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Exam 6: Inventories

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Question 41

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An overstatement of ending inventory in a period will result in an understatement of gross margin in that period.

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Question 42

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Which inventory method generally results in the most realistic balance sheet valuation?

A) FIFO
B) Specific identification
C) LIFO
D) Average-cost

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Question 43

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Use this inventory information for the month of March to answer the following question. -Assuming that a periodic inventory system is used,what is ending inventory (rounded) under the average-cost method?

An overstatement of beginning inventory in a period will result in an overstatement of gross margin in the next period.

Which costing method will produce different results under perpetual and periodic systems?

Which of the following inventory methods when used for income tax purposes must also be used for reporting purposes?

When the average-cost method is applied to a perpetual inventory system,the sale of goods will not change the unit cost of the goods that remain in inventory.

Which of the following costs would not be included in the inventory cost?

Which of the following is an inventory costing method?

In periods of rising inventory prices,the LIFO method will result in a higher inventory valuation than will the average-cost method.

The specific identification method is well suited for a discount department store.

A retail store prices its goods to achieve a gross margin of 35 percent.Up to the date of a fire that destroyed the store's inventory,sales were $250,000 and cost of goods available for sale was $175,000.The estimated cost of the inventory destroyed is

To increase their levels of inventory,many merchandisers and manufacturers use supply-chain management in conjunction with a just-in-time operating environment.

Which inventory method generally best follows the matching principle?

Both the retail method and the gross profit method are useful in estimating the inventory cost.

Applying the lower-of-cost-or-market rule follows which of the following accounting conventions?

Use this information to answer the following question. A periodic inventory system is used. -Using the average-cost method,the cost assigned to ending inventory is

How is the matching rule applied when accounting for merchandise inventory?

A major criticism of the FIFO method is that it magnifies the effects of the business cycle on business income.

A cost-to-retail percentage must be calculated when applying the gross profit method.