Question 1

Maynard Company started the year with no inventory.During the year,it purchased two identical inventory items at different times.The first unit cost $1,100 and the second,$1,200.One of the items was sold during the year.Based on this information,how much product cost would be allocated to cost of goods sold and ending inventory,assuming use of
a.LIFO
b.FIFO
c.Weighted average

Accepted Answer

The answer of Maynard Company started the year with no...

Question 2

During a period of declining prices,a company would report a lower gross margin using the FIFO cost flow method than with LIFO.

Accepted Answer

A) True 
 B)False

Question 3

What ratio (usually an average from prior periods)can be used in estimating the current period's ending inventory?

Accepted Answer

The answer of What ratio (usually an average from prior...

Question 4

Which of the following methods of applying the lower-of-cost-or-market rule will result in the fewest write-downs of inventory?

Accepted Answer

A)  Each individual inventory item.
B)  Average of cost of goods sold for the past three years.
C)  Major classes or categories of inventory.
D)  The entire stock of inventory in aggregate.E) B) and C)
F) A) and C)

Question 5

Warner Company purchased two units of a product for $36 and later purchased one more for $40.If the company uses the weighted average cost flow method,and it sold one unit of the product for $60,its gross margin would be $22.00.

Accepted Answer

A) True 
 B)False

Question 6

A discount merchandiser is likely to have a higher inventory turnover than more upscale stores with higher merchandise prices.

Accepted Answer

A) True 
 B)False

Question 7

During December 2016,Crowe Company sold 125 units @ $225 each.Cash selling and administrative expenses for the year were $11,000.All transactions were cash transactions.The following information is also available:
The company's income tax rate is 30%.
Required:
  
a)Prepare an income statement for Crowe Company for 2016 assuming:
1)FIFO inventory cost flow
2)LIFO inventory cost flow
b)Prepare the operating activities section of the statement of cash flows for 2016 assuming:
1)FIFO inventory cost flow
2)LIFO inventory cost flow

Accepted Answer

a)1)
2)
   b)
1)FIFO
  2)LIFO

Question 8

Melbourne Company uses the perpetual inventory method.Melbourne purchased 500 units of inventory that cost $4.00 each.At a later date the company purchased an additional 600 units of inventory that cost $5.00 each.If Melboune uses a LIFO cost flow method,and sells 800 units of inventory,the amount of ending inventory appearing on the balance sheet will be:

Accepted Answer

A)  $3,800.
B)  $1.350.
C)  $1,500.
D)  $1,200.E) None of the above
F) B) and D)

Question 9

Which inventory costing method will produce an amount for cost of goods sold that is closest to current market value?

Accepted Answer

A)  Weighted average.
B)  Specific identification.
C)  LIFO.
D)  FIFO.E) All of the above
F) A) and D)

Question 10

Use the following information for questions
Chase Co.uses the perpetual inventory method.The inventory records for Chase reflected the following
 
-Assuming Chase uses a LIFO cost flow method,the amount of cost of goods sold for the sales transaction on January 18 is (round the final result to the nearest whole dollar) :

Accepted Answer

A)  $1,150.
B)  $1,050.
C)  $1,070.
D)  $1,130.E) All of the above
F) A) and C)

Question 11

Barker Company paid cash to purchase two identical inventory items.The first purchase cost $18.00 cash and the second cost $20.00 cash.Barker sold one inventory item for $30.00 cash.Based on this information alone,without considering the effect of income tax,:

Accepted Answer

A)  cash flow from operating activities is $11.00 assuming a weighted average cost flow.
B)  cash flow from operating activities is $12.00 assuming a FIFO cost flow.
C)  cash flow from operating activities is $10.00 assuming a LIFO cost flow.
D)  the amount of cash flow from operating activities is not affected by the cost flow method.E) None of the above
F) All of the above D

Question 12

The Rowe Company has six different categories of inventory.Quantity,cost,market value for each inventory category is shown below
Required:
  
a)Determine the value of ending inventory after applying the lower-of-cost-or-market rule to each individual category of inventory.
b)Determine the value of ending inventory after applying the lower-of-cost-or-market rule to inventory in aggregate.
c)Prepare the journal entry,if required,to adjust inventory for part a above.
d)Prepare the journal entry,if required,to adjust inventory for part b above.

Accepted Answer

a)

b)

c)

d)No ent...

Question 13

Use the following information for questions 
The inventory records for Radford Co.reflected the following
 
-Determine the amount of gross margin assuming the FIFO cost flow method.

Accepted Answer

A)  $2,920
B)  $3,420
C)  $3,000
D)  $4,020E) B) and C)
F) A) and C)

Question 14

Use the following information for questions 
Singleton Company's perpetual inventory records included the following information:
 
-If Singleton uses the FIFO cost flow method,its cost of goods sold would be $4,490.

Accepted Answer

A) True 
 B)False

Question 15

Carson Company has an inventory turnover of 12.75,and its inventory amounts to $2,400,000.What is the amount of cost of goods sold?

Accepted Answer

A)  $30,600,000
B)  $188,235
C)  $26,666,667
D)  $51,000E) B) and C)
F) None of the above

Question 16

Use the following information for questions 
Singleton Company's perpetual inventory records included the following information:
 
-If Singleton uses the weighted-average cost flow method,its weighted-average cost per unit would be $8.00.

Accepted Answer

A) True 
 B)False  False

Question 17

Which of the following statements is not correct in regard to the importance of inventory turnover to a company's profitability?

Accepted Answer

A)  Most companies prefer to have a low inventory turnover than a high inventory turnover.
B)  It is sometimes more desirable to sell a large amount of merchandise with a small amount of gross margin than a small amount of merchandise with a large amount of gross margin.
C)  A company's profitability is affected by how rapidly inventory sells.
D)  A company's profitability is affected by the spread between cost and selling price.E) A) and B)
F) All of the above

Question 18

At the end of the 2016 accounting period DeYoung Company determined that the market value of its inventory was $79,800.The historical cost of this inventory was $81,400.DeFazio uses the perpetual inventory method.The entry necessary to reduce the inventory to the lower of cost or market will

Accepted Answer

A)  decrease assets and decrease gross margin.
B)  decrease assets and decrease net income.
C)  increase assets and increase net income.
D)  decrease assets,gross margin,and net income.E) A) and D)
F) A) and C)

Question 19

When prices are falling:

Accepted Answer

A)  LIFO will result in lower income and a lower inventory valuation than will FIFO.
B)  LIFO will result in lower income and a higher inventory valuation than will FIFO.
C)  LIFO will result in higher income and a higher inventory valuation than will FIFO.
D)  LIFO will result in higher income and a lower inventory valuation than will FIFO.E) A) and B)
F) A) and C)

Question 20

If the replacement cost of inventory is greater than its historical cost,the increase in value does not affect the company's financial statements.

Accepted Answer

A) True 
 B)False

Exam 5: Accounting for Inventories

Correct Answer
verified

During a period of declining prices,a company would report a lower gross margin using the FIFO cost flow method than with LIFO.

Correct Answer
verified

What ratio (usually an average from prior periods)can be used in estimating the current period's ending inventory?

Correct Answer
verified

Which of the following methods of applying the lower-of-cost-or-market rule will result in the fewest write-downs of inventory?

Correct Answer
verified

Warner Company purchased two units of a product for $36 and later purchased one more for $40.If the company uses the weighted average cost flow method,and it sold one unit of the product for $60,its gross margin would be $22.00.

Correct Answer
verified

A discount merchandiser is likely to have a higher inventory turnover than more upscale stores with higher merchandise prices.

Correct Answer
verified

Correct Answer
verified
11ea7f4c_c6ac_8b5c_933e_6b28ac93ff11_TB3574_00 a)1) 2) 11ea7f4c_c6ac_8b5d_933e_77537f615730_TB3574_00 11ea7f4c_c6ac_8b5e_933e_095eeb17d2f6_TB3574_00 b) 1)FIFO 11ea7f4c_c6ac_8b5f_933e_e1cb7d5bf1de_TB3574_00 2)LIFO 11ea7f4c_c6ac_8b60_933e_e141c9a0aa98_TB3574_00

Correct Answer
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Which inventory costing method will produce an amount for cost of goods sold that is closest to current market value?

Correct Answer
verified

Correct Answer
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Barker Company paid cash to purchase two identical inventory items.The first purchase cost $18.00 cash and the second cost $20.00 cash.Barker sold one inventory item for $30.00 cash.Based on this information alone,without considering the effect of income tax,:

Correct Answer
verified
D

Correct Answer
verified
a) b) c) d)No ent...
View Answer

Use the following information for questions The inventory records for Radford Co.reflected the following -Determine the amount of gross margin assuming the FIFO cost flow method.

Correct Answer
verified

Use the following information for questions Singleton Company's perpetual inventory records included the following information: -If Singleton uses the FIFO cost flow method,its cost of goods sold would be $4,490.

Correct Answer
verified

Carson Company has an inventory turnover of 12.75,and its inventory amounts to $2,400,000.What is the amount of cost of goods sold?

Correct Answer
verified

Use the following information for questions Singleton Company's perpetual inventory records included the following information: -If Singleton uses the weighted-average cost flow method,its weighted-average cost per unit would be $8.00.

Correct Answer
verified
False

Which of the following statements is not correct in regard to the importance of inventory turnover to a company's profitability?

Correct Answer
verified

At the end of the 2016 accounting period DeYoung Company determined that the market value of its inventory was $79,800.The historical cost of this inventory was $81,400.DeFazio uses the perpetual inventory method.The entry necessary to reduce the inventory to the lower of cost or market will

Correct Answer
verified

When prices are falling:

Correct Answer
verified

If the replacement cost of inventory is greater than its historical cost,the increase in value does not affect the company's financial statements.

Correct Answer
verified

Exam 5: Accounting for Inventories

Correct AnswerverifiedShow Answer

During a period of declining prices,a company would report a lower gross margin using the FIFO cost flow method than with LIFO.

Correct AnswerverifiedShow Answer

What ratio (usually an average from prior periods)can be used in estimating the current period's ending inventory?

Correct AnswerverifiedShow Answer

Which of the following methods of applying the lower-of-cost-or-market rule will result in the fewest write-downs of inventory?

Correct AnswerverifiedShow Answer

Warner Company purchased two units of a product for $36 and later purchased one more for $40.If the company uses the weighted average cost flow method,and it sold one unit of the product for $60,its gross margin would be $22.00.

Correct AnswerverifiedShow Answer

A discount merchandiser is likely to have a higher inventory turnover than more upscale stores with higher merchandise prices.

Correct AnswerverifiedShow Answer

Correct Answerverified11ea7f4c_c6ac_8b5c_933e_6b28ac93ff11_TB3574_00 a)1) 2) 11ea7f4c_c6ac_8b5d_933e_77537f615730_TB3574_00 11ea7f4c_c6ac_8b5e_933e_095eeb17d2f6_TB3574_00 b) 1)FIFO 11ea7f4c_c6ac_8b5f_933e_e1cb7d5bf1de_TB3574_00 2)LIFO 11ea7f4c_c6ac_8b60_933e_e141c9a0aa98_TB3574_00

Correct AnswerverifiedShow Answer

Which inventory costing method will produce an amount for cost of goods sold that is closest to current market value?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Barker Company paid cash to purchase two identical inventory items.The first purchase cost $18.00 cash and the second cost $20.00 cash.Barker sold one inventory item for $30.00 cash.Based on this information alone,without considering the effect of income tax,:

Correct AnswerverifiedD

Correct Answerverifieda) b) c) d)No ent...View AnswerShow Answer

Use the following information for questions The inventory records for Radford Co.reflected the following -Determine the amount of gross margin assuming the FIFO cost flow method.

Correct AnswerverifiedShow Answer

Use the following information for questions Singleton Company's perpetual inventory records included the following information: -If Singleton uses the FIFO cost flow method,its cost of goods sold would be $4,490.

Correct AnswerverifiedShow Answer

Carson Company has an inventory turnover of 12.75,and its inventory amounts to $2,400,000.What is the amount of cost of goods sold?

Correct AnswerverifiedShow Answer

Use the following information for questions Singleton Company's perpetual inventory records included the following information: -If Singleton uses the weighted-average cost flow method,its weighted-average cost per unit would be $8.00.

Correct AnswerverifiedFalse

Which of the following statements is not correct in regard to the importance of inventory turnover to a company's profitability?

Correct AnswerverifiedShow Answer

At the end of the 2016 accounting period DeYoung Company determined that the market value of its inventory was $79,800.The historical cost of this inventory was $81,400.DeFazio uses the perpetual inventory method.The entry necessary to reduce the inventory to the lower of cost or market will

Correct AnswerverifiedShow Answer

When prices are falling:

Correct AnswerverifiedShow Answer

If the replacement cost of inventory is greater than its historical cost,the increase in value does not affect the company's financial statements.

Correct AnswerverifiedShow Answer

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11ea7f4c_c6ac_8b5c_933e_6b28ac93ff11_TB3574_00 a)1) 2) 11ea7f4c_c6ac_8b5d_933e_77537f615730_TB3574_00 11ea7f4c_c6ac_8b5e_933e_095eeb17d2f6_TB3574_00 b) 1)FIFO 11ea7f4c_c6ac_8b5f_933e_e1cb7d5bf1de_TB3574_00 2)LIFO 11ea7f4c_c6ac_8b60_933e_e141c9a0aa98_TB3574_00

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D

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a) b) c) d)No ent...
View Answer

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False

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