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The following information applied to Michaels Company for 2014: The following information applied to Michaels Company for 2014: Michaels' inventoriable cost for 2014 was A) $409,000. B) $407,500. C) $406,000. D) $405,000 Michaels' inventoriable cost for 2014 was


A) $409,000.
B) $407,500.
C) $406,000.
D) $405,000

E) A) and B)
F) A) and C)

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Which of the following will result if the current year's ending inventory amount is understated in the cost of goods sold calculation?


A) Cost of goods sold will be overstated.
B) Total assets will be overstated.
C) Net income will be overstated.
D) Both cost of goods sold and net income will be overstated.

E) All of the above
F) A) and C)

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The following information is available for the Underwater Company for the three months ended March 31 of this year: The following information is available for the Underwater Company for the three months ended March 31 of this year: The gross margin was estimated to be 25 percent of sales.What is the estimated inventory balance at March 31? A) $600,000 B) $350,000 C) $562,500 D) $450,000 The gross margin was estimated to be 25 percent of sales.What is the estimated inventory balance at March 31?


A) $600,000
B) $350,000
C) $562,500
D) $450,000

E) A) and B)
F) None of the above

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Paper Depot is a wholesaler of office supplies.The activity for Model III calculators during August is shown below: Paper Depot is a wholesaler of office supplies.The activity for Model III calculators during August is shown below: -See information for Paper Depot above.If Paper Depot uses a LIFO periodic inventory system,the ending inventory of Model III calculators at August 31 is reported as A) $146,400. B) $150,080. C) $150,160. D) $152,960. -See information for Paper Depot above.If Paper Depot uses a LIFO periodic inventory system,the ending inventory of Model III calculators at August 31 is reported as


A) $146,400.
B) $150,080.
C) $150,160.
D) $152,960.

E) None of the above
F) All of the above

Correct Answer

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If the ending inventory balance is understated,net income of the same period


A) will be overstated.
B) will be understated.
C) will be unaffected.
D) cannot be determined from the information.

E) A) and C)
F) A) and B)

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During periods of rising prices,when the FIFO inventory cost flow method is used,a perpetual inventory system would


A) not be permitted.
B) result in a higher ending inventory than a periodic inventory system.
C) result in the same ending inventory as a periodic inventory system.
D) result in a lower ending inventory than a periodic inventory system.

E) A) and B)
F) None of the above

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The following information is available from Carron Company's 2014 accounting records: The following information is available from Carron Company's 2014 accounting records: Carron's 2014 cost of goods sold is A) $465,000. B) $475,000. C) $505,000. D) $585,000. Carron's 2014 cost of goods sold is


A) $465,000.
B) $475,000.
C) $505,000.
D) $585,000.

E) All of the above
F) None of the above

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A

The specific identification method of inventory costing


A) eliminates all opportunity for profit manipulation.
B) matches the flow of recorded costs with the physical flow of goods.
C) can be used only with a perpetual inventory system.
D) is a violation of generally accepted accounting principles.

E) B) and D)
F) C) and D)

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The use of a discounts lost account implies that the recorded cost of a purchased inventory item is its


A) invoice price.
B) invoice price plus the purchase discount lost.
C) invoice price less the purchase discount taken.
D) invoice price less the purchase discount allowable whether taken or not.

E) A) and B)
F) None of the above

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Purchases and sales during a recent period for Lantern,Inc.were: Purchases and sales during a recent period for Lantern,Inc.were: Beginning inventory was 100 units at $1 each. -See information for Lantern,Inc.above.Given this information,what is the ending inventory if the periodic LIFO costing alternative is used? A) $400 B) $500 C) $1,250 D) $3,100 Beginning inventory was 100 units at $1 each. -See information for Lantern,Inc.above.Given this information,what is the ending inventory if the periodic LIFO costing alternative is used?


A) $400
B) $500
C) $1,250
D) $3,100

E) B) and D)
F) B) and C)

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Entole Company began operations in 2014.During the first two years of operations,Entole made undiscovered errors in taking its year-end inventories that overstated 2014 ending inventory by $50,000 and understated 2015 ending inventory by $40,000.The combined effect of these errors on reported income is 2014 2015 2016


A) understated $50,000 overstated $90,000 understated $40,000
B) overstated $50,000 understated $90,000 not affected
C) overstated $50,000 understated $40,000 not affected
D) overstated $50,000 understated $90,000 overstated $40,000

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

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The following information was obtained from the accounts of Marion Company: The following information was obtained from the accounts of Marion Company: Given this information,the cost of goods sold during the year is A) $46,000. B) $41,000. C) $51,000. D) $61,000. Given this information,the cost of goods sold during the year is


A) $46,000.
B) $41,000.
C) $51,000.
D) $61,000.

E) A) and C)
F) A) and B)

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Paper Depot is a wholesaler of office supplies.The activity for Model III calculators during August is shown below: Paper Depot is a wholesaler of office supplies.The activity for Model III calculators during August is shown below: -See information for Paper Depot.above.If Paper Depot uses a LIFO cost perpetual inventory system,the ending inventory of Model III calculators at August 31 is reported as A) $146,400. B) $150,080. C) $150,160. D) $152,960. -See information for Paper Depot.above.If Paper Depot uses a LIFO cost perpetual inventory system,the ending inventory of Model III calculators at August 31 is reported as


A) $146,400.
B) $150,080.
C) $150,160.
D) $152,960.

E) A) and D)
F) B) and D)

Correct Answer

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C

Merchandise shipped FOB shipping point on the last day of the year should ordinarily be included in


A) the buyer's inventory balance.
B) the seller's inventory balance.
C) neither the buyer's nor seller's inventory balance.
D) both the buyer's and the seller's inventory balances.

E) A) and B)
F) A) and C)

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Flash Company's inventory at June 30,2014,was $75,000 based on a physical count of goods priced at cost,and before any necessary year-end adjustment relating to the following: Flash Company's inventory at June 30,2014,was $75,000 based on a physical count of goods priced at cost,and before any necessary year-end adjustment relating to the following: What amount should Flash report as inventory on its June 30,2014,balance sheet? A) $73,500 B) $74,000 C) $75,000 D) $76,500 What amount should Flash report as inventory on its June 30,2014,balance sheet?


A) $73,500
B) $74,000
C) $75,000
D) $76,500

E) A) and B)
F) A) and C)

Correct Answer

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Elan Company's Accounts Payable balance at December 31,2014,was $1,800,000 before considering the following transactions: Elan Company's Accounts Payable balance at December 31,2014,was $1,800,000 before considering the following transactions: In its December 31,2011,balance sheet,Elan should report Accounts Payable of A) $1,950,000. B) $1,900,000. C) $1,850,000. D) $1,800,000. In its December 31,2011,balance sheet,Elan should report Accounts Payable of


A) $1,950,000.
B) $1,900,000.
C) $1,850,000.
D) $1,800,000.

E) None of the above
F) C) and D)

Correct Answer

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Which of the following will occur when inventory costs are decreasing?


A) LIFO will result in lower net income and lower ending inventory than will FIFO.
B) FIFO will result in lower net income and lower ending inventory than will LIFO.
C) LIFO will result in a lower net income,but a higher ending inventory,than will FIFO.
D) FIFO will result in a lower net income,but a higher ending inventory,than will LIFO.

E) A) and D)
F) None of the above

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Commodity L sells for $12.00;selling expenses are $2.40;normal profit is $3.00.If the cost of Commodity L is $7.80 and the replacement cost is $6.00,the lower of cost or market is


A) $5.40.
B) $6.60.
C) $6.00.
D) $7.80.

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

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The Pistons Company had its entire inventory destroyed when a fire swept through the company's warehouse.Fortunately,the accounting records were locked in a fireproof safe and were not damaged.The following information for the period up to the date of the fire was taken from the accounting records: The Pistons Company had its entire inventory destroyed when a fire swept through the company's warehouse.Fortunately,the accounting records were locked in a fireproof safe and were not damaged.The following information for the period up to the date of the fire was taken from the accounting records: The Pistons Company had its entire inventory destroyed when a fire swept through the company's warehouse.Fortunately,the accounting records were locked in a fireproof safe and were not damaged.The following information for the period up to the date of the fire was taken from the accounting records:

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(1) 11eaafb9_294f_affc_892c_b9e55929ccd0_TB2121_00 (2) 11eaafb9_294f_affd_892c_71fc89b6d6bf_TB2121_00

The following information is available for Jimmy Corporation for the month of June: The following information is available for Jimmy Corporation for the month of June: Given this information,the ending inventory balance using the average cost method is A) $276. B) $302. C) $368. D) $386. Given this information,the ending inventory balance using the average cost method is


A) $276.
B) $302.
C) $368.
D) $386.

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

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