Question 1

A merchandise company's beginning inventory plus merchandise purchases equals:

Accepted Answer

A)  ending inventory.
B)  cost of goods sold.
C)  cost of goods available for sale.
D)  sales level.E) None of the above
F) B) and C) C

Question 2

For a company making cheese,Cured cheese that is waiting to be shipped to retailers would be included in which of the following?

Accepted Answer

A)  Raw materials inventory.
B)  Work in progress inventory.
C)  Finished goods inventory.
D)  All of the above.E) A) and D)
F) A) and C)

Question 3

If the company uses the weighted average method,what is the cost of its ending inventory (rounded to the nearest dollar) ?

Accepted Answer

A)  $38
B)  $48
C)  $67
D)  $75E) A) and C)
F) A) and B)

Question 4

Which of the following inventory method will give the highest ending inventory in a period of rising prices?

Accepted Answer

A)  FIFO
B)  LIFO
C)  Specific Identification Method
D)  Weighted Average CostE) A) and C)
F) None of the above A

Question 5

Maxell Company uses the periodic FIFO method to assign costs to inventory and cost of goods sold.Given the following information,what would be reported as the cost of goods sold and ending inventory balances for the period?

Accepted Answer

A)  Option A
B)  Option B
C)  Option C
D)  Option DE) B) and C)
F) A) and D)

Question 6

Which of the following may not be true if excessive quantities of inventory are ordered:

Accepted Answer

A)  storage and interest costs may increase.
B)  goods might have to be sold at large discounts.
C)  there is a greater probability that goods will become damaged or obsolete.
D)  would always lead to higher sales and resulting in higher profits.E) A) and D)
F) A) and C)

Question 7

The process of buying and selling inventory is known as inventory

Accepted Answer

A)  circulation.
B)  cost management.
C)  turnover.
D)  asset allocation.E) None of the above
F) B) and C)

Question 8

One of the most common sources of misstatement in financial statements is the:

Accepted Answer

A)  use of alternating inventory costing methods.
B)  failure to appropriately estimate the market value of inventory.
C)  failure to report stock issues appropriately.
D)  incorrectly calculating the inventory turnover ratio.E) C) and D)
F) B) and D)

Question 9

Specific identification method would be appropriate inventory costing method for a grocery store chain.
BT: Comprehension

Accepted Answer

A) True 
 B)False

Question 10

Which inventory costing method generally results in the most recent costs being assigned to ending inventory?

Accepted Answer

A)  LIFO.
B)  FIFO.
C)  Weighted average cost.
D)  Simple average cost.E) B) and C)
F) A) and D)

Question 11

Which of the following inventory costing method is not permitted by ASPE and IFRS in Canada?

Accepted Answer

A)  FIFO.
B)  LIFO
C)  Specific identification method
D)  Weighted average cost methodE) B) and D)
F) B) and C)

Question 12

Which of the following statements is true?

Accepted Answer

A)  Whether unit costs are steadily rising or falling,the weighted average cost method always yields a cost of goods sold between that of FIFO and LIFO.
B)  FIFO will lead to the highest net income if unit costs are falling.
C)  LIFO will always yield a smaller net income than FIFO.
D)  Specific identification is the most practical,but least accurate,measure of cost and net income.E) B) and D)
F) A) and D)

Question 13

If the company uses the LIFO method,what is the cost of its ending inventory (rounded to the nearest dollar) ?

Accepted Answer

A)  $24
B)  $42
C)  $58
D)  $76E) A) and D)
F) None of the above

Question 14

If BetterBuy uses the weighted average method,its cost of goods sold will be:

Accepted Answer

A)  $2,900.
B)  $2,950.
C)  $3,040.
D)  $3,033.E) A) and B)
F) A) and C)

Question 15

Your company has 500 units in inventory that had been purchased for $12 each and that would currently cost $15 to replace.Your supplier has just announced the cost of these goods is rising to $16.50.

Accepted Answer

A)  Your company should make no adjustments to the inventory account.
B)  Your company should adjust the inventory account using the lower of the recent market values,which is $15.
C)  Your company should adjust the inventory account using the higher of the recent market values,which is $16.50.
D)  Your company should adjust the inventory account using the average of the recent market values,which is $14.50.E) None of the above
F) B) and C)

Question 16

In each accounting period,a manager can select the inventory costing method that yields the most positive net income.
BT: Knowledge

Accepted Answer

A) True 
 B)False  False

Question 17

Which of the two following inventory valuation system differ between periodic and perpetual inventory systems?

Accepted Answer

A)  LIFO and FIFO
B)  FIFO and Weighted average method
C)  LIFO and Weighted average method
D)  Specific identificationE) A) and B)
F) A) and C)

Question 18

In which of the following companies tend to use the specific identification method?

Accepted Answer

A)  When accounting for mass produced cheap products
B)  When accounting for unique and individually expensive items
C)  When accounting for high tech products
D)  When accounting for grocery and produce itemsE) A) and B)
F) A) and D)

Question 19

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

Accepted Answer

A)  during the period the company replaces the raw material inventory.
B)  the company buys and sells its inventory of goods.
C)  the company produces and delivers its inventory of goods to customers.
D)  All of the above combined.E) All of the above
F) A) and C)

Question 20

The LIFO method assumes that the costs for the newest goods (the last ones in)are used first and the older costs are left in ending inventory.
BT: Knowledge

Accepted Answer

A) True 
 B)False

Exam 7: Inventory and Cost of Goods Sold

A merchandise company's beginning inventory plus merchandise purchases equals:

Correct AnswerverifiedC

For a company making cheese,Cured cheese that is waiting to be shipped to retailers would be included in which of the following?

Correct AnswerverifiedShow Answer

If the company uses the weighted average method,what is the cost of its ending inventory (rounded to the nearest dollar) ?

Correct AnswerverifiedShow Answer

Which of the following inventory method will give the highest ending inventory in a period of rising prices?

Correct AnswerverifiedA

Maxell Company uses the periodic FIFO method to assign costs to inventory and cost of goods sold.Given the following information,what would be reported as the cost of goods sold and ending inventory balances for the period?

Correct AnswerverifiedShow Answer

Which of the following may not be true if excessive quantities of inventory are ordered:

Correct AnswerverifiedShow Answer

The process of buying and selling inventory is known as inventory

Correct AnswerverifiedShow Answer

One of the most common sources of misstatement in financial statements is the:

Correct AnswerverifiedShow Answer

Specific identification method would be appropriate inventory costing method for a grocery store chain. BT: Comprehension

Correct AnswerverifiedShow Answer

Which inventory costing method generally results in the most recent costs being assigned to ending inventory?

Correct AnswerverifiedShow Answer

Which of the following inventory costing method is not permitted by ASPE and IFRS in Canada?

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

If the company uses the LIFO method,what is the cost of its ending inventory (rounded to the nearest dollar) ?

Correct AnswerverifiedShow Answer

If BetterBuy uses the weighted average method,its cost of goods sold will be:

Correct AnswerverifiedShow Answer

Your company has 500 units in inventory that had been purchased for $12 each and that would currently cost $15 to replace.Your supplier has just announced the cost of these goods is rising to $16.50.

Correct AnswerverifiedShow Answer

In each accounting period,a manager can select the inventory costing method that yields the most positive net income. BT: Knowledge

Correct AnswerverifiedFalse

Which of the two following inventory valuation system differ between periodic and perpetual inventory systems?

Correct AnswerverifiedShow Answer

In which of the following companies tend to use the specific identification method?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The LIFO method assumes that the costs for the newest goods (the last ones in)are used first and the older costs are left in ending inventory. BT: Knowledge

Correct AnswerverifiedShow Answer

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False

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