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Exam 8: Inventories and the Cost of Goods Sold

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Question 41

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An advocate of just-in-time inventory system would advocate:

A) Maintaining a large inventory selection for customers.
B) Leaving extra time in order to make inventory deadlines.
C) Maintaining a small inventory supply.
D) LIFO over FIFO.

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Question 42

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Just-in-time inventory systems cannot be used in conjunction with the LIFO cost flow assumption.

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Question 43

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Which of the following statements is not a characteristic of the LIFO method of pricing inventory?

In a periodic inventory system,overstating the amount of ending inventory will cause an understatement of gross profit in the following year.

Inventory flow assumptions Arrow,Inc.uses a perpetual inventory system.On January 22,2018,the company had 200 units of a particular product on hand,with a total cost of $2,400.The per-unit costs were: On January 24,2018,Arrow sold 65 units of this product. Using the three flow assumptions listed below,compute (1)the cost of goods sold,and (2)the cost of the inventory of this product on hand after this sale.Show your computations as per below format.

If the inventory at the end of the current year is understated and the error is never caught,the effect is to:

Assuming a 365-day year,the average number of days required for Carlin Equipment to sell its inventory is: (Round your final answer to one decimal place)

[The following information applies to the questions displayed below.] During the current year,Carlin Equipment Stores had net sales of $500 million,a cost of goods sold of $400 million,average accounts receivable of $60 million,and average inventory of $50 million. -Carlin Equipment 's inventory turnover rate is:

[The following information applies to the questions displayed below.] Green Leaf Company had the following information available on December 31: -Management applies the LCM rule on the basis of the total inventory.What is the write-down required?

[The following information applies to the questions displayed below.] Beech Soda,Inc.uses a perpetual inventory system.The company's beginning inventory of a particular product and its purchases during the month of January were as follows: On January 14,Beech Soda,Inc.sold 25 units of this product.The other 28 units remained in inventory at January 31. -Assuming that Beech Soda uses the FIFO cost flow assumption,the 28 units of this product in inventory at January 31 have a total cost of:

The logic behind the lower-of-cost-or-market rule is:

If the ending inventory is overstated in the current year:

The Valley Garden Company had the following transactions: (A)Prepare journal entries for Valley Garden assuming the company uses a perpetual inventory. (B)Prepare journal entries for Valley Garden assuming the company uses a periodic inventory.

During periods of inflation,which method will yield the smallest ending inventory and the largest cost of goods sold?

Because of the consistency principle,inventory should never be written down below cost.

The primary advantage of a just-in-time inventory system is:

The gross profit method of valuing inventory:

Gross profit rate is equal to:

In order to obtain the maximum tax benefit,companies that use a perpetual inventory system can restate their year-end inventory at costs indicated by periodic LIFO costing procedures.

As a result of taking an annual physical inventory,it usually is necessary in a perpetual inventory system to make an entry: