Question 1

Physical counts of inventory:

Accepted Answer

A)   Are not necessary under the perpetual system.
B)   Are necessary to adjust the Inventory account to the actual inventory available.
C)   Must be taken at least once a month.
D)   Requires the use of hand-held portable computers.
E)   Are not necessary under the cost-to benefit constraint.F) A) and C)
G) C) and D)

Question 2

A company reported the current month purchase and sales data for its only product and uses the perpetual inventory system.Determine the cost assigned to ending inventory and cost of goods sold using FIFO.
 $\begin{array}{r|l|c|c|}
\hline \text { Date } & \text { Activities } & \text { Units Acquired at Cost } & \text { Units Sold at Retail } \
\hline \text { April } 1& \text { Beginning Inventory } & 175 \text { units@\$15.00 } & \
\hline 4& \text { Purchase } & \text { 150units@\$16.00 } & \
\hline 7& \text { Sales } & & 160 \text { units@ } \$ 30.00 \
\hline 10&\text { Purchase } & \text { E00units@\$17.00 } & \
\hline 16& \text { Sales } & & 250 \text { units@ } \$ 30.00 \
\hline 25& \text { Purchase } & 160 \text { units@\$18.00 } & \
\hline 28&\text { Sales } & & \text { 150units@\$32.00 } \
\hline
\end{array}$

Accepted Answer

The answer of A company reported the current month purchase...

Question 3

On January 31,a company needed to estimate its ending inventory to prepare its monthly financial statements.The following information is currently available:
Inventory as of January 1: $120,500
Net sales for January: $400,000
Net purchases for January: $270,500
This company typically achieves a gross profit ratio of 15%.Ending Inventory under the gross profit method would be:

Accepted Answer

A)   $102,425.
B)   $10,425.
C)   $9,000.
D)   $51,000.
E)   $51,425.F) B) and C)
G) All of the above

Question 4

A company's current inventory consists of 5,000 units purchased at $6 per unit.Replacement cost has now fallen to $5 per unit.What is the entry the company must record to adjust inventory to market?

Accepted Answer

A)   Debit Merchandise Inventory $25,000; credit Cost of Goods Sold $25,000.
B)   Debit Cost of Goods Sold $30,000; credit Merchandise Inventory $30,000.
C)   Debit Cost of Goods Sold $5,000; credit Merchandise Inventory $5,000.
D)   Debit Loss on Inventory $5,000; credit Cost of Goods Sold $5,000.
E)   Debit Merchandise Inventory $30,000; credit Cost of Goods Sold $25,000.F) C) and D)
G) All of the above

Question 5

A company's normal selling price for its product is $20 per unit.However,due to market competition,the selling price has fallen to $15 per unit.This company's current inventory consists of 200 units purchased at $16 per unit.Replacement cost has fallen to $13 per unit.Calculate the value of this company's inventory at the lower of cost or market.

Accepted Answer

A)   $2,550.
B)   $2,600.
C)   $2,700.
D)   $3,000.
E)   $3,200.F) B) and D)
G) A) and B)

Question 6

It can be expected that companies selling perishable goods have a higher inventory turnover than companies selling nonperishable goods.

Accepted Answer

A) True 
 B)False

Question 7

During a period of steadily rising costs,the inventory valuation method that yields the highest reported net income is:

Accepted Answer

A)   Specific identification method.
B)   Average cost method.
C)   Weighted-average method.
D)   FIFO method.
E)   LIFO method.F) A) and E)
G) None of the above

Question 8

Match each of the following terms with the appropriate definition.
-An inventory pricing method that assumes the unit prices of the beginning inventory and of each purchase are weighted by the number of units of each in inventory; the calculation occurs at the time of each sale.

Accepted Answer

A)  Conservatism constraint
B)  Inventory turnover
C)  Net realizable value
D)  Retail inventory method
E)  Days' sales in inventoryF) Weighted average inventory methodG) Interim statementsH) LIFO methodI) FIFO methodJ) Specific identification methodK) A) and B)
L) E) and I)

Question 9

A company had the following purchases during its first year of operations:
  Purchases  January: 10 units at $120 February: 20 units at $130 May: 15 units at $140 September: 12 units at $150 November: 10 units at $160\begin{array} { | l | l | } \hline & 	ext { Purchases } \\hline 	ext { January: } & 10 	ext { units at } \$ 120 \\hline 	ext { February: } & 20 	ext { units at } \$ 130 \\hline 	ext { May: } & 15 	ext { units at } \$ 140 \\hline 	ext { September: } & 12 	ext { units at } \$ 150 \\hline 	ext { November: } & 10 	ext { units at } \$ 160 \\hline\end{array} January:  February:  May:  September:  November: ​ Purchases 10 units at $12020 units at $13015 units at $14012 units at $15010 units at $160​​ 
On December 31,there were 26 units remaining in ending inventory.These 26 units consisted of 2 from January,4 from February,6 from May,4 from September,and 10 from November.Using the specific identification method,what is the cost of the ending inventory?

Accepted Answer

A)   $3,500.
B)   $3,800.
C)   $3,960.
D)   $3,280.
E)   $3,640. F) C) and E)
G) None of the above

Question 10

A company uses the retail inventory method and has the following information available concerning its most recent accounting period:
 $$\begin{array} { | l | r | r | } 
\hline & \text { At Cost } & \text { At Retail } \
\hline \text { Beginning-of-period inventory } & \$ 148,600 & \$ 245,200 \
\hline \text { Net purchases } & 677,400 & 1,229,800 \
\hline \text { Sales } & & 1,200,000 \
\hline
\end{array}$$ 
1.What is the cost-to-retail ratio using the retail method?
2.What is the estimated cost of the ending inventory?

Accepted Answer

\[\begin{array} { | l | r | r | }
\hlin...

Question 11

Eastview Company uses a periodic LIFO inventory system,and has the following purchases and sales:
  January 1 150 units were purchased at $9 per unit.  January 17120 units were sold.  January 20 160 units were purchased at $11 per unit.  January 29 150 units were sold. \begin{array} { | l | l | } \hline 	ext { January 1 } & 150 	ext { units were purchased at \$9 per unit. } \\hline 	ext { January } 17 & 120 	ext { units were sold. } \\hline 	ext { January 20 } & 160 	ext { units were purchased at \$11 per unit. } \\hline 	ext { January 29 } & 150 	ext { units were sold. } \\hline\end{array} January 1  January 17 January 20  January 29 ​150 units were purchased at $9 per unit. 120 units were sold. 160 units were purchased at $11 per unit. 150 units were sold. ​​ 
-
What is the value of ending inventory?

Accepted Answer

A)   $2,730.
B)   $2,750.
C)   $2,670.
D)   $440.
E)   $360. F) B) and C)
G) D) and E)

Question 12

Goods in transit are included in a purchaser's inventory:

Accepted Answer

A)   At any time during transit.
B)   When the purchaser is responsible for paying freight charges.
C)   When the supplier is responsible for freight charges.
D)   If the goods are shipped FOB destination.
E)   After the half-way point between the buyer and seller.F) None of the above
G) B) and D)

Question 13

The ________ method is commonly used to estimate the value of inventory that has been destroyed,lost,or stolen.

Accepted Answer

The answer of The ________ method is commonly used to...

Question 14

Salmone Company reported the following purchases and sales of its only product.Salmone uses a periodic inventory system.Determine the cost assigned to the ending inventory using FIFO.
  Date  Activities  Units Acquired at Cost  Units Sold at Retail  May 1 Beginning Inventory 150 units @ $10.005 Purchase 220 units @ $12.0010 Sales 140 units @ $20.00 15 Purchase 100 units @ $13.0024 Sales 90 units @ $21.00 \begin{array} { | c | l | l | l | } \hline 	ext { Date } & { 	ext { Activities } } & 	ext { Units Acquired at Cost } & 	ext { Units Sold at Retail } \\hline 	ext { May 1}& 	ext { Beginning Inventory } & 150 	ext { units @ } \$ 10.00 & \\hline 5& 	ext { Purchase } & 220 	ext { units @ } \$ 12.00 & \\hline 10& 	ext { Sales } & & 140 	ext { units @ \$20.00 } \\hline 15& 	ext { Purchase } & 100 	ext { units @ } \$ 13.00 & \\hline 24& 	ext { Sales } & & 90 	ext { units @ \$21.00 } \\hline\end{array} Date  May 15101524​ Activities  Beginning Inventory  Purchase  Sales  Purchase  Sales ​ Units Acquired at Cost 150 units @ $10.00220 units @ $12.00100 units @ $13.00​ Units Sold at Retail 140 units @ $20.00 90 units @ $21.00 ​​

Accepted Answer

A)   $2,980
B)   $5,440
C)   $2,460
D)   $2,850
E)   $2,590 F) B) and D)
G) All of the above

Question 15

Sandoval needs to determine its year-end inventory.The warehouse contains 20,000 units,of which 3,000 were damaged by flood and are not sellable.Another 2,000 units were purchased from Markor Company,FOB shipping point,and are currently in transit.The company also consigns goods and has 4,000 units at a consignee's location.How many units should Sandoval include in its year-end inventory?

Accepted Answer

A)   29,000
B)   21,000
C)   23,000
D)   19,000
E)   26,000F) B) and E)
G) A) and E)

Question 16

A company had the following purchases and sales during its first year of operations:
  Purchases  Sales  January: 10 units at $1206 units  February: 20 units at $1255 units  May: 15 units at $1309 units  September: 12 units at $1358 units  November: 10 units at $14013 units \begin{array} { | l | l | l | } \hline & 	ext { Purchases } & 	ext { Sales } \\hline 	ext { January: } & 10 	ext { units at } \$ 120 & 6 	ext { units } \\hline 	ext { February: } & 20 	ext { units at } \$ 125 & 5 	ext { units } \\hline 	ext { May: } & 15 	ext { units at } \$ 130 & 9 	ext { units } \\hline 	ext { September: } & 12 	ext { units at } \$ 135 & 8 	ext { units } \\hline 	ext { November: } & 10 	ext { units at } \$ 140 & 13 	ext { units } \\hline\end{array} January:  February:  May:  September:  November: ​ Purchases 10 units at $12020 units at $12515 units at $13012 units at $13510 units at $140​ Sales 6 units 5 units 9 units 8 units 13 units ​​ 
On December 31,there were 26 units remaining in ending inventory.
-Using the Perpetual FIFO inventory valuation method,what is the value of cost of goods sold? (Assume all sales were made on the last day of the month.)

Accepted Answer

A)   $8,670.
B)   $3,540.
C)   $5,400.
D)   $5,130.
E)   $3,270. F) None of the above
G) A) and E)

Question 17

Oxford Packing Company reported net sales in November of the current year of $1,000,000.At the beginning of November,the company reported beginning inventory of $368,000.Cost of goods purchased during November amounted to $217,500.The company reported ending inventory at the end of November of $226,750.
The company's gross profit rate for November of the current year was:

Accepted Answer

A)   35.9%
B)   18.8%
C)   81.2%
D)   64.1%
E)   58.6%F) D) and E)
G) B) and E)

Question 18

Sarbanes Oxley (SOX)demands that companies safeguard inventory and properly report it.List methods that companies should use to safeguard inventory and accounting procedures that should be used to properly report inventory.

Accepted Answer

Safeguards include restricted access,use...

Question 19

What specific costs and deductions are used to determine the final cost of merchandise inventory? Identify all costs including the incidental costs.

Accepted Answer

The costs of merchandise inventory inclu...

Question 20

A company made the following merchandise purchases and sales during the month of May:
 $$\begin{array} {| l | l | l | l | } 
\hline \text { May 1 } & \text { Purchased } & 380 \text { units at } & \$ 15 \text { each } \
\hline \text { May 5 } & \text { Purchased } & 270 \text { units at } & \$ 17 \text { each } \
\hline \text { May 10 } & \text { Sold } & 400 \text { units at } & \$ 50 \text { each } \
\hline \text { May 20 } & \text { Purchased } & 300 \text { units at } & \$ 22 \text { each } \
\hline \text { May 25 } & \text { Sold } & 400 \text { units at } & \$ 50 \text { each } \
\hline
\end{array}$$ 
There was no beginning inventory.If the company uses the FIFO periodic inventory method,what would be the cost of the ending inventory?

Accepted Answer

\[\begin{array} { | l | r | }
\hline 38...

Exam 5: Inventories and Cost of Sales

Correct Answer
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Physical counts of inventory:

Correct Answer
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Goods in transit are included in a purchaser's inventory:

Correct Answer
verified

During a period of steadily rising costs,the inventory valuation method that yields the highest reported net income is:

Correct Answer
verified

Correct Answer
verified

Sarbanes Oxley (SOX)demands that companies safeguard inventory and properly report it.List methods that companies should use to safeguard inventory and accounting procedures that should be used to properly report inventory.

Correct Answer
verified
Safeguards include restricted access,use...
View Answer

What specific costs and deductions are used to determine the final cost of merchandise inventory? Identify all costs including the incidental costs.

Correct Answer
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The costs of merchandise inventory inclu...
View Answer

Correct Answer
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Correct Answer
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Match each of the following terms with the appropriate definition. -An inventory pricing method that assumes the unit prices of the beginning inventory and of each purchase are weighted by the number of units of each in inventory; the calculation occurs at the time of each sale.

Correct Answer
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The ________ method is commonly used to estimate the value of inventory that has been destroyed,lost,or stolen.

Correct Answer
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Correct Answer
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A company's current inventory consists of 5,000 units purchased at $6 per unit.Replacement cost has now fallen to $5 per unit.What is the entry the company must record to adjust inventory to market?

Correct Answer
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\[\begin{array} { | l | r | r | }
\hlin...
View Answer

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\[\begin{array} { | l | r | }
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View Answer

It can be expected that companies selling perishable goods have a higher inventory turnover than companies selling nonperishable goods.

Correct Answer
verified

Exam 5: Inventories and Cost of Sales

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Physical counts of inventory:

Correct AnswerverifiedShow Answer

Goods in transit are included in a purchaser's inventory:

Correct AnswerverifiedShow Answer

During a period of steadily rising costs,the inventory valuation method that yields the highest reported net income is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Sarbanes Oxley (SOX)demands that companies safeguard inventory and properly report it.List methods that companies should use to safeguard inventory and accounting procedures that should be used to properly report inventory.

Correct AnswerverifiedSafeguards include restricted access,use...View AnswerShow Answer

What specific costs and deductions are used to determine the final cost of merchandise inventory? Identify all costs including the incidental costs.

Correct AnswerverifiedThe costs of merchandise inventory inclu...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Match each of the following terms with the appropriate definition. -An inventory pricing method that assumes the unit prices of the beginning inventory and of each purchase are weighted by the number of units of each in inventory; the calculation occurs at the time of each sale.

Correct AnswerverifiedShow Answer

The ________ method is commonly used to estimate the value of inventory that has been destroyed,lost,or stolen.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A company's current inventory consists of 5,000 units purchased at $6 per unit.Replacement cost has now fallen to $5 per unit.What is the entry the company must record to adjust inventory to market?

Correct AnswerverifiedShow Answer

Correct Answerverified\[\begin{array} { | l | r | r | } \hlin...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct Answerverified\[\begin{array} { | l | r | } \hline 38...View AnswerShow Answer

It can be expected that companies selling perishable goods have a higher inventory turnover than companies selling nonperishable goods.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Safeguards include restricted access,use...
View Answer

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The costs of merchandise inventory inclu...
View Answer

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Correct Answer
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\[\begin{array} { | l | r | r | }
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Correct Answer
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