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Exam 7: Inventory and Cost of Goods Sold

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Question 51

Multiple Choice

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

A) $24
B) $42
C) $58
D) $76

E) C) and D)
F) A) and C)

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Question 52

True/False

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If the inventory turnover ratio increases,the days to sell measure decreases. BT: Comprehension

A) True
B) False

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Question 53

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The ending inventory of one accounting period becomes the beginning inventory of the next accounting period. BT: Knowledge

Acme sells 300 units during this quarter.Acme uses the LIFO method.What is its cost of goods sold for the quarter?

Goods available for sale minus the ending inventory equals cost of goods sold. BT: Knowledge

Inventory levels regularly rise and fall as the company buys and sells merchandise. BT: Knowledge

Which of the following would cause the greatest increase in a company's inventory turnover ratio?

Match the term and the definition.Not all definitions will be used. _____ weighted average cost. _____ work in process inventory. _____ days to sell. _____ specific identification. _____ goods available for sale. _____ inventory. _____ inventory turnover ratio. _____ cost of goods sold equation. A.The sum of beginning inventory and purchases by the company. B.A company's policy of requiring identification by customers who pay by cheque. C.The book value of all the partially produced goods held by a manufacturer. D.Beginning inventory plus purchases minus ending inventory. E.Tangible property held for future sale or used to produce other goods or services for sale. F.The concept that relatively small amounts should be reported in the most cost effective way if they are too small to influence decisions. G.The current market value of investment assets minus their original cost. H.The average cost a company paid for inventory taking into account the number of units bought at each unit cost. I.The average length of time it takes a company to sell an item in inventory. J.An inventory costing method where the firm adds up all the different prices it paid for inventory and divides by the number of prices. K.The average number of times a company sells its inventory over the year. L.The amount of money that firms set aside today to buy inventory in the future. M.An inventory costing method where the firm keeps track of the cost and sale of each individual good.

Your company has 100 units in inventory,purchased at $16 per unit,and this inventory could be replaced at $14 per unit.

For external financial statement reporting purposes,loss of inventory value is typically combined with:

When the replacement cost of inventory drops below the cost recorded in the financial records,applying the lower of cost or net realizable value (LC&NRV) rule means:

If the company uses the weighted average inventory costing method,what is the cost of its ending inventory?

Meanmocha Hardware has a periodic inventory system and uses the weighted average method.The company began the month of November with 150 large brass switch plates on hand at a cost of $4.00 each.These switch plates sell for $7.00 each.The following schedule sets forth the purchases of switch plates during November: If Meanmocha sells 570 switch plates for $7.00 each during November,what is the company's gross profit for November (rounded to the nearest dollar) ?

Which of the following statements is true?

The 2009 records of Thompson Company showed beginning inventory,$6,000; cost of goods sold,$14,000; and ending inventory,$8,000.The cost of purchases for 2009 was:

Fables Inc.gives goods on consignment to Aesop Inc.who agrees to try to sell them for a 15% commission.At the end of the year,which of the following would include the consigned goods in its inventory?

In making comparisons of financial statements,it is desirable to compare data calculated using the same inventory costing methods. BT: Comprehension

Inventory may include materials used in producing goods for sale. BT: Knowledge

The specific identification method would probably be most appropriate for which of the following goods?

Acme sells 150 units during this quarter.Acme uses the weighted average method.What is its cost of goods sold for the quarter?