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Exam 6: Inventories

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Question 111

True/False

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Direct disposal costs do not include special advertising or sales commissions.

A) True
B) False

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Question 112

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"Market" as used in the phrase "lower of cost or market" for valuing inventory, refers to the price at which the inventory is being offered for sale by the company.

A) True
B) False

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Question 113

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Control of inventory should begin as soon as the inventory is received. Which of the following internal control steps is not done to meet this goal?

The following data were taken from Castle, Inc. What is (1) the inventory turnover ratio and (2) the number of days' sales in inventory for Castle Inc.

​All of the following are documents used for inventory control except

Basic inventory data for April 30 are presented below for a business that employs the lower-of-cost-or-market basis of inventory valuation to each category. ​

What is the ending inventory balance at the end of the year using the LIFO method?

Beginning inventory, purchases, and sales for an inventory item are as follows: $\begin{array} { l l l l l } \text { Sep. } 1 \text { Beginning inventory } & 24 \text { units } & @ & \$ 15 \\5 \text { Sale } & 17 \text { units } & & \\17 \text { Purchase } & 10 \text { units } & @ & \$ 20 \\30 \text { Sale } & 8 \text { units } & &\end{array}$ ​ Assuming a perpetual inventory system and the first-in, first-out method, determine (a) the cost of the goods sold for the September 30 sale and (b) the inventory on September 30.

Addison, Inc. uses a perpetual inventory system. Below is information about one inventory item for the month of September. -Use the information in the table to answer this question. If Addison uses LIFO, the September 17 cost of goods sold would be:

Damaged merchandise that can be sold only at prices below cost should be valued at