Question 1

The inventory costing method that reports the most current prices in ending inventory is

Accepted Answer

A)   FIFO
B)   specific identification
C)   LIFO
D)   average cost

Question 2

During periods of decreasing costs,the use of the LIFO method of costing inventory will result in a lower amount of net income than would result from the use of the FIFO method.

Accepted Answer

A) True 
 B)False

Question 3

Determine the total value of the merchandise using net realizable value.
​

Accepted Answer

The answer of Determine the total value of the merchandise...

Question 4

A purchase order establishes an initial record of the receipt of the inventory.

Accepted Answer

A) True 
 B)False

Question 5

Inventory turnover measures the length of time it takes to acquire,sell,and replace the inventory.

Accepted Answer

A) True 
 B)False

Question 6

When using a perpetual inventory system,the journal entry to record the cost of goods sold is:

Accepted Answer

A)   debit Cost of Goods Sold; credit Sales
B)   debit Cost of Goods Sold; credit Inventory
C)   debit Inventory; credit Cost of Goods Sold
D)   No journal entry is made to record the cost of goods sold.

Question 7

Based upon the following data,estimate the cost of ending inventory using the gross profit method.

Accepted Answer

The answer of Based upon the following data,estimate the cost...

Question 8

It's not unusual for large companies to use different inventory costing methods for different segments of its inventory.

Accepted Answer

A) True 
 B)False

Question 9

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?

Accepted Answer

($755 × 30 units)+ (...

Question 10

Inventory errors,if not discovered,will self-correct within two years.

Accepted Answer

A) True 
 B)False

Question 11

Based on the following data,calculate the estimated cost of the inventory on March 31 using the retail method.

Accepted Answer

The answer of Based on the following data,calculate the estimated...

Question 12

What is the amount of the inventory at the end of the year rounded to nearest dollar using the average cost method?

Accepted Answer

A)   $1,685
B)   $1,575
C)   $1,805
D)   $3,705

Question 13

During periods of rapidly rising costs,the use of the LIFO method results in illusory or inventory profits.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique,high-cost items?

Accepted Answer

A)   FIFO
B)   LIFO
C)   average
D)   specific identification

Question 15

​The primary objectives of control over inventory are

Accepted Answer

A)   ​safeguarding the inventory from damage and maintaining constant observation of the inventory
B)   ​reporting inventory in the financial statements
C)   ​maintaining constant observation of the inventory and reporting inventory in the financial statements
D)   ​safeguarding inventory from damage and reporting inventory in the financial statements

Question 16

The use of the lower-of-cost-or-market method of inventory valuation increases net income for the period in which the inventory replacement price declined.

Accepted Answer

A) True 
 B)False

Question 17

Ending inventory is made up of the oldest purchases when a company uses

Accepted Answer

A)   first-in,first-out
B)   last-in,first-out
C)   average cost
D)   retail method

Question 18

When merchandise sold is assumed to be in the order in which the purchases were made,the company is using

Accepted Answer

A)   first-in,last-out
B)   last-in,first-out
C)   first-in,first-out
D)   average cost

Question 19

During times of rising prices,which of the following is not an accurate statement?

Accepted Answer

A)   Average costing will yield results that are between those of FIFO and LIFO.
B)   LIFO will result in a higher cost of goods sold than FIFO.
C)   FIFO will result in a higher net income than LIFO.
D)   LIFO will result in higher income taxes than FIFO.

Question 20

A business using the retail method of inventory costing determines that inventory at retail is $2,300,000.If the ratio of cost to retail price is 55%,what is the amount of inventory to be reported on the financial statements?

Accepted Answer

$2,300,000...

Exam 6: Inventories

The use of the lower-of-cost-or-market method of inventory valuation increases net income for the period in which the inventory replacement price declined.

Correct AnswerverifiedShow Answer

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?

Correct Answerverified($755 × 30 units)+ (...View AnswerShow Answer

During periods of rapidly rising costs,the use of the LIFO method results in illusory or inventory profits.

Correct AnswerverifiedShow Answer

During times of rising prices,which of the following is not an accurate statement?

Correct AnswerverifiedShow Answer

​The primary objectives of control over inventory are

Correct AnswerverifiedShow Answer

Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique,high-cost items?

Correct AnswerverifiedShow Answer

Inventory errors,if not discovered,will self-correct within two years.

Correct AnswerverifiedShow Answer

What is the amount of the inventory at the end of the year rounded to nearest dollar using the average cost method?

Correct AnswerverifiedShow Answer

It's not unusual for large companies to use different inventory costing methods for different segments of its inventory.

Correct AnswerverifiedShow Answer

Based upon the following data,estimate the cost of ending inventory using the gross profit method.

Correct AnswerverifiedShow Answer

When merchandise sold is assumed to be in the order in which the purchases were made,the company is using

Correct AnswerverifiedShow Answer

Ending inventory is made up of the oldest purchases when a company uses

Correct AnswerverifiedShow Answer

During periods of decreasing costs,the use of the LIFO method of costing inventory will result in a lower amount of net income than would result from the use of the FIFO method.

Correct AnswerverifiedShow Answer

Determine the total value of the merchandise using net realizable value. ​

Correct AnswerverifiedShow Answer

Based on the following data,calculate the estimated cost of the inventory on March 31 using the retail method.

Correct AnswerverifiedShow Answer

A business using the retail method of inventory costing determines that inventory at retail is $2,300,000.If the ratio of cost to retail price is 55%,what is the amount of inventory to be reported on the financial statements?

Correct Answerverified$2,300,000...View AnswerShow Answer

Inventory turnover measures the length of time it takes to acquire,sell,and replace the inventory.

Correct AnswerverifiedShow Answer

A purchase order establishes an initial record of the receipt of the inventory.

Correct AnswerverifiedShow Answer

When using a perpetual inventory system,the journal entry to record the cost of goods sold is:

Correct AnswerverifiedShow Answer

The inventory costing method that reports the most current prices in ending inventory is

Correct AnswerverifiedShow Answer

Correct Answer
verified

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?

Correct Answer
verified
($755 × 30 units)+ (...
View Answer

Correct Answer
verified

Correct Answer
verified

The primary objectives of control over inventory are

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Determine the total value of the merchandise using net realizable value.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$2,300,000...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified