer

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