Question 1Question Show
All of the following are inventory costing methods except for Answer
Question 2Question This method of accounting for inventory assumes that the units acquired earliest are sold or used first Answer
Question 3Question This method of accounting for inventory assumes that the units acquired most recently are sold or used first Answer
Question 4Question The cost at which an inventory item could be acquired today is the Answer
Question 5Question Inventory costing methods place primary reliance on assumptions about the flow of Answer
Question 6Question The selection of an appropriate inventory cost flow assumption for an individual company is made by Answer
Question 7Question The primary goals of inventory management include Answer
Question 8Question A company just starting in business purchased three inventory items at the following prices: first purchase, $80; second purchase, $95; third purchase, $85. If the company sold two units for a total of $200 and used FIFO costing, the gross profit for the period would be Question 9Question Which of the following would not be affected by the choice of costing methods? Answer
Question 10Question In periods of rising prices, the inventory method which results in the highest gross profit is Answer
Question 11Question In a period of declining prices, which of the following inventory methods generally results in the lowest balance sheet figure for inventory? Answer
Question 12Question Which inventory method generally results in cost allocated to ending inventory that will approximate their current cost? Answer
Question 13Question The managers of Sera Company receive performance bonuses based on the net profit of the firm. Which inventory costing method are they likely to favour in periods of declining prices? Answer
Question 14Question In periods of rising prices, LIFO will produce Answer
Question 15Question Considerations that affect the selection of an inventory costing method do not include: Answer
Question 16Question The LCM rule for inventory is an example of the application of Answer
Question 17Question Which of these would cause the inventory turnover ratio to increase the most Answer
Question 18Question Wonder Corp. failed to record the purchase of merchandise on account. As a result, ending inventory was understated. What is the effect of these errors on assets, liabilities, capital, and net income, respectively? Answer
Question 19Question The specific ID method would probably be most appropriate for which of the following goods? Answer
Question 20Question Gerber Department Store utilizes the retail inventory method. Gerber's beginning inventory cost $140 000 and retailed for $280 000. Purchases for the period amounted to $390 000 and were priced to sell at twice that amount. Sales for the period, at retail, were $600 000. How much is the cost of ending inventory? Answer
Question 21Question Which inventory costing method generally results in the most recent costs being assigned to ending inventory? Answer
Question 22Question The 2014 records of Thompson Co. showed beginning inventory, $6 000; cost of goods sold, $14 000; and ending inventory, $8 000. The cost of purchases for 2014 was Answer
Question 23Question Which of the following statements is true with regards to all inventory costing methods? Answer
Question 24Question An adjustment to ending inventory under the LCM rule would be most likely to be recorded by a company that sells Answer
Question 25Question When the LCM rule requires an inventory adjustment Answer
Question 26Question A rising balance in the inventory account and a falling inventory turnover ratio implies that the inventory buildup is occurring because Answer
Question 27Question Which of the following companies would be least concerned about a low inventory ratio? Answer
Question 28Question Because LIFO uses older costs for inventory, in times of rising prices: Answer
Question 29Question Which of the following inventory cost flow methods would an auto dealership most likely use for its new car sales? Answer
Question 30Question In an inflationary environment in Canada, which inventory cost flow method will require the smallest cash payment for income taxes? Answer
Question 31Question Carrington Company applies the LCM rule to each individual item in its ending inventory. The company determines that it must write down its inventory by $4 000. Which of the following answers reflects how this would effect the statements? (Assets = Liabilities + Equity; Revenue - Expenses = Net Income) Answer
Question 32Question An overstatement of ending inventory results in an Answer
Question 33Question The following info is from the 2014 accounting records of Odom Company: Sales Revenue = $625 000; Beginning Inventory = $254 000; Purchases = $366 000; Historical Gross Profit Margin = 40% What is the estimated gross profit? Answer
Question 34Question The ? principle states that a company should use the same accounting methods and procedures from one period to the next. Answer
Question 35Question An undiscovered inventory error usually affects: Answer
Question 36Question When using the FIFO inventory method, the most recent inventory costs will be found on the Answer
Question 37Question Use the following info for this question: Beginning Inventory: 10 units, $10 each; January 20 Purchase: 10 units, $20 each; January 30 Purchase: 5 units, $30 each. 15 of the 25 are sold. Calculate cost of goods sold using FIFO. Answer
Question 38Question Use the following info for this question: Beginning Inventory: 10 units, $10 each; January 20 Purchase: 10 units, $20 each; January 30 Purchase: 5 units, $30 each. 15 of the 25 are sold. Calculate cost of goods sold using LIFO. Answer
Question 39Question Use the following info for this question: Beginning Inventory: 10 units, $10 each; January 20 Purchase: 10 units, $20 each; January 30 Purchase: 5 units, $30 each. 15 of the 25 are sold. Calculate cost of goods sold using average cost. Answer
Question 40Question In a period of rising prices, all of the following statements are true regarding LIFO except: Answer
Question 41Question In a period of falling prices, all of the following statements are true regarding FIFO except: Answer
Question 42Question Use the following information: May 1 Beginning Inventory: 50 units @ $20 May 7 Purchases: 40 units @ $25 May 18 Sales: 60 units May 22 Purchases: 10 units @ $30 May 29 Sales: 25 units What is the ending inventory using the LIFO method? Answer
Question 43Question Use the following information: May 1 Beginning Inventory: 50 units @ $20 May 7 Purchases: 40 units @ $25 May 18 Sales: 60 units May 22 Purchases: 10 units @ $30 May 29 Sales: 25 units What is the ending inventory using the AVG cost method? Answer
Question 44Question Use the following information: May 1 Beginning Inventory: 50 units @ $20 May 7 Purchases: 40 units @ $25 May 18 Sales: 60 units May 22 Purchases: 10 units @ $30 May 29 Sales: 25 units What is the ending inventory using the FIFO method? Answer
Question 45Question Use the following info to compute gross profit. Sales price of merchandise sold to customers is $10 000, beginning inventory $1 000, inventory purchases $4 000, and cost of goods sold $3 000. Answer
Question 46Question Errors may arise in the process of counting inventory. Assume some inventory is accidentally counted twice. All of the following statements are true except: Answer
Question 47Question Which inventory method generally best follows the matching rule? Answer
Question 48Question During periods of declining prices, which inventory method probably will result in the lowest ending inventory? Answer
Question 49Question Insurance companies often verify the extent of inventory lost or destroyed by applying the Answer
Question 50Question Which of the following statement is true of inventory errors? Answer
What does inventory costing methods place primary reliance on assumptions over?goods. Explanation: Inventory costing methods placed the reliance of their assumptions on the flow of goods.
What methods of inventory valuation are assumptions as to the flow of costs?FIFO, LIFO, average are assumptions because the flow of costs out of inventory does not have to match the way the items were physically removed from inventory.
Why are cost flow assumptions needed?Cost flow assumptions are necessary because of inflation and the changing costs experienced by companies. If costs were completely stable, it wouldn't matter how costs were flowed.
What are the 3 cost flow methods for inventory?There are three methods for inventory valuation: FIFO (First In, First Out), LIFO (Last In, First Out), and WAC (Weighted Average Cost).
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