Question 1

Inventory at the end of the year was understated.Which of the following statements correctly states the effect of the error?

Accepted Answer

A)   net income is understated
B)   net income is overstated
C)   cost of goods sold is understated
D)   inventory reported on the balance sheet is overstatedE) A) and C)
F) All of the above

Question 2

Under a perpetual inventory system,the amount of each type of merchandise on hand is available in the

Accepted Answer

A)   customer's ledger
B)   creditor's ledger
C)   inventory ledger
D)   purchase ledgerE) None of the above
F) B) and C)

Question 3

If the revenues are correctly reported and the gross profit of a company is understated,what is the effect on stockholders' equity?

Accepted Answer

A)   understated
B)   overstated
C)   correctly stated
D)   none of theseE) B) and C)
F) A) and B)

Question 4

What is the amount of cost of goods sold for the year according to the average cost method?

Accepted Answer

A)   $1,380
B)   $1,375
C)   $1,510
D)   $1,250E) C) and D)
F) A) and B)

Question 5

Safeguarding inventory and proper reporting of the inventory in the financial statements are the reasons for controlling the inventory.

Accepted Answer

A) True 
 B)False

Question 6

The choice of an inventory costing method has no significant impact on the financial statements.

Accepted Answer

A) True 
 B)False

Question 7

On the basis of the following data,what is the estimated cost of the inventory on May 31 using the retail method? ​

Accepted Answer

A)   $250,000
B)   $360,000
C)   $172,500
D)   $187,500E) B) and D)
F) C) and D)

Question 8

"Market" as used in the phrase "lower of cost or market" for valuing inventory,refers to the price at which the inventory is being offered for sale by the company.

Accepted Answer

A) True 
 B)False

Question 9

If ending inventory for the year is overstated,stockholders' equity reported on the balance sheet at the end of the year is understated.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)   $35
B)   $80
C)   $115
D)   $25E) C) and D)
F) A) and D)

Question 11

Which document authorizes the purchase of the inventory from an approved vendor?​

Accepted Answer

A)   ​the purchase order
B)   ​the petty cash voucher
C)   the receiving report
D)   the vendor's invoiceE) A) and B)
F) B) and D)

Question 12

Assume that three identical units of merchandise were purchased during October,as follows:
​
​
  Assume one unit is sold on October 31 for $28.Determine cost of goods sold,gross profit,and ending inventory under the LIFO method.

Accepted Answer

The answer of Assume that three identical units of merchandise...

Question 13

Applying the lower of cost or market to each item of inventory,what should the total inventory value be for the following items?
​

Accepted Answer

The answer of Applying the lower of cost or market...

Question 14

The specific identification inventory method should be used when the inventory consists of identical,low-cost units that are purchased and sold frequently.

Accepted Answer

A) True 
 B)False

Question 15

Based on the following information,compute (a)inventory turnover; (b)average daily cost of goods sold using a 365 day year; and (c)number of days' sales in inventory.
​
Cost of goods sold $195,640
Inventory:
Beginning 20,500
Ending 18,628

Accepted Answer

(a)$195,640 ÷ [($20,500 + 18,6...

Question 16

Assuming that the company uses the perpetual inventory system,determine the cost of goods sold for the sale of May 20 using the FIFO inventory cost method.

Accepted Answer

A)   $120
B)   $180
C)   $136
D)   $144E) A) and B)
F) C) and D)

Question 17

If a fire destroys the inventory,the gross profit method can be used to estimate the cost of merchandise destroyed.

Accepted Answer

A) True 
 B)False

Question 18

If ending inventory for the year is understated,net income for the year is overstated.

Accepted Answer

A) True 
 B)False

Question 19

On the basis of the following data,determine the value of the inventory at the lower of cost or market.Apply lower of cost or market to each inventory item.Show your work.

Accepted Answer

The answer of On the basis of the following data,determine...

Question 20

Three identical units of merchandise were purchased during March,as shown:
​
​
  Assume that one unit is sold on March 23 for $1,125.Determine the gross profit for March and ending inventory on March 31 using (a)FIFO and (b)LIFO.

Accepted Answer

The answer of Three identical units of merchandise were purchased...

Exam 6: Inventories

Applying the lower of cost or market to each item of inventory,what should the total inventory value be for the following items? ​

Correct AnswerverifiedShow Answer

If the revenues are correctly reported and the gross profit of a company is understated,what is the effect on stockholders' equity?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

"Market" as used in the phrase "lower of cost or market" for valuing inventory,refers to the price at which the inventory is being offered for sale by the company.

Correct AnswerverifiedShow Answer

Assume that three identical units of merchandise were purchased during October,as follows: ​ ​ Assume one unit is sold on October 31 for $28.Determine cost of goods sold,gross profit,and ending inventory under the LIFO method.

Correct AnswerverifiedShow Answer

The choice of an inventory costing method has no significant impact on the financial statements.

Correct AnswerverifiedShow Answer

On the basis of the following data,what is the estimated cost of the inventory on May 31 using the retail method? ​

Correct AnswerverifiedShow Answer

Under a perpetual inventory system,the amount of each type of merchandise on hand is available in the

Correct AnswerverifiedShow Answer

Assuming that the company uses the perpetual inventory system,determine the cost of goods sold for the sale of May 20 using the FIFO inventory cost method.

Correct AnswerverifiedShow Answer

If ending inventory for the year is understated,net income for the year is overstated.

Correct AnswerverifiedShow Answer

On the basis of the following data,determine the value of the inventory at the lower of cost or market.Apply lower of cost or market to each inventory item.Show your work.

Correct AnswerverifiedShow Answer

If a fire destroys the inventory,the gross profit method can be used to estimate the cost of merchandise destroyed.

Correct AnswerverifiedShow Answer

Inventory at the end of the year was understated.Which of the following statements correctly states the effect of the error?

Correct AnswerverifiedShow Answer

Safeguarding inventory and proper reporting of the inventory in the financial statements are the reasons for controlling the inventory.

Correct AnswerverifiedShow Answer

What is the amount of cost of goods sold for the year according to the average cost method?

Correct AnswerverifiedShow Answer

If ending inventory for the year is overstated,stockholders' equity reported on the balance sheet at the end of the year is understated.

Correct AnswerverifiedShow Answer

The specific identification inventory method should be used when the inventory consists of identical,low-cost units that are purchased and sold frequently.

Correct AnswerverifiedShow Answer

Based on the following information,compute (a)inventory turnover; (b)average daily cost of goods sold using a 365 day year; and (c)number of days' sales in inventory. ​ Cost of goods sold $195,640 Inventory: Beginning 20,500 Ending 18,628

Correct Answerverified(a)$195,640 ÷ [($20,500 + 18,6...View AnswerShow Answer

Three identical units of merchandise were purchased during March,as shown: ​ ​ Assume that one unit is sold on March 23 for $1,125.Determine the gross profit for March and ending inventory on March 31 using (a)FIFO and (b)LIFO.

Correct AnswerverifiedShow Answer

Which document authorizes the purchase of the inventory from an approved vendor?​

Correct AnswerverifiedShow Answer

Applying the lower of cost or market to each item of inventory,what should the total inventory value be for the following items?

Correct Answer
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Assume that three identical units of merchandise were purchased during October,as follows: Assume one unit is sold on October 31 for $28.Determine cost of goods sold,gross profit,and ending inventory under the LIFO method.

Correct Answer
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Correct Answer
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On the basis of the following data,what is the estimated cost of the inventory on May 31 using the retail method?

Correct Answer
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Based on the following information,compute (a)inventory turnover; (b)average daily cost of goods sold using a 365 day year; and (c)number of days' sales in inventory. Cost of goods sold $195,640 Inventory: Beginning 20,500 Ending 18,628

Correct Answer
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(a)$195,640 ÷ [($20,500 + 18,6...
View Answer

Three identical units of merchandise were purchased during March,as shown: Assume that one unit is sold on March 23 for $1,125.Determine the gross profit for March and ending inventory on March 31 using (a)FIFO and (b)LIFO.

Correct Answer
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Which document authorizes the purchase of the inventory from an approved vendor?

Correct Answer
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