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When inventory costs are declining,__________ generally results in a higher amount of reported net income.

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Using the weighted-average cost method,the average cost of inventory is calculated as the average unit cost of inventory purchased during the year.

A) True
B) False

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For each item below,indicate whether FIFO or LIFO will generally result in a higher reported amount when inventory costs are rising versus falling.  Inventory  Costs  Higher  total assets  Higher  cost of goods sold  Higher  net income  Rising  Falling \begin{array} { l c c c } { \begin{array} { c } \text { Inventory } \\\text { Costs }\end{array} } & \begin{array} { c } \text { Higher } \\\text { total assets }\end{array} & \begin{array} { c } \text { Higher } \\\text { cost of goods sold }\end{array} & \begin{array} { c } \text { Higher } \\\text { net income }\end{array} \\\hline \text { Rising } &\\\text { Falling } &\\\end{array}

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During periods when inventory costs are rising,cost of goods sold will most likely be:


A) Higher under FIFO than LIFO.
B) Higher under FIFO than average cost.
C) Lower under average cost than LIFO.
D) Lower under LIFO than FIFO.

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

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During 2012,a company sells 400 units of inventory for $85 each.The company has the following inventory purchase transactions for 2012:  Date  Transaction  Number  of Units  Unit  Cost  Total  Cost  Jan. 1  Beginning inventory 60$70$4,200 May 5  Purchase 1807212,960 Nov. 3  Purchase 1907514,250430$31,410\begin{array} { l l c c c } \text { Date } &{ \text { Transaction } } & \begin{array} { c } \text { Number } \\\text { of Units }\end{array} & \begin{array} { r } \text { Unit } \\\text { Cost }\end{array} & \begin{array} { c } \text { Total } \\\text { Cost }\end{array} \\\text { Jan. 1 } & \text { Beginning inventory } & 60 & \$ 70 & \$ 4,200 \\\text { May 5 } & \text { Purchase } & 180 & 72 & 12,960 \\\text { Nov. 3 } & \text { Purchase } & 190 & 75 & 14,250 \\\hline& & 430 & & \$ 31,410 \\\hline\end{array} Calculate ending inventory and cost of goods sold for 2012 assuming the company uses LIFO with a periodic inventory system.

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Ending inventory = $...

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What does it mean that FIFO has a balance sheet focus and LIFO has an income statement focus?

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Since FIFO assumes the first purchases s...

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Using the information below,determine the ending inventory value applying the lower-of-cost-or-market method.  Inventory Item  Quantity  Cost  Market  Cutlets 200$12$14 Chops 400$16$14 Shanks 300$15$12\begin{array}{llll}\text { Inventory Item } & \text { Quantity } &{\text { Cost }} &\text { Market }\\\hline\text { Cutlets } & 200 & \$ 12 & \$ 14 \\\text { Chops } & 400 & \$ 16 & \$ 14 \\\text { Shanks } & 300 & \$ 15 & \$ 12\end{array}


A) $13,300.
B) $12,000.
C) $11,600.
D) $13,700.

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

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The following information relates to inventory for Shoeless Joe Inc.  Date  Quantity  Price  March 1  Beginning Inventory 20$2 March 7  Purchase 153 March 11  Sale 257 March 12  Purchase 204\begin{array} { l l c c } \text { Date } & & \text { Quantity } & \text { Price } \\\text { March 1 } & \text { Beginning Inventory } & 20 & \$ 2 \\\text { March 7 } & \text { Purchase } & 15 & 3 \\\text { March 11 } & \text { Sale } & 25 & 7 \\\text { March 12 } & \text { Purchase } & 20 & 4\end{array} At what amount would Shoeless report gross profit using LIFO cost flow assumptions?


A) $105.
B) $80.
C) $175.
D) $120.

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

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Inventory records for Marvin Company revealed the following:  Date  Transaction  Number  of Units  Unit  Cost  Mar. 1  Beginning inventory 1,000$7.20 Mar. 10  Purchase 6007.25 Mar. 16  Purchase 8007.30 Mar. 23  Purchase 6007.35\begin{array} { l l c r } \text { Date } & { \text { Transaction } } & \begin{array} { c } \text { Number } \\\text { of Units }\end{array} & \begin{array} { r } \text { Unit } \\\text { Cost }\end{array} \\\text { Mar. 1 } & \text { Beginning inventory } & 1,000 & \$ 7.20 \\\text { Mar. 10 } & \text { Purchase } & 600 & 7.25 \\\text { Mar. 16 } & \text { Purchase } & 800 & 7.30 \\\text { Mar. 23 } & \text { Purchase } & 600 & 7.35\end{array} Marvin sold 2,300 units of inventory during the month.Ending inventory assuming LIFO would be:


A) $5,040.
B) $5,055.
C) $5,075.
D) $5,135.

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

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A company reports the following amounts for 2012:  Inventory (beginning) $20,000 Inventory (ending) 30,000 Purchases 160,000 Purchase returns 10,000\begin{array} { l r } \text { Inventory (beginning) } & \$ 20,000 \\\text { Inventory (ending) } & 30,000 \\\text { Purchases } & 160,000 \\\text { Purchase returns } & 10,000\end{array} Calculate cost of goods sold,the inventory turnover ratio,and the average days in inventory for 2012.

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Cost of goods sold = $140,000;...

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