Question 1

Goods placed in inventory are initially recorded at market value.

Accepted Answer

A) True 
 B)False

Question 2

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

Question 3

Assume the periodic inventory method is used.When LIFO is used,costs are assigned to cost of goods sold using the most recent purchase at the time of the sale.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements about inventory classifications is not correct?

Accepted Answer

A)   Inventory may include materials used in producing goods for sale.
B)   Manufacturers hold three types of inventory that are referred to as raw materials inventory, work in process inventory, and finished goods inventory.
C)   Inventory is classified as a long-term asset on the balance sheet.
D)   Merchandisers buy inventory in finished form ready for resale.E) A) and D)
F) A) and C)

Question 5

Evaluate each inventory error separately and determine whether it overstates or understates cost of goods sold and net income.

Accepted Answer

The answer of Evaluate each inventory error separately and determine...

Question 6

Fill in the blanks below with the words "higher" and "lower" to indicate which inventory costing method causes the value to be higher and which causes it to be lower.Assume that the cost of inventory is decreasing.

Accepted Answer

The answer of Fill in the blanks below with the...

Question 7

The inventory turnover ratio is calculated as:

Accepted Answer

A)   cost of goods sold divided by sales.
B)   cost of goods sold divided by average inventory.
C)   ending inventory divided by cost of goods sold.
D)   average inventory divided by cost of goods sold.E) None of the above
F) A) and D)

Question 8

If the Ball Corp.writes down its inventory,its:

Accepted Answer

A)   cost of goods sold will decrease.
B)   net income will increased.
C)   its current assets will decreased.
D)   its stockholders' equity will increase.E) A) and B)
F) B) and D)

Question 9

Your company has 100 units in inventory,purchased at $16 per unit.These units have a current market value of $14.The entry to write-down the inventory will include a:

Accepted Answer

A)   credit to Cost of Goods Sold for $200.
B)   debit to Cost of Goods Sold for $1,400.
C)   credit to Inventory for $200.
D)   debit to Inventory for $1,400.E) A) and B)
F) A) and C)

Question 10

Greenies Inc.updates its inventory periodically.The company's cost of goods sold was $24,700 and purchases were $12,000 during the year.The company's ending inventory count was $3,500.
Required:
Determine the amount of beginning inventory.

Accepted Answer

Cost of goods sold = Beginning...

Question 11

If inventory is updated perpetually,which of the equations is correct?

Accepted Answer

A)   Cost of goods sold = Beginning inventory - Purchases - Ending inventory
B)   Cost of goods sold = Beginning inventory + Purchases + Ending inventory
C)   Ending inventory = Beginning inventory + Purchases - Cost of goods sold
D)   Ending inventory = Beginning inventory + Purchases + Cost of goods soldE) B) and C)
F) A) and D)

Question 12

Which of the following is not associated with a high inventory turnover ratio?

Accepted Answer

A)   A reduction in storage and obsolescence costs.
B)   Relatively short time periods between inventory purchases and sales.
C)   A drop in the demand for the company's products.
D)   A reduction in borrowing to finance inventory purchases.E) A) and B)
F) A) and C)

Question 13

Use the following to answer questions 179 - 180:
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.
-Use the information above to answer the following question.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) A) and D)
F) A) and C)

Question 14

Eaton Electronics uses a periodic inventory system.On March 31, Eaton has two plasma TVs on hand at a cost of $1,500 each (serial numbers 11534892 and 11534894) .In April, the company purchases four more identical TVs from Toshiba for $1,450 each (serial numbers 11542631 through 11542634) .In May, the company purchases five more identical TVs for $1,600 each (serial numbers 11550964 through 11550968) .In June, Eaton sells two of these TVs (serial numbers 11534894 and 11542631) .There were no additional purchases or sales during the remainder of the year.
-Use the information above to answer the following question.Eaton Electronics uses the FIFO method.What is the cost of its ending inventory?

Accepted Answer

A)   $13,850
B)   $13,800
C)   $13,760
D)   $13,600E) A) and B)
F) A) and D)

Exam 7: Reporting and Interpreting Inventories and Cost of Goods Sold

Goods placed in inventory are initially recorded at market value.

Correct Answer
verified

Greenies Inc.updates its inventory periodically.The company's cost of goods sold was $24,700 and purchases were $12,000 during the year.The company's ending inventory count was $3,500. Required: Determine the amount of beginning inventory.

Correct Answer
verified
Cost of goods sold = Beginning...
View Answer

Assume the periodic inventory method is used.When LIFO is used,costs are assigned to cost of goods sold using the most recent purchase at the time of the sale.

Correct Answer
verified

Fill in the blanks below with the words "higher" and "lower" to indicate which inventory costing method causes the value to be higher and which causes it to be lower.Assume that the cost of inventory is decreasing.

Correct Answer
verified

Correct Answer
verified

Your company has 100 units in inventory,purchased at $16 per unit.These units have a current market value of $14.The entry to write-down the inventory will include a:

Correct Answer
verified

Which of the following is not associated with a high inventory turnover ratio?

Correct Answer
verified

If inventory is updated perpetually,which of the equations is correct?

Correct Answer
verified

If the Ball Corp.writes down its inventory,its:

Correct Answer
verified

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

Correct Answer
verified

Evaluate each inventory error separately and determine whether it overstates or understates cost of goods sold and net income.

Correct Answer
verified

Correct Answer
verified

Which of the following statements about inventory classifications is not correct?

Correct Answer
verified

The inventory turnover ratio is calculated as:

Correct Answer
verified

Exam 7: Reporting and Interpreting Inventories and Cost of Goods Sold

Goods placed in inventory are initially recorded at market value.

Correct AnswerverifiedShow Answer

Greenies Inc.updates its inventory periodically.The company's cost of goods sold was $24,700 and purchases were $12,000 during the year.The company's ending inventory count was $3,500. Required: Determine the amount of beginning inventory.

Correct AnswerverifiedCost of goods sold = Beginning...View AnswerShow Answer

Assume the periodic inventory method is used.When LIFO is used,costs are assigned to cost of goods sold using the most recent purchase at the time of the sale.

Correct AnswerverifiedShow Answer

Fill in the blanks below with the words "higher" and "lower" to indicate which inventory costing method causes the value to be higher and which causes it to be lower.Assume that the cost of inventory is decreasing.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Your company has 100 units in inventory,purchased at $16 per unit.These units have a current market value of $14.The entry to write-down the inventory will include a:

Correct AnswerverifiedShow Answer

Which of the following is not associated with a high inventory turnover ratio?

Correct AnswerverifiedShow Answer

If inventory is updated perpetually,which of the equations is correct?

Correct AnswerverifiedShow Answer

If the Ball Corp.writes down its inventory,its:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Evaluate each inventory error separately and determine whether it overstates or understates cost of goods sold and net income.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements about inventory classifications is not correct?

Correct AnswerverifiedShow Answer

The inventory turnover ratio is calculated as:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Cost of goods sold = Beginning...
View Answer

Correct Answer
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