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Exam 8: Inventory

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Question 61

Multiple Choice

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Which statement is NOT true about the gross profit method of inventory valuation?

A) It may be used to estimate inventories for interim statements.
B) It may be used to estimate inventories for annual statements.
C) It may be used by auditors.
D) It may be used to provide a rough check on the accuracy of the physical inventory count.

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Question 62

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Under ASPE, agricultural produce, forest products, and mineral products inventories may be accounted for at net realizable value if

A) there is a well-established industry practice of doing so.
B) arbitrary cost allocation would be too costly.
C) costs to bring them to market are expected to be minimal.
D) the company's financial results appear more favourable by doing so.

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Question 63

Multiple Choice

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The following inventory transactions took place for NPR Corporation for the month of May: The ending inventory balance for NPR Corporation, assuming the company uses a perpetual inventory system, and a first-in, first-out (FIFO) cost formula is

Use the following information for questions. Shanti Inc.is a calendar-year corporation.Its financial statements for the years 2018 and 2017 contained errors as follows: -Assume that no correcting entries were made at December 31, 2017.Ignoring income taxes, by how much will retained earnings at December 31, 2018 be overstated or understated?

Which of the following inventories may NOT be valued at fair value less costs to sell?

Use the following information for questions. The following information was available from the inventory records of Key Company for January: -Assuming that Key uses the perpetual inventory system, what should the inventory be at January 31, using the moving-average inventory method, rounded to the nearest dollar?

Washington Distribution Co.has determined its December 31, 2017 inventory on a FIFO basis at $240,000.Information pertaining to that inventory follows: Washington records losses that result from applying the lower of cost and net realizable value rule.At December 31, 2017, the loss that Washington should recognize is

The following information was reported by Montana Inc.for 2017: Based on this data, Montana's 2017 inventoriable cost was

An inventory cost formula in which the oldest costs incurred rarely have an effect on the ending inventory valuation is

A manufacturing company typically maintains the following inventory account(s) :

An inventory method which is designed to approximate inventory valuation at the lower of average cost and market is

When using the moving-average cost formula with a perpetual system,

To produce an inventory valuation which approximates the lower of average cost and market using the conventional retail inventory method, the calculation of the ratio of cost to retail should

Conversion costs include

All of the following costs should be charged to expense in the period in which they are incurred EXCEPT for

Tennessee Ltd.'s accounting records reported the following information: A physical inventory taken on December 31, 2017 resulted in an ending inventory of $350,000.Tennessee's gross profit on sales has remained constant at 30% in recent years.Tennessee suspects some inventory may have been taken by a new employee.At December 31, 2017, what is the estimated cost of the missing inventory?

Tehran Ltd.uses FIFO to cost its inventory.The following information is available for Tehran's inventory of product # 101: Beginning inventory: 120 units @ $3.14 per unit March 1: Purchase of 250 units @ $3.50 per unit April 10: Sale of 100 units @ $5.10 per unit Assuming Tehran uses the perpetual inventory system, the second entry to account for the April 10 sale is

Which of the following does NOT correctly describe the concept of net realizable value (NRV) ?

Portland Ltd.estimates the cost of its physical inventory at March 31 for use in interim financial statements.The rate of markup on cost is 25%.The following account balances are available: What is the estimated dollar value of the inventory at March 31?

Use the following information for questions. Giselle Ltd.is a calendar-year corporation.Its financial statements for the years 2018 and 2017 contained errors as follows: -Assume that the proper correcting entries were made at December 31, 2017.By how much will 2018 pre-tax income be overstated or understated?