You are watching: When using the periodic lifo inventory cost method, which of the following statements is correct?
B. Companies that room manufacturers list their finished goods, work-in-process and also raw products inventory separately.
C. List is classified together a permanent asset on the balance sheet.
D. Merchandisers buy list in finished form ready because that resale.
Which the the complying with statements about inventory calculations is true?
A. Beginning inventory + net purchases - ending inventory = cost of goods sold.
B. Goods available for revenue + finishing inventory = price of products sold.
C. Beginning inventory + net purchases - ending inventory = goods available for sale.
D. Goods available for sale + cost of goods sold = ending inventory.
Which that the adhering to statements concerning inventory costing approaches is true?
A. The LIFO an approach assumes that the costs for the newest goods (the critical ones in) are used very first and the older prices are left in finishing inventory.
B. During a period of climbing prices, LIFO outcomes in a higher income tax price than go FIFO.
C. Worldwide Financial Reporting standards (IFRS) permit the use of LIFO yet not FIFO.
D. In the U.S., if a agency uses LIFO ~ above the revenue tax return, it might use a different method for jae won reporting.
The LIFO method assumes the the expenses for the newest goods (the critical ones in) room used an initial and the older prices are left in ending inventory.
Which of the complying with statements concerning the calculations provided for the weighted average inventory costing an approach is true?
A. Under the load average price method, if the items in inventory were purchased at three different prices, the three various prices would be added and then separated by 3 to find the weighted average cost per unit.
B. Once the weighted average inventory costing method is used, finishing inventory and cost of products sold space calculated using different costs per unit.
C. There is no difference in the calculations under the weight average an approach whether a perpetual or periodic inventory device is used.
D. The weighted-average an approach will create an inventory cost which is in between the results of FIFO and LIFO inventory costing methods.
The weighted-average technique will create an inventory price which is between the outcomes of FIFO and LIFO list costing methods.
Which that the following statements regarding the lower of cost or market dominance is not true?
A. The lower of expense or market ascendancy sometimes reasons the book value the inventory come be created down listed below cost, but will never reason the book value of list to be increased above cost.
B. The amount of inventory write-down is an expense which most companies report as price of goods sold.
C. Reduced of expense or market is an perform cost an approach used come determine cost of items sold and ending inventory.
D. The lower of expense or market preeminence is based upon the conservatism concept.
Lower of expense or market is an perform cost technique used to determine price of goods sold and ending inventory.
Which one of the adhering to statements about inventory is not true?
A. An increase in inventory levels is always a authorize of incompetent in inventory management.
B. The measure of inventory influence both the balance sheet and also the earnings statement in ~ an accounting period.
C. The finishing inventory that one accounting period becomes the start inventory the the next bookkeeping period.
D. The price of merchandise deserve to vary end time and may be influenced by weather, politics, and technical innovation.
An boost in inventory levels is constantly a authorize of incompetent in inventory management.
Which of the complying with statements about inventory measures is not true?
A. If the list turnover proportion increases, the job to offer measure decreases.
B. The work to sell measure can assist managers do ordering decisions for inventory.
C. A greater inventory turnover ratio shows that inventory is moving an ext quickly from purchase to sale.
D. That is rarely for a company with a lower gross profit portion to have actually a quicker inventory turnover.
It is rarely for a agency with a reduced gross profit percentage to have actually a faster inventory turnover.
Which of the following statements about comparisons do in regulating inventory is not true?
A. In do comparisons of gaue won statements, the is desirable to to compare data calculated using the very same inventory costing methods.
B. The inventory turnover ratio and also days to market measure will certainly be influenced by the expense flow presumptions used, which causes problems for financial explanation users.
C. List turnover and also days to offer are often influenced by transforms in the financial climate.
D. The list turnover and days to sell ratios are consistent among companies in different industries.
The inventory turnover and also days to sell ratios are consistent amongst companies in different industries.
Carrying inadequate quantities of perform on hand:
A. Would not affect the company"s profitability.
B. May an outcome in lost sales.
C. Has small effect on client satisfaction.
D. Will rise the costs of transporting inventory.
may result in shed sales.
Which that the complying with is not true if excessive quantities of inventory are purchased?
A. Storage and interest expenses may increase.
B. Goods can have to be sold at large discounts.
C. Over there is a better probability that items will end up being damaged or obsolete.
D. The inventory turnover proportion is likely to increase.
The perform turnover proportion is most likely to increase.
The primary goals of inventory administration do not include:
A. Maintaining a sufficient quantity of list to save customers satisfied.
B. Maintaining enough quality of inventory to store customers satisfied.
C. Minimizing the costs linked with keeping inventories.
D. Minimizing the amount of ending inventory.
minimizing the amount of finishing inventory.
Which that the following is not true about an auto manufacturer"s inventory?
A. Tires, batteries, glass, paint, headlamp bulbs, and electric wiring would certainly be consisted of in raw products inventory.
B. Incomplete dare that room still gift processed would certainly be had in work-in-process inventory.
C. Perfect cars ready to be shipped to dealers would be consisted of in finished goods inventory.
D. Dare that have been offered to dealers would certainly be contained in finished items inventory.
Cars that have actually been marketed to dealers would be consisted of in finished products inventory.
Which of the adhering to is the equation for price of products sold?
A. Start inventory + network purchases - ending inventory
B. Beginning inventory + net purchases + ending inventory
C. Net purchases - ending inventory
D. Finishing inventory + network purchases - start inventory
Beginning perform + net purchases - ending inventory
A goods company"s beginning inventory add to merchandise purchase equals:
A. Finishing inventory.
B. Cost of products sold.
C. Goods easily accessible for sale.
D. Network purchases.
goods obtainable for sale.
A merchandise company"s beginning inventory to add merchandise purchases minus finishing inventory equals:
A. Net sales.
B. Price of items sold.
C. Goods easily accessible for sale.
D. Network purchases.
cost of goods sold.
Which that the following would be in the raw materials inventory of a agency making cheese?
A. Milk and also cream supplied to make the cheese.
B. Cheese that has been made but is curing before being ready to sell.
C. Cured cheese the is wait to be transport to retailers.
D. Partially processed cheese.
Milk and cream offered to do the cheese.
Which of the following would it is in in the work-in-process perform of a firm making cheese?
A. Milk and cream used to make the cheese.
B. Cheese that has actually been made but is curing prior to being prepared to sell.
C. Cured cheese that is waiting to be shipped to retailers.
D. Cured cheese that has actually been sold to retailers.
Cheese that has been made yet is curing prior to being all set to sell.
Which that the following would it is in in the finished items inventory that a firm making cheese?
A. Milk and cream used to do the cheese.
B. Cheese that has actually been made but is curing prior to being all set to sell.
C. Cured cheese that is waiting to be transport to retailers.
D. Cured cheese that has actually been marketed to retailers.
Cured cheese that is waiting to be shipped to retailers.
The particular identification method would more than likely be most proper for which of the following goods?
A. Box of brass 4-inch drywall screws at house Depot.
B. Bottles of suntan scent in Wal-Mart"s main warehouse.
C. To adjust of tires at the Goodyear plant.
D. Diamond necklaces in ~ a Tiffany & Co. Jewelry store.
Diamond necklaces in ~ a Tiffany & Co. Jewel store.
The Acme copy, group buys 300 units of was in January in ~ $5 each. In February, Acme buys 500 units at $4 each and in March it buys 200 units at $6 each. Acme sell 150 units throughout this quarter. What is the cost of items sold under the FIFO method?
If a agency purchased 200 systems of inventory at $9 per unit and also 300 units at $10 every unit, the weighted typical unit expense for this inventory would be:
The LIFO inventory costing technique assumes the the expense of the units most recently to buy is:
A. The critical to it is in assigned to cost of products sold.
B. The an initial to it is in assigned to finishing inventory.
C. The an initial to it is in assigned to cost of items sold.
D. The last to be assigned come units easily accessible for sale.
the first to be assigned to cost of items sold.
Which list costing method generally results in the many recent costs being assigned to ending inventory?
C. Weighted typical cost.
D. Straightforward average cost.
During 2013, Shockglass agency recorded inventory purchases of $45,000 and cost of products sold that $50,000. If inventory at the start of the year to be $15,000, the ending inventory balance must have been:
The 2014 records of Thompson agency showed beginning inventory, $6,000; cost of items sold, $14,000; and also ending inventory, $8,000. The price of purchase was:
The Acme coporation, group buys 300 systems of was in January in ~ $5 each. Acme buys 500 units at $4 every in February and also 200 systems at $6 each in March. Acme sell 150 units during this quarter. Acme offers a regular inventory system and had no beginning inventory. What is its cost of products sold for the quarter using the LIFO method?
Which the the following statements is true?
A. Once unit prices are steadily rising or falling, the weighted average cost an approach yields a cost of items sold between that the FIFO and LIFO.
B. FIFO will bring about the greatest net earnings if unit prices are falling.
C. LIFO will always yield a smaller net earnings than FIFO.
D. Details identification is the most practical, however least accurate, measure up of cost and also net income.
When unit costs are steadily increasing or falling, the weighted average cost method yields a cost of products sold in between that that FIFO and also LIFO.
Which that the following results would occur as a an outcome of a acquisition of merchandise for cash in a perpetual list system?
A. Complete assets increase.
B. Full assets room unchanged.
C. Full liabilities increase.
D. Full stockholders" equity decreases.
Total assets are unchanged.
An convey to finishing inventory under the lower of cost or market (LCM) rule would it is in least likely to be taped by a agency that sells:
A. A family members staple choose laundry detergent.
B. A fad product like bathing suits.
C. Seasonal items favor snow blowers.
D. High-tech products like personal Digital Assistants.
a household staple choose laundry detergent.
An adjustment to finishing inventory under the lower of expense or sector (LCM) dominance would it is in most likely to be videotaped by a firm that sells:
A. Plastic warehouse containers.
B. Paper clips.
C. Body lotion.
D. Designer clothes.
When the reduced of cost or sector (LCM) preeminence requires an perform adjustment:
A. The convey usually, yet not always, reduce the publication value that inventory.
B. The write-down is normally reported as a part of cost of goods sold.
C. The list adjustment is recorded in a contra-account called merchandise allowances.
D. The write-down walk not impact any of the financial statements.
the write-down is generally reported as a component of expense of items sold.
Your company has 500 devices in inventory that had actually been purchased for $12 each and also that would at this time cost $15 to replace. Her supplier has just announced the expense of these products is climbing to $16.50.
A. Your company should make no adjustments to the inventory account.
B. Your company should readjust the perform account making use of the reduced of the recent industry values, i beg your pardon is $15.
C. Your company should readjust the inventory account using the cost, which is $12.00.
D. Your agency should change the list account using the median of the recent sector values, i beg your pardon is $14.50.
Your firm should do no adjustments come the perform account.
Your firm has 100 systems in inventory, purchased at $16 per unit, that might be changed for $14.
A. The firm should credit expense of products sold for $200.
B. The firm should debit price of goods sold because that $1,400.
C. The company should credit inventory for $200.
D. The company should debit inventory because that $1,400.
The firm should credit transaction inventory for $200.
If the market value of goods in inventory drops to $26,000 below its cost, the company should:
A. Execute nothing, due to the fact that assets space reported at their original purchase price.
B. Credit inventory because that $26,000.
C. Debit inventory because that $26,000.
D. Usage the weighted average cost an approach since that method provides a more accurate indicator of existing value.
credit inventory because that $26,000.
When the replacement expense of inventory drops below the cost recorded in the jae won records, applying the lower of expense or sector (LCM) ascendancy causes:
A. A diminish in cost of goods sold.
B. No readjust in network income, various other things gift equal.
C. A reduction in the publication value of total assets.
D. An increase in network income.
a palliation in the publication value of complete assets.
The process of buying and also selling perform is recognized as inventory:
Inventory levels rise by 10% in ~ your firm during the fourth quarter. Based upon this increase, which of the complying with statements is true?
A. This is always an excellent news due to the fact that inventories space an asset to the company.
B. This could be an excellent news if the agency is ordering an ext goods since sales show up to it is in rising.
C. This could be poor news if the firm is ordering an ext goods due to the fact that unit prices are falling.
D. This is always bad news because greater inventories mean higher costs.
This could be good news if the company is ordering much more goods since sales show up to be rising.
For a manufacturer, list turnover refers to how many times:
A. During the duration the firm replaces the raw materials inventory.
B. The agency buys and sells its inventory of finished goods.
C. The company produces its goods and delivers the inventory come customers.
D. The firm orders raw materials.
the agency produces that is goods and also delivers the inventory come customers.
For a merchandiser, list turnover refers to how countless times:
A. During the duration the agency replaces that is raw materials inventory.
B. The firm buys and also sells its inventory of goods.
C. The company produces and delivers its list of items to customers.
D. The agency orders merchandise.
the firm buys and also sells its perform of goods.
An boosting balance in the perform account and a decreasing inventory turnover ratio means that the inventory develop up is developing because:
A. Goods are not selling as rapid as they were in the past.
B. The agency is expecting to sell an ext in the future.
C. Goods are selling, but it is taking much longer to collection payment.
D. Products cannot be shipped quick enough.
goods space not selling as rapid as they to be in the past.
An increasing balance in the list account and a faster inventory turnover proportion would indicate that the inventory accumulation is emerging because:
A. Goods are not selling as quick as anticipated.
B. The agency is expecting come sell an ext in the future.
C. Goods are selling however it is taking longer to collect payment.
D. The economy is slow down.
the firm is expecting come sell more in the future.
Which that the adhering to companies would certainly be least concerned around a low inventory turnover ratio?
A. A fish sector selling fresh fish.
B. A hardware company selling drywall screws.
C. A dairy company selling butter and milk.
D. A semiconductor firm selling microchips.
A hardware firm selling drywall screws.
Which the the following would reason the best increase in a company"s inventory sales ratio?
A. Keeping the very same amount of inventory on hand if unit sales are increasing.
B. Boosting the amount of list on hand when unit sales are increasing.
C. Maintaining the very same amount of list on hand when unit sales are decreasing.
D. Decreasing the amount of inventory on hand if unit sales are increasing.
Decreasing the amount of inventory on hand when unit sales space increasing.
An increasing inventory turnover ratio indicates:
A. A longer time span in between the ordering and also receiving that inventory.
B. A shorter time span in between the ordering and receiving that inventory.
C. A shorter time span in between the purchase and also sale the inventory.
D. A longer time span between the purchase and also sale of inventory.
a much shorter time span between the purchase and sale the inventory.
Which the the complying with would not be influenced by the choice of an inventory costing an approach (that is between FIFO, LIFO, load average, and details identification)?
A. Net sales
B. Expense of goods sold
C. Pistol profit
D. Net income
Which of the complying with statements is true?
A. FIFO results in a reduced net revenue than LIFO when expenses are increasing.
B. LIFO results in a higher net income than FIFO when costs are increasing.
C. LIFO results in a greater net revenue than FIFO when expenses are decreasing.
D. LIFO outcomes in the exact same net earnings as FIFO when prices are increasing.
LIFO results in a higher net revenue than FIFO when expenses are decreasing.
The most commonly used perform costing method in the U.S. Is:
B. Particular identification.
D. Load average.
On April 6, Lopez Co. To buy $5,000 of merchandise, state 1/15, n/30. Lopez Co. Paid for the acquisition on April 26. The entry to document the payment on April 26 in a perpetual perform system includes which that the following?
A. A credit to inventory because that $50.
B. A debit to accounts payable for $4,900.
C. A credit transaction to account payable because that $5,000.
D. A credit transaction to cash because that $5,000.
A credit transaction to cash for $5,000.
Because LIFO offers older costs for inventory, in time of rising prices:
A. LIFO results in a higher book value of inventory and also lower perform turnover proportion than FIFO.
B. LIFO outcomes in a lower book value the inventory and also lower list turnover ratio than FIFO.
C. LIFO results in a higher book value of list and higher inventory turnover proportion than FIFO.
D. LIFO results in a lower publication value of inventory and higher inventory turnover proportion than FIFO.
LIFO outcomes in a lower publication value of perform and greater inventory turnover ratio than FIFO.
One that the most common sources of misstatement in financial statements is the:
A. Use of alternating inventory costing methods.
B. Fail to compose down inventory when the market value is below cost.
C. Failure to report stock concerns appropriately.
D. Erroneously calculating the inventory sales ratio.
failure to write down inventory as soon as the industry value is below cost.
A one-time error in the applications of the reduced of cost or sector (LCM) rule in the current period distorts financial outcomes for the present accounting duration
B. And also the period before.
C. And the period after.
D. And all periods after.
and the period after.
Which the the adhering to statements is true?
A. Valuing list under LIFO may produce different results depending on whether a perpetual or regular inventory device is used.
B. Valuing list under the weighted mean cost technique always produces the same results using one of two people a perpetual or regular inventory system.
C. Valuing inventory under FIFO may develop different results depending upon whether a perpetual or regular inventory device is used.
D. Utilizing the particular identification method will create different results depending upon whether perpetual or periodic inventory device is used.
Valuing list under LIFO may produce different results relying on whether a perpetual or routine inventory mechanism is used.
A $15,000 overstatement the the 2014 ending inventory was uncovered after the gaue won statements because that the year were prepared. How would that inventory error affect the 2014 financial statements?
A. Present assets were overstated and net earnings was understated.
B. Current assets to be understated and also net earnings was understated.
C. Current assets were overstated and net income was overstated.
D. Present assets were understated and net revenue was overstated.
Current assets to be overstated and also net earnings was overstated.
A company purchased $6,000 the merchandise. Transportation costs were second $100. The agency returned $250 that the merchandise and then payment the invoice in ~ the 2% discount period. What is the full amount of cash paid?
A retailer using a regular inventory system returned $3,000 of defective merchandise which to be purchased ~ above account from among its everyone suppliers. The entry to document this transaction top top the retailer"s publications would include a debit to
A. Account receivable.
B. Expense of goods sold.
C. Account payable.
Which the the adhering to accounts would generally have a credit transaction balance?
B. Price of products sold
D. Sales returns & allowances
If a firm"s start inventory is $35,000, products purchased throughout the duration cost $120,000, and also the cost of items sold because that the duration is $140,000, what is the lot of the ending inventory?
The inventory costing method that smoothes out changes in costs is
An error in the finishing inventory one period causes one offsetting error in the next period, and as a result:
A. It affects only earnings statement accounts.
B. It affects just balance paper accounts.
C. Management have the right to ignore the error.
D. That is a self-correcting or counter-balancing error.
it is a self-correcting or counter-balancing error.
An understatement the the finishing inventory balance will cause:
A. Expense of products sold to it is in overstated and net income to be understated.
B. Expense of products sold to be overstated and net revenue to it is in overstated.
C. Price of goods sold to be understated and also net revenue to it is in overstated.
D. Price of products sold to it is in overstated and net earnings to it is in correct.
Cost of products sold to be overstated and also net income to be understated.
The inventory turnover proportion is calculate as:
Cost of items sold split by typical inventory.
Days to offer is calculation as:
365 divided by Inventory sales ratio.
An understatement that the start inventory balance causes:
A. Expense of goods sold to be understated and also net revenue to it is in understated.
B. Price of goods sold to it is in understated and net income to it is in overstated.
C. Price of goods sold to it is in overstated and net income to be understated.
D. Expense of products sold to it is in overstated and also net revenue to it is in correct.
Cost of goods sold to it is in understated and net income to it is in overstated.
In using the lower of price or market method to inventory, sector is characterized as
A. Historical cost.
B. Present replacement cost.
C. Current sales price.
D. Weighted-average cost.
current replacement cost.
Generally accepted accounting principles (GAAP) require that the perform be report at:
A. Market value.
B. Historical cost.
C. Lower of expense or market.
D. Sleeve value.
lower of expense or market.
A agency had been selling its product because that $20 every unit, yet recently lower the selling price to $15 every unit. The company"s present inventory consists of 200 systems purchased at $16 per unit. The replacement expense of this was is at this time $13 every unit. In ~ what amount need to the company"s list be reported on the balance sheet under the lower of expense or market rule?
The net sales that a firm is $300,000. The price of goods available for revenue is $280,000 and also the pistol profit percentage is 35%. What is the lot of finishing inventory?
Which of the adhering to will occur when inventory costs are decreasing?
FIFO will an outcome in a reduced net income and also a lower ending inventory then will certainly LIFO.
When a firm uses a perpetual list system, purchase returns will be videotaped by:
A. Debiting inventory.
B. Debiting purchase returns.
C. Crediting accounts payable.
D. Crediting inventory.
What is the quantity of the discount to it is in taken by a agency that purchases inventory because that $10,000 with terms 2/10, n/30, return $2,000 that the perform purchased, receives an pin money for defective was of $100, and also pays the quantity due within the discount period?
Which the the following activities would not impact the inventory account because that a firm that offers the perpetual perform system?
B. Acquisition returns
In a duration of climbing prices, the inventory costing method that will reason the company to have the lowest revenue taxes is
C. Weight average.
D. Particular identification.
In a duration of climbing prices, the perform costing an approach that will reason the agency to have actually the lowest cost of items sold is
C. Load average.
D. Particular identification.
In a duration of increasing prices, the perform costing an approach that assigns a worth to inventory that approximates current cost is
C. Weighted average.
D. Certain identification.
In a duration of increasing prices, the list costing technique that will tend to smooth out erratic alters in costs is
C. Weighted average.
D. Certain identification.
In a period of fallout’s prices, the list costing an approach that will reason the agency to have the lowest price of products sold is
C. Weight average.
D. Particular identification.
In a duration of fall prices, the perform costing method that assigns a value to inventory that approximates current cost is
C. Weighted average.
D. Details identification.
Which of the adhering to is a valid reason for a agency to forgo a discount top top a purchase made under state 2/10, n/30?
A. The company does not have the cash and would have to borrow funds to salary the invoice within the discount period.
B. The interest rate the agency can earn on investments exceeds the annualized discount rate.
C. The company plans to return several of the merchandise before the finish of the credit period.
D. Other suppliers offer a 1% discount for prompt payment.
The interest rate the agency can knife on investments exceeds the annualized discount rate.
In a perpetual inventory system, paying transport charges on goods purchased FOB shipping suggest would have actually which that the following effects?
A. Decrease operation expenses.
B. Increase selling, general, and also administrative expenses.
C. Decrease cost of items sold.
D. Boost inventory.
Which the the adhering to is true about terms 2/10, n/30?
A. A 2% discount is given if the invoice is payment in 10 days; the complete amount is early in 30 days.
B. A 10% discount is offered if the invoice is paid in 2 days; the full amount is due in 30 days.
C. The discount period is 30 days.
D. The credit period is 10 days.
A 2% discount is provided if the invoice is payment in 10 days; the full amount is early in 30 days.
Which that the adhering to statements is not true around accounts payable?
A. That is credited when goods is to buy on account.
B. The is attributed for transportation charges paid.
C. That is debited as soon as payment is make on account.
D. That is debited when merchandise is reverted by the purchaser.
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It is credited for transportation charges paid.
Lower of cost or sector is an applications of which audit principle? A. Consistency B. Conservatism C. Equivalent D. Accumulation Basi