Question 1

Health Defense sells first aid kits and uses the periodic inventory system to account for its merchandise.The beginning balance of the inventory and its transactions during January were as follows: January 1: Beginning balance of 18 units at $13 each
January 12: Purchased 30 units at $14 each
January 19: Sold 24 units at a selling price of $30 each
January 20: Purchased 24 units at $17 each
January 27: Sold 27 units at a selling price of $30 each
If the ending inventory is reported at $357,what inventory method was used?

Accepted Answer

A)  LIFO.
B)  FIFO.
C)  Weighted average.
D)  Specific identification.
E)  Retail inventory methoD.

Question 2

Regardless of what inventory method or system is used,cost of goods available for sale must be allocated between ___________________ and ___________________.
answers can appear in any order

Accepted Answer

cost of go...

Question 3

Hasham purchases inventory from overseas and incurs the following costs: the merchandise cost is $80,000,credit terms 1/10,n/30,applicable only to the $80,000;FOB shipping point freight charges are $2,500;insurance during transit is $300;and import duties are $1,500.Hasham paid within the discount period.Compute the cost that should be assigned to the inventory.

Accepted Answer

A)  $83,500
B)  $79,200
C)  $81,700
D)  $84,300
E)  $81,000

Question 4

Big Box Store has operated with a 30% average gross profit ratio for a number of years.It had $100,000 in sales during the second quarter of this year.If it began the quarter with $18,000 of inventory at cost and purchased $72,000 of inventory during the quarter,its estimated ending inventory by the gross profit method is:

Accepted Answer

A)  $30,000.
B)  $21,000.
C)  $20,000.
D)  $18,000.
E)  $27,000.

Question 5

The understatement of the beginning inventory balance causes:

Accepted Answer

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

Question 6

A company's store was destroyed by an earthquake on February 10 of the current year.The only information for the current period that could be salvaged included the following:  Historically,the company's gross profit ratio has been 30%.Estimate the value of the destroyed inventory using the gross profit method.

Accepted Answer

The answer of A company's store was destroyed by an...

Question 7

The ______________________ method of assigning costs to inventory and cost of goods sold requires that we divide the cost of goods available for sale by the units of inventory available at the time of each sale.

Accepted Answer

weighted a...

Question 8

Physical counts of inventory:

Accepted Answer

A)  Are not necessary under the perpetual system.
B)  Are necessary to adjust the Inventory account to the actual inventory available.
C)  Must be taken at least once a month.
D)  Requires the use of hand-held portable computers.
E)  Are not necessary under the cost-to benefit constraint.

Question 9

The conservatism constraint prescribes that:

Accepted Answer

A)  When multiple estimates of amounts to be received or paid in the future are equally likely,then the least optimistic amount should be used.
B)  A company use the same accounting methods period after period.
C)  Revenues and expenses are reported in the period in which they are earned or incurred.
D)  All items of a material nature are included in financial statements.
E)  All inventory items are reported at full cost.

Question 10

Days' sales in inventory is calculated as:

Accepted Answer

A)  Ending inventory divided by cost of goods sold.
B)  Cost of goods sold divided by ending inventory.
C)  Ending inventory divided by cost of goods sold times 365.
D)  Cost of goods sold divided by ending inventory times 365.
E)  Ending inventory times cost of goods sold.

Question 11

A company uses the retail inventory method and has the following information available concerning its most recent accounting period:

Accepted Answer

The answer of A company uses the retail inventory method...

Question 12

In applying the lower of cost or market method to inventory valuation,market is defined as:

Accepted Answer

A)  Historical cost.
B)  Current replacement cost.
C)  Current sales price.
D)  FIFO.
E)  LIFO.

Question 13

Goods in transit are included in a purchaser's inventory:

Accepted Answer

A)  At any time during transit.
B)  When the purchaser is responsible for paying freight charges.
C)  When the supplier is responsible for freight charges.
D)  If the goods are shipped FOB destination.
E)  After the half-way point between the buyer and seller.

Question 14

The inventory valuation method that results in the lowest taxable income in a period of inflation is:

Accepted Answer

A)  LIFO method.
B)  FIFO method.
C)  Weighted-average cost method.
D)  Specific identification method.
E)  Gross profit method.

Question 15

Raleigh Co.has the following products in its ending inventory.Compute the lower of cost or market total for inventory applied separately to each product.

Accepted Answer

A)  $2,040.50.
B)  $2,086.50.
C)  $2,018.00.
D)  $2,109.00.
E)  $2,053.50.

Question 16

Giorgio had cost of goods sold of $9,421 million,ending inventory of $2,089 million,and average inventory of $1,965 million.Its inventory turnover equals:

Accepted Answer

A)  0.21.
B)  4.51.
C)  4.79.
D)  76.1 days.
E)  80.9 days.

Question 17

Grays Company has inventory of 10 units at a cost of $10 each on August 1.On August 3,it purchased 20 units at $12 each.12 units are sold on August 6.Using the FIFO perpetual inventory method,what amount will be reported in cost of goods sold for the 12 units that were sold?

Accepted Answer

A)  $120.
B)  $124.
C)  $128.
D)  $130.
E)  $140.

Question 18

Use the following information for Davis Company to compute inventory turnover for 2015.

Accepted Answer

A)  5.86
B)  5.76
C)  5.67
D)  11.77
E)  5.89

Question 19

Days' sales in inventory:

Accepted Answer

A)  Is also called days' stock on hand.
B)  Focuses on average inventory rather than ending inventory.
C)  Is used to measure solvency.
D)  Is calculated by dividing cost of goods sold by ending inventory.
E)  Is a substitute for the acid-test ratio.

Question 20

A company uses the retail inventory method and has the following information available concerning its most recent accounting period:

Accepted Answer

The answer of A company uses the retail inventory method...

Exam 6: Inventories and Cost of Sales

The ______________________ method of assigning costs to inventory and cost of goods sold requires that we divide the cost of goods available for sale by the units of inventory available at the time of each sale.

Correct Answer
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weighted a...
View Answer

Grays Company has inventory of 10 units at a cost of $10 each on August 1.On August 3,it purchased 20 units at $12 each.12 units are sold on August 6.Using the FIFO perpetual inventory method,what amount will be reported in cost of goods sold for the 12 units that were sold?

Correct Answer
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Use the following information for Davis Company to compute inventory turnover for 2015.

Correct Answer
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Correct Answer
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A company uses the retail inventory method and has the following information available concerning its most recent accounting period:

Correct Answer
verified

The understatement of the beginning inventory balance causes:

Correct Answer
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Correct Answer
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The conservatism constraint prescribes that:

Correct Answer
verified

Days' sales in inventory is calculated as:

Correct Answer
verified

A company uses the retail inventory method and has the following information available concerning its most recent accounting period:

Correct Answer
verified

In applying the lower of cost or market method to inventory valuation,market is defined as:

Correct Answer
verified

Physical counts of inventory:

Correct Answer
verified

Correct Answer
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Goods in transit are included in a purchaser's inventory:

Correct Answer
verified

Correct Answer
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Raleigh Co.has the following products in its ending inventory.Compute the lower of cost or market total for inventory applied separately to each product.

Correct Answer
verified

Days' sales in inventory:

Correct Answer
verified

Giorgio had cost of goods sold of $9,421 million,ending inventory of $2,089 million,and average inventory of $1,965 million.Its inventory turnover equals:

Correct Answer
verified

The inventory valuation method that results in the lowest taxable income in a period of inflation is:

Correct Answer
verified

Regardless of what inventory method or system is used,cost of goods available for sale must be allocated between _ and _. answers can appear in any order

Correct Answer
verified
cost of go...
View Answer

Exam 6: Inventories and Cost of Sales

The ______________________ method of assigning costs to inventory and cost of goods sold requires that we divide the cost of goods available for sale by the units of inventory available at the time of each sale.

Correct Answerverifiedweighted a...View AnswerShow Answer

Grays Company has inventory of 10 units at a cost of $10 each on August 1.On August 3,it purchased 20 units at $12 each.12 units are sold on August 6.Using the FIFO perpetual inventory method,what amount will be reported in cost of goods sold for the 12 units that were sold?

Correct AnswerverifiedShow Answer

Use the following information for Davis Company to compute inventory turnover for 2015.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A company uses the retail inventory method and has the following information available concerning its most recent accounting period:

Correct AnswerverifiedShow Answer

The understatement of the beginning inventory balance causes:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The conservatism constraint prescribes that:

Correct AnswerverifiedShow Answer

Days' sales in inventory is calculated as:

Correct AnswerverifiedShow Answer

A company uses the retail inventory method and has the following information available concerning its most recent accounting period:

Correct AnswerverifiedShow Answer

In applying the lower of cost or market method to inventory valuation,market is defined as:

Correct AnswerverifiedShow Answer

Physical counts of inventory:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Goods in transit are included in a purchaser's inventory:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Raleigh Co.has the following products in its ending inventory.Compute the lower of cost or market total for inventory applied separately to each product.

Correct AnswerverifiedShow Answer

Days' sales in inventory:

Correct AnswerverifiedShow Answer

Giorgio had cost of goods sold of $9,421 million,ending inventory of $2,089 million,and average inventory of $1,965 million.Its inventory turnover equals:

Correct AnswerverifiedShow Answer

The inventory valuation method that results in the lowest taxable income in a period of inflation is:

Correct AnswerverifiedShow Answer

Regardless of what inventory method or system is used,cost of goods available for sale must be allocated between ___________________ and ___________________. answers can appear in any order

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weighted a...
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verified

Regardless of what inventory method or system is used,cost of goods available for sale must be allocated between _ and _. answers can appear in any order

Correct Answer
verified
cost of go...
View Answer