Question 1

Match the term to the appropriate definition.There are more definitions than terms.
-LIFO

Accepted Answer

A)  Inventory costing method that uses the weighted average unit cost of the goods available for sale for both cost of goods sold and ending inventory.
B)  The inventory that starts the manufacturing process.
C)  Inventory costing method that assumes that the costs of the last goods purchased are the costs of the first goods sold.
D)  Beginning Inventory + Purchases - Ending Inventory
E)  Inventory costing method that identifies the cost of the specific item that was sold.F) A valuation rule that requires Inventory to be written down when its market value falls below its cost.G) Goods that are held for sale in the normal course of business or are used to produce other goods for sale.H) The difference between net sales and cost of goods sold.I) Inventory that was in process and now is completed and ready for sale.J) Beginning Inventory + Purchases - Cost of Goods SoldK) Requires that if LIFO is used on the income tax return,it also must be used in financial statement reporting.L) Goods that are in the process of being manufactured.M) The expense that follows directly after Net Sales on a multiple step income statement.N) Consists of products acquired in a finished condition,ready for sale without further processing.O) Inventory costing method that assumes that the costs of the first goods purchased are the costs of the first goods sold.P) A measure of the average number of days from the time inventory is bought to the time it is sold.Q) Inventory items being transported.R) Goods a company is holding on behalf of the goods' owner.S) How many times (on average) that inventory has been bought or sold.T) K) and L)
U) D) and I)

Question 2

Goods available for sale equals:

Accepted Answer

A)  Cost of Goods Sold plus ending inventory.
B)  Cost of Goods Sold minus ending inventory.
C)  Beginning inventory plus Cost of Goods Sold.
D)  Beginning inventory plus Purchases minus Cost of Goods Sold.E) A) and B)
F) C) and D)

Question 3

Which company is most likely to have a higher inventory turnover than its competitors within the same industry?

Accepted Answer

A)  A company with lower-priced goods and lower gross profit.
B)  A company with higher-priced goods and lower gross profit.
C)  A company with higher-priced goods and higher gross profit.
D)  A company that reports lower cost of goods sold and higher inventory values.E) B) and C)
F) All of the above

Question 4

Sun Concepts sells and installs solar energy products.Information from the financial statements for the last two years revealed the following:   Beginning Inventory  Ending Inventory  Cost of Goods Sold  Year 1 $90,000$130,000$605,000 Year 2 130,000110,000720,000\begin{array}{cccc} & 	ext { Beginning Inventory } & 	ext { Ending Inventory } & 	ext { Cost of Goods Sold } \	ext { Year 1 } & \$ 90,000 & \$ 130,000 & \$ 605,000 \	ext { Year 2 } & 130,000 & 110,000 & 720,000\end{array} Year 1  Year 2 ​ Beginning Inventory $90,000130,000​ Ending Inventory $130,000110,000​ Cost of Goods Sold $605,000720,000​  Compared with Year 1,Sun Concept's number of days to sell in Year 2 was:

Accepted Answer

A)  shorter.
B)  longer.
C)  unchanged.
D)  unable to be determined. E) C) and D)
F) None of the above

Question 5

Charter Company,which uses the perpetual inventory method,purchases different letters for resale.Character had a beginning inventory comprised of seven units at $4 per unit.The company purchased five units at $6 per unit in February,sold seven units in October,and purchased two units at $7 per unit in December. If Charter Company uses the LIFO method,what is the cost of its ending inventory?

Accepted Answer

A)  $38
B)  $34
C)  $44
D)  $72E) C) and D)
F) A) and B)

Question 6

FIFO,LIFO,and weighted average inventory costing methods are based on:

Accepted Answer

A)  assumptions that accountants make about the flow of inventory costs.
B)  the actual physical flow of goods purchased and sold by a business.
C)  surveys taken that ask real companies how they value their inventories.
D)  the accounting equation (assets = liabilities + stockholders' equity) .E) All of the above
F) C) and D)

Question 7

The assignment of costs to cost of goods sold and to inventory using the weighted average method usually yields different results depending on whether a perpetual or a periodic system is used.

Accepted Answer

A) True 
 B)False

Question 8

Which inventory costing method uses the oldest cost for cost of goods sold on the income statement and the newest cost for inventory on the balance sheet?

Accepted Answer

A)  LIFO
B)  Specific identification
C)  FIFO
D)  Weighted averageE) None of the above
F) A) and B)

Question 9

Delta Diamonds uses a periodic inventory system.The company had five one-carat diamonds available for sale this year: one was purchased on June 1 for $500,two were purchased on July 9 for $550 each,and two were purchased on September 23 for $600 each.On December 24,it sold one of the diamonds that was purchased on July 9.Using the LIFO method,its cost of goods sold equals:

Accepted Answer

A)  $1,200.
B)  $1,100.
C)  $600.
D)  $500.E) B) and C)
F) A) and D)

Question 10

Specific identification is:

Accepted Answer

A)  the classification of an account as an asset,liability,or stockholders' equity account.
B)  an inventory method that individually identifies and records the cost of each item as cost of goods sold.
C)  a detailed list of all of a corporation's stockholders.
D)  a high-tech security technique for identifying key employees.E) A) and C)
F) A) and B)

Question 11

For a merchandiser,inventory turnover refers to how many times:

Accepted Answer

A)  during the period the company replaces its raw materials inventory.
B)  the company purchases and sells its inventory of goods.
C)  the company produces and delivers its inventory of goods to customers.
D)  the company orders merchandise.E) None of the above
F) B) and D)

Question 12

Match the term to the appropriate definition.There are more definitions than terms.
-Goods in Transit

Accepted Answer

A)  Inventory costing method that identifies the cost of the specific item that was sold.
B)  Inventory costing method that assumes that the costs of the first goods purchased are the costs of the first goods sold.
C)  The difference between net sales and cost of goods sold.
D)  The inventory that starts the manufacturing process.
E)  Inventory items being transported.F) Consists of products acquired in a finished condition,ready for sale without further processing.G) A valuation rule that requires Inventory to be written down when its market value falls below its cost.H) The expense that follows directly after Net Sales on a multiple step income statement.I) Beginning Inventory + Purchases - Cost of Goods SoldJ) Goods a company is holding on behalf of the goods' owner.K) Inventory costing method that assumes that the costs of the last goods purchased are the costs of the first goods sold.L) Requires that if LIFO is used on the income tax return,it also must be used in financial statement reporting.M) Beginning Inventory + Purchases - Ending InventoryN) Goods that are in the process of being manufactured.O) Inventory costing method that uses the weighted average unit cost of the goods available for sale for both cost of goods sold and ending inventory.P) Goods that are held for sale in the normal course of business or are used to produce other goods for sale.Q) How many times (on average) that inventory has been bought or sold.R) Inventory that was in process and now is completed and ready for sale.S) A measure of the average number of days from the time inventory is bought to the time it is sold.T) F) and K)
U) E) and N)

Question 13

A one-time error in the application of the lower of cost or market/net realizable value (LCM/NRV) rule in the current period distorts financial results for the current accounting period:

Accepted Answer

A)  only.
B)  and the period before.
C)  and the period after.
D)  and all periods after.E) None of the above
F) C) and D)

Question 14

For a manufacturer,inventory turnover refers to how many times:

Accepted Answer

A)  during the period the company replaces the raw materials inventory.
B)  the company purchases and sells its inventory of finished goods.
C)  the company produces its goods and delivers the inventory to customers.
D)  the company orders raw materials.E) A) and D)
F) B) and D)

Question 15

Match the term to the appropriate definition.There are more definitions than terms.
-Inventory Turnover

Accepted Answer

A)  Inventory costing method that uses the weighted average unit cost of the goods available for sale for both cost of goods sold and ending inventory.
B)  The inventory that starts the manufacturing process.
C)  Inventory costing method that assumes that the costs of the last goods purchased are the costs of the first goods sold.
D)  Beginning Inventory + Purchases - Ending Inventory
E)  Inventory costing method that identifies the cost of the specific item that was sold.F) A valuation rule that requires Inventory to be written down when its market value falls below its cost.G) Goods that are held for sale in the normal course of business or are used to produce other goods for sale.H) The difference between net sales and cost of goods sold.I) Inventory that was in process and now is completed and ready for sale.J) Beginning Inventory + Purchases - Cost of Goods SoldK) Requires that if LIFO is used on the income tax return,it also must be used in financial statement reporting.L) Goods that are in the process of being manufactured.M) The expense that follows directly after Net Sales on a multiple step income statement.N) Consists of products acquired in a finished condition,ready for sale without further processing.O) Inventory costing method that assumes that the costs of the first goods purchased are the costs of the first goods sold.P) A measure of the average number of days from the time inventory is bought to the time it is sold.Q) Inventory items being transported.R) Goods a company is holding on behalf of the goods' owner.S) How many times (on average) that inventory has been bought or sold.T) F) and O)
U) M) and O)

Question 16

Delta Diamonds uses a periodic inventory system.The company had five one-carat diamonds available for sale this year: one was purchased on June 1 for $500,two were purchased on July 9 for $550 each,and two were purchased on September 23 for $600 each.On December 24,it sold one of the diamonds that was purchased on July 9.Using the specific identification method,its ending inventory (after the December 24 sale) equals:

Accepted Answer

A)  $2,250.
B)  $1,650.
C)  $2,200.
D)  $550.E) None of the above
F) B) and C)

Question 17

In a period of falling prices,the inventory costing method that will cause the company to have the highest cost of goods sold is:

Accepted Answer

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

Question 18

Windrose,Inc.uses a periodic inventory system and its inventory records contain the following information:  The company sold 2,000 units during June.There were no additional purchases or sales during the remainder of the year.The company had 1,000 units were in its ending inventory at the end of the year.
If Windrose uses the LIFO costing method,what is the cost of its ending inventory?

Accepted Answer

A)  $2,730
B)  $2,988
C)  $3,240
D)  $5,670E) None of the above
F) All of the above

Question 19

Evans Company uses a periodic inventory system.The company bought 150 units of inventory for $8 each and 50 units of inventory for $10 each.Evans' weighted average cost per unit is:

Accepted Answer

A)  $8.50.
B)  $9.00.
C)  $8.00.
D)  $10.00.E) A) and B)
F) A) and C)

Question 20

Delta Diamonds uses a periodic inventory system.The company had five one-carat diamonds available for sale this year: one was purchased on June 1 for $500,two were purchased on July 9 for $550 each,and two were purchased on September 23 for $600 each.On December 24,it sold one of the diamonds that was purchased on July 9.Using the FIFO method,its ending inventory (after the December 24 sale) equals:

Accepted Answer

A)  $2,300.
B)  $2,800.
C)  $2,200.
D)  $2,250.E) A) and C)
F) A) and B)

Exam 7: Inventory and Cost of Goods Sold

In a period of falling prices,the inventory costing method that will cause the company to have the highest cost of goods sold is:

Correct Answer
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A one-time error in the application of the lower of cost or market/net realizable value (LCM/NRV) rule in the current period distorts financial results for the current accounting period:

Correct Answer
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Correct Answer
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Correct Answer
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Evans Company uses a periodic inventory system.The company bought 150 units of inventory for $8 each and 50 units of inventory for $10 each.Evans' weighted average cost per unit is:

Correct Answer
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Correct Answer
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Match the term to the appropriate definition.There are more definitions than terms. -Inventory Turnover

Correct Answer
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FIFO,LIFO,and weighted average inventory costing methods are based on:

Correct Answer
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For a manufacturer,inventory turnover refers to how many times:

Correct Answer
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Correct Answer
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Match the term to the appropriate definition.There are more definitions than terms. -LIFO

Correct Answer
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For a merchandiser,inventory turnover refers to how many times:

Correct Answer
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Specific identification is:

Correct Answer
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Match the term to the appropriate definition.There are more definitions than terms. -Goods in Transit

Correct Answer
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Correct Answer
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Goods available for sale equals:

Correct Answer
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Correct Answer
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The assignment of costs to cost of goods sold and to inventory using the weighted average method usually yields different results depending on whether a perpetual or a periodic system is used.

Correct Answer
verified

Which company is most likely to have a higher inventory turnover than its competitors within the same industry?

Correct Answer
verified

Which inventory costing method uses the oldest cost for cost of goods sold on the income statement and the newest cost for inventory on the balance sheet?

Correct Answer
verified

Exam 7: Inventory and Cost of Goods Sold

In a period of falling prices,the inventory costing method that will cause the company to have the highest cost of goods sold is:

Correct AnswerverifiedShow Answer

A one-time error in the application of the lower of cost or market/net realizable value (LCM/NRV) rule in the current period distorts financial results for the current accounting period:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Evans Company uses a periodic inventory system.The company bought 150 units of inventory for $8 each and 50 units of inventory for $10 each.Evans' weighted average cost per unit is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Match the term to the appropriate definition.There are more definitions than terms. -Inventory Turnover

Correct AnswerverifiedShow Answer

FIFO,LIFO,and weighted average inventory costing methods are based on:

Correct AnswerverifiedShow Answer

For a manufacturer,inventory turnover refers to how many times:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Match the term to the appropriate definition.There are more definitions than terms. -LIFO

Correct AnswerverifiedShow Answer

For a merchandiser,inventory turnover refers to how many times:

Correct AnswerverifiedShow Answer

Specific identification is:

Correct AnswerverifiedShow Answer

Match the term to the appropriate definition.There are more definitions than terms. -Goods in Transit

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Goods available for sale equals:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The assignment of costs to cost of goods sold and to inventory using the weighted average method usually yields different results depending on whether a perpetual or a periodic system is used.

Correct AnswerverifiedShow Answer

Which company is most likely to have a higher inventory turnover than its competitors within the same industry?

Correct AnswerverifiedShow Answer

Which inventory costing method uses the oldest cost for cost of goods sold on the income statement and the newest cost for inventory on the balance sheet?

Correct AnswerverifiedShow Answer

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