Question 1

The following data were taken from Castle,Inc.
Determine the inventory turnover ratio and the number of days' sales in inventory for Castle Inc.Round to two decimal places.

Accepted Answer

Inventory turnover = Cost of goods sold ...

Question 2

During the taking of its physical inventory on December 31,2014,Barry's Bike Shop incorrectly counted its inventory as $350,000 instead of the correct amount of $280,000.The effect on the balance sheet and income statement would be

Accepted Answer

A)   assets overstated by $70,000; retained earnings understated by $70,000; and net income statement understated by $70,000
B)   assets overstated by $70,000; retained earnings understated by $70,000; and no effect on the income statement
C)   assets,retained earnings,and net income all overstated by $70,000
D)   assets and retained earnings overstated by $70,000; and net income understated by $70,000E) None of the above
F) A) and D)

Question 3

Average cost periodic (round average to nearest cent)

Accepted Answer

Total sales (not dep...

Question 4

Fill in the missing amounts from the chart below regarding the calculation of Bean Corporation's estimated inventory using the retail method of estimation.

Accepted Answer

The answer of Fill in the missing amounts from the...

Question 5

Control of inventory should begin as soon as the inventory is received.Which of the following internal control steps is not done to meet this goal?

Accepted Answer

A)   check the invoice to the receiving report
B)   check the invoice to the purchase order
C)   check the invoice with the person who specifically purchased the item
D)   check the invoice extensions and totalsE) A) and D)
F) B) and D)

Question 6

If the cost of an item of inventory is $60 and the current replacement cost is $75,the amount included in inventory according to the lower of cost or market is

Accepted Answer

A)   $15
B)   $60
C)   $75
D)   $135E) A) and C)
F) All of the above

Question 7

The value of ending inventory using FIFO is ​

Accepted Answer

A)   $1,250
B)   $1,350
C)   $1,375
D)   $1,150E) A) and D)
F) A) and C)

Question 8

Complete the chart,indicating whether LIFO or FIFO would give the highest and lowest amounts for each item,assuming a period of increasing costs.

Accepted Answer

The answer of Complete the chart,indicating whether LIFO or FIFO...

Question 9

What is the amount of cost of goods sold for the year according to the LIFO method?

Accepted Answer

A)   $1,380
B)   $1,375
C)   $1,510
D)   $1,250E) A) and C)
F) All of the above

Question 10

The weighted average cost method will always yield results between FIFO and LIFO.

Accepted Answer

A) True 
 B)False

Question 11

Generally,the lower the number of days' sales in inventory,the better.

Accepted Answer

A) True 
 B)False

Question 12

​All of the following are documents used for inventory control except

Accepted Answer

A)   a ​petty cash voucher
B)   a ​vendor's invoice
C)   ​a receiving report
D)   ​a purchase orderE) C) and D)
F) A) and C)

Question 13

​Excess inventory results in all of the following except

Accepted Answer

A)   ​tied-up funds that could be used to improve operations
B)   ​lost sales
C)   ​increased storage expense
D)   ​increased risk of loss due to damageE) All of the above
F) C) and D)

Question 14

Of the three widely used inventory costing methods (FIFO,LIFO,and average cost),the LIFO method of costing inventory assumes costs are charged based on the most recent purchases first.

Accepted Answer

A) True 
 B)False

Question 15

All of the following are reasons to use an estimated method of costing inventory except ​

Accepted Answer

A)   Perpetual inventory records are not maintained.
B)   Purchase records are not maintained.
C)   A disaster has destroyed the inventory records and the inventory.
D)   Interim financial statements are required but physical inventory is only taken at the end of the financial accounting period.E) B) and C)
F) A) and B)

Question 16

For the year ended December 31,Depot Max's cost of goods sold was $56,900.Inventory at the beginning of the year was $6,540.Ending inventory was $7,250.Compute Depot Max's inventory turnover for the year.

Accepted Answer

A)   8.7
B)   7.8
C)   8.3
D)   44.0E) A) and C)
F) A) and B)

Question 17

While taking a physical inventory,a company counts its inventory as less than the actual amount on hand.How will this error affect the income statement?

Accepted Answer

Net income...

Question 18

If a company mistakenly counts less items during a physical inventory than actually exist,how will the error affect the cost of goods sold?

Accepted Answer

A)   understated
B)   overstated
C)   no change
D)   only inventory will be affectedE) A) and C)
F) C) and D)

Question 19

During periods of increasing costs,an advantage of the LIFO inventory cost method is that it matches more recent costs against current revenues.

Accepted Answer

A) True 
 B)False

Question 20

Under the _____ inventory method,accounting records maintain a continuously updated inventory value.

Accepted Answer

A)   retail
B)   periodic
C)   physical
D)   perpetualE) A) and B)
F) A) and C)

Exam 6: Inventories

Of the three widely used inventory costing methods (FIFO,LIFO,and average cost),the LIFO method of costing inventory assumes costs are charged based on the most recent purchases first.

Correct AnswerverifiedShow Answer

​All of the following are documents used for inventory control except

Correct AnswerverifiedShow Answer

During the taking of its physical inventory on December 31,2014,Barry's Bike Shop incorrectly counted its inventory as $350,000 instead of the correct amount of $280,000.The effect on the balance sheet and income statement would be

Correct AnswerverifiedShow Answer

Under the _____ inventory method,accounting records maintain a continuously updated inventory value.

Correct AnswerverifiedShow Answer

Average cost periodic (round average to nearest cent)

Correct AnswerverifiedTotal sales (not dep...View AnswerShow Answer

The following data were taken from Castle,Inc. Determine the inventory turnover ratio and the number of days' sales in inventory for Castle Inc.Round to two decimal places.

Correct AnswerverifiedInventory turnover = Cost of goods sold ...View AnswerShow Answer

​Excess inventory results in all of the following except

Correct AnswerverifiedShow Answer

The value of ending inventory using FIFO is ​

Correct AnswerverifiedShow Answer

If the cost of an item of inventory is $60 and the current replacement cost is $75,the amount included in inventory according to the lower of cost or market is

Correct AnswerverifiedShow Answer

While taking a physical inventory,a company counts its inventory as less than the actual amount on hand.How will this error affect the income statement?

Correct AnswerverifiedNet income...View AnswerShow Answer

Control of inventory should begin as soon as the inventory is received.Which of the following internal control steps is not done to meet this goal?

Correct AnswerverifiedShow Answer

Generally,the lower the number of days' sales in inventory,the better.

Correct AnswerverifiedShow Answer

If a company mistakenly counts less items during a physical inventory than actually exist,how will the error affect the cost of goods sold?

Correct AnswerverifiedShow Answer

For the year ended December 31,Depot Max's cost of goods sold was $56,900.Inventory at the beginning of the year was $6,540.Ending inventory was $7,250.Compute Depot Max's inventory turnover for the year.

Correct AnswerverifiedShow Answer

Complete the chart,indicating whether LIFO or FIFO would give the highest and lowest amounts for each item,assuming a period of increasing costs.

Correct AnswerverifiedShow Answer

What is the amount of cost of goods sold for the year according to the LIFO method?

Correct AnswerverifiedShow Answer

During periods of increasing costs,an advantage of the LIFO inventory cost method is that it matches more recent costs against current revenues.

Correct AnswerverifiedShow Answer

The weighted average cost method will always yield results between FIFO and LIFO.

Correct AnswerverifiedShow Answer

Fill in the missing amounts from the chart below regarding the calculation of Bean Corporation's estimated inventory using the retail method of estimation.

Correct AnswerverifiedShow Answer

All of the following are reasons to use an estimated method of costing inventory except ​

Correct AnswerverifiedShow Answer

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All of the following are documents used for inventory control except

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Total sales (not dep...
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Inventory turnover = Cost of goods sold ...
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Excess inventory results in all of the following except

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The value of ending inventory using FIFO is

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Net income...
View Answer

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All of the following are reasons to use an estimated method of costing inventory except

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