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Exam 7: Inventories

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Question 21

True/False

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If a fire destroys the merchandise inventory,the gross profit method can be used to estimate the cost of merchandise destroyed.

A) True
B) False

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Question 22

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During a period of falling prices,which of the following inventory methods generally results in the lowest balance sheet amount for inventory?

A) average cost method
B) LIFO method
C) FIFO method
D) cannot tell without more information

E) A) and C)
F) B) and C)

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Question 23

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​ Match each description to the appropriate cost flow assumption (a-c) . -Rarely used with a perpetual inventory system

Beginning inventory,purchases,and sales data for tennis rackets are as follows:​ Complete the inventory cost card assuming the business maintains a perpetual inventory system and calculates the cost of merchandise sold and ending inventory using LIFO.

The units of Manganese Plus available for sale during the year were as follows:​ There are 15 units of the product in the physical inventory at November 30.The periodic inventory system is used.Determine the difference in gross profit between the LIFO and FIFO inventory cost systems.

During periods of increasing costs,the use of the FIFO method of costing inventory will yield an inventory amount for the balance sheet that is higher than LIFO would produce.

If a manufacturer ships merchandise to a retailer on consignment,the unsold merchandise should be included in the inventory of the

Three identical units of merchandise were purchased during March,as shown:​​ Assume that one unit is sold on March 23 for $1,125.Determine the gross profit for March and ending inventory on March 31 using (a)FIFO, (b)LIFO,and (c)average cost methods.

​ Match each description to the appropriate cost flow assumption (a-c) . -Produces the same cost of merchandise sold under both the periodic and the perpetual inventory systems

Three identical units of merchandise were purchased during July,as follows:​ Assume one unit sells on July 28 for $45.Determine the gross profit,cost of merchandise sold,and ending inventory on July 31 using the (a)first-in,first-out, (b)last-in,first-out,and (c)average cost flow methods.

Beginning inventory,purchases,and sales for an inventory item are as follows:​​ The firm uses the perpetual inventory system and there are 240 units of the item on hand at the end of the year.What is the total cost of ending inventory according to LIFO?

Which of the following companies would be more likely to use the specific identification inventory costing method?

Which of the following is used to analyze the efficiency and effectiveness of inventory management?

A perpetual inventory system is an effective means of control over inventory.

Match each situation to its impact (a-c) on the current year's net income. -A consignor included merchandise in the hands of the consignee in ending inventory.

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

The inventory data for an item for November are:Using a perpetual system,what is the cost of merchandise sold for November if the company uses LIFO?

Assume that three identical units of merchandise were purchased during October,as follows:​​ Assume one unit is sold on October 31 for $28.Determine cost of merchandise sold,gross profit,and ending inventory under the LIFO method.

Which of the following measures the length of time it takes to acquire,sell,and replace inventory?

Using a LIFO perpetual cost flow,calculate the value of the ending inventory and the cost of merchandise sold for the month of November of Beamer Company using the data below.​Nov. 1 Purchase 600 units $80 each4 Sale 200 units11 Purchase 350 units $82 each12 Sale 275 units22 Purchase 175 units $84 each23 Sale 155 units​Calculate the following: (a)Inventory valuation at the end of November (b)Cost of merchandise sold for November