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Exam 5: Reporting and Analyzing Inventories

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Question 101

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The assignment of costs to cost of goods sold and inventory using weighted average usually yields different results depending on whether a perpetual or periodic system is used.

A) True
B) False

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Question 102

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The assignment of costs to cost of goods sold and inventory using FIFO usually yields different results depending on whether a perpetual or periodic system is used.

A) True
B) False

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Question 103

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When costs to purchase inventory regularly decline,which method of inventory costing will yield the lowest cost of goods sold?

In applying the lower of cost or market method to inventory valuation,market is defined as the current replacement cost.

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

A company had the following purchases and sales during its first year of operations: On December 31,there were 26 units remaining in ending inventory.Using the Perpetual FIFO inventory valuation method,what is the value of cost of goods sold? (Assume all sales were made on the last day of the month.)

Underwood had cost of goods sold of $8 million and its ending inventory was $2 million.Therefore,its days' sales in inventory equals 25 days.

In a period of rising purchase costs,LIFO usually gives a lower taxable income and therefore,yields a tax advantage.

Interim financial statements:

The ________ method of assigning costs to inventory and cost of goods sold requires that we divide the cost of goods available for sale by the units of inventory available at the time of each sale.

When LIFO is used with the periodic inventory system,cost of goods sold is assigned costs from the most recent purchases at the point of each sale,rather than from the most recent purchases for the period.

Describe the internal controls that must be applied when taking a physical count of inventory.

Identify the items that are included in merchandise inventory.(In your answer address the special situations of goods in transit,consigned goods,and damaged goods.)

Using the retail inventory method,if the cost to retail ratio is 70% and ending inventory at retail is $145,000,then estimated ending inventory at cost is $207,143.

Strods Company reported the following purchases and sales for its only product.Strods uses a perpetual inventory system.Determine the cost assigned to cost of goods sold using LIFO.

A company had the following purchases and sales during its first year of operations: On December 31,there were 26 units remaining in ending inventory.Using the Periodic LIFO inventory valuation method,what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)

Given the following information,determine the cost of the inventory at June 30 using the perpetual LIFO inventory method. The cost of the ending inventory is:

A company had the following purchases and sales during its first month of operations: Using the Perpetual weighted average method,what is the value of cost of goods sold? (Round weighted average costs per unit to 2 decimal places.)

The inventory valuation method that identifies each item in ending inventory with a specific purchase and invoice is the:

Identify and describe the four inventory valuation methods.