Question 1

Cinnamon Buns Co. (CBC)  started 2018 with $52,000 of merchandise on hand. During 2018, $280,000 in merchandise was purchased on account with credit terms of 2/10, n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $9,000. Merchandise with an invoice amount of $4,000 was returned for credit. Cost of goods sold for the year was $316,000. CBC uses a perpetual inventory system. 
-What is cost of goods available for sale, assuming CBC uses the gross method?

Accepted Answer

A)   $312,480.
B)   $326,000.
C)   $331,480.
D)   $337,000.E) A) and B)
F) B) and C)

Question 2

Buckeye Corporation adopted dollar-value LIFO on January 1, 2018, when the inventory value was $500,000 and the cost index was 1.0. On December 31, 2018, the inventory value at year-end costs was $535,000 and the cost index was 1.06. Buckeye would report a LIFO inventory of:

Accepted Answer

A)   $504,717.
B)   $530,000.
C)   $505,000.
D)   $533,019.E) None of the above
F) All of the above

Question 3

Nu Company reported the following pretax data for its first year of operations. 
- What is Nu's gross profit ratio if it elects LIFO?

Accepted Answer

A)   80%.
B)   49%.
C)   40%.
D)   5%.E) B) and C)
F) C) and D)

Question 4

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Cost flow assumption

Accepted Answer

A)  Not feasible for many types of products.
B)  Not required to correspond to actual product flow.
C)  Legal title passes when goods are delivered to common carrier.
D)  Legal title passes when goods arrive at customer location.
E)  Making sure goods in transit are properly accounted for.F) D) and E)
G) A) and C)

Question 5

-Required: Compute the January 31 ending inventory and cost of goods sold for January, assuming Denver uses FIFO.

Accepted Answer

The answer of  
-Required: Compute the January 31 ending...

Question 6

Spando Apparel uses the LIFO inventory method for external reporting and for income tax purposes but maintains its internal records using FIFO. The following disclosure note was included in a recent annual report:

The company's income statement reported cost of goods sold of $3,120 million for the fiscal year ended December 31, 2018.
Required:
1. Spando adjusts the LIFO reserve at the end of its fiscal year. Prepare the December 31, 2018, adjusting entry to record the cost of goods sold adjustment.
2. If Spando had used FIFO to value its inventories, what would cost of goods sold have been for the 2018 fiscal year?

Accepted Answer

The answer of Spando Apparel uses the LIFO inventory method...

Question 7

In a perpetual average cost system:

Accepted Answer

A)   A new weighted-average unit cost is calculated each time additional units are purchased.
B)   The cost allocated to ending inventory is generally the same as it would be in a periodic inventory system.
C)   The moving-average unit cost is determined following each sale.
D)   The average is determined by dividing the total number of units sold by the cost of units purchased during the period.E) B) and C)
F) B) and D)

Question 8

Briefly explain the advantages of dollar-value LIFO (DVL).

Accepted Answer

DVL is less costly to apply than unit LI...

Question 9

Listed below are 10 terms, followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term.
-F.o.b. destination

Accepted Answer

A)  Goods are transferred to another company but title remains with transferor.
B)  Items sold are those acquired first.
C)  Items sold are those acquired last.
D)  Inventory is viewed as a quantity of value.
E)  Legal title passes when goods arrive at customer location.F) Items sold come from a mixture of goods acquired during the period.G) Continuously records changes in inventory.H) Legal title passes when goods are delivered to common carrier.I) Adjusts inventory at the end of the period.J) If LIFO is used for income tax purposes, it must be used for financial reporting.K) F) and I)
L) A) and I)

Question 10

The Genworth Company adopted the dollar-value LIFO method on January 1, 2018 when the inventory value of its one inventory pool was $450,000. The company decided to use an external index, the Consumer Price Index (CPI), to adjust for changes in the cost level. On January 1, 2018, the CPI was 280. On December 31, 2018, inventory valued at year-end cost was $504,000 and the CPI was 294.
Required:
Calculate the inventory value at the end of 2018 using the dollar-value LIFO method.

Accepted Answer

Set the base year, 1...

Question 11

Inventory records for Herb's Chemicals revealed the following: March 1, 2018, inventory: 1,000 gallons @ $7.20 = $7,200 
- Ending inventory assuming LIFO in a periodic inventory system would be:

Accepted Answer

A)   $5,040.
B)   $5,055.
C)   $5,075.
D)   $5,135.E) None of the above
F) A) and D)

Question 12

Briefly explain how companies that use LIFO can both increase and decrease reported earnings by "managing" ending inventories.

Accepted Answer

A company that uses LIFO can manipulate ...

Question 13

Cinnamon Buns Co. (CBC)  started 2018 with $52,000 of merchandise on hand. During 2018, $280,000 in merchandise was purchased on account with credit terms of 2/10, n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $9,000. Merchandise with an invoice amount of $4,000 was returned for credit. Cost of goods sold for the year was $316,000. CBC uses a perpetual inventory system.
- Assuming CBC uses the gross method to record purchases, ending inventory would be:

Accepted Answer

A)   $6,480.
B)   $15,400.
C)   $15,480.
D)   $21,000.E) All of the above
F) None of the above

Question 14

The following information is taken from the accounting records of Madeline Inc. for the year 2018. Missing information has been left blank. Inventory is the only supply that Madeline purchases on credit.

Required: Compute the missing amounts.

-

Accepted Answer

The answer of The following information is taken from the...

Question 15

Listed below are 10 terms, followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term.
-LIFO conformity rule

Accepted Answer

A)  Goods are transferred to another company but title remains with transferor.
B)  Items sold are those acquired first.
C)  Items sold are those acquired last.
D)  Inventory is viewed as a quantity of value.
E)  Legal title passes when goods arrive at customer location.F) Items sold come from a mixture of goods acquired during the period.G) Continuously records changes in inventory.H) Legal title passes when goods are delivered to common carrier.I) Adjusts inventory at the end of the period.J) If LIFO is used for income tax purposes, it must be used for financial reporting.K) A) and I)
L) D) and F)

Question 16

Inventory costing methods are merely means by which costs are allocated between ending inventory and cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 17

Listed below are 10 terms, followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term.
-LIFO

Accepted Answer

A)  Goods are transferred to another company but title remains with transferor.
B)  Items sold are those acquired first.
C)  Items sold are those acquired last.
D)  Inventory is viewed as a quantity of value.
E)  Legal title passes when goods arrive at customer location.F) Items sold come from a mixture of goods acquired during the period.G) Continuously records changes in inventory.H) Legal title passes when goods are delivered to common carrier.I) Adjusts inventory at the end of the period.J) If LIFO is used for income tax purposes, it must be used for financial reporting.K) C) and D)
L) A) and I)

Question 18

Listed below are 10 terms, followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term.
-Average cost

Accepted Answer

A)  Goods are transferred to another company but title remains with transferor.
B)  Items sold are those acquired first.
C)  Items sold are those acquired last.
D)  Inventory is viewed as a quantity of value.
E)  Legal title passes when goods arrive at customer location.F) Items sold come from a mixture of goods acquired during the period.G) Continuously records changes in inventory.H) Legal title passes when goods are delivered to common carrier.I) Adjusts inventory at the end of the period.J) If LIFO is used for income tax purposes, it must be used for financial reporting.K) A) and F)
L) C) and H)

Question 19

The use of LIFO in accounting for a firm's inventory:

Accepted Answer

A)   Usually matches the physical flow of goods through the business.
B)   Is usually used for internal management purposes.
C)   Usually provides a better match of expenses with revenues.
D)   None of these answer choices are correct.E) A) and D)
F) A) and C)

Question 20

In a periodic inventory system, the cost of purchases is debited to:

Accepted Answer

A)   Purchases.
B)   Cost of goods sold.
C)   Inventory.
D)   Accounts payable.E) B) and C)
F) All of the above

Exam 8: Inventories: Measurement

Inventory costing methods are merely means by which costs are allocated between ending inventory and cost of goods sold.

Correct Answer
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The following information is taken from the accounting records of Madeline Inc. for the year 2018. Missing information has been left blank. Inventory is the only supply that Madeline purchases on credit. Required: Compute the missing amounts. -

Correct Answer
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In a perpetual average cost system:

Correct Answer
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Listed below are 10 terms, followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term. -Average cost

Correct Answer
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Set the base year, 1...
View Answer

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Listed below are 10 terms, followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term. -LIFO conformity rule

Correct Answer
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Briefly explain how companies that use LIFO can both increase and decrease reported earnings by "managing" ending inventories.

Correct Answer
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A company that uses LIFO can manipulate ...
View Answer

The use of LIFO in accounting for a firm's inventory:

Correct Answer
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Listed below are 10 terms, followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term. -F.o.b. destination

Correct Answer
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Inventory records for Herb's Chemicals revealed the following: March 1, 2018, inventory: 1,000 gallons @ $7.20 = $7,200 - Ending inventory assuming LIFO in a periodic inventory system would be:

Correct Answer
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-Required: Compute the January 31 ending inventory and cost of goods sold for January, assuming Denver uses FIFO.

Correct Answer
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Correct Answer
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Briefly explain the advantages of dollar-value LIFO (DVL).

Correct Answer
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DVL is less costly to apply than unit LI...
View Answer

In a periodic inventory system, the cost of purchases is debited to:

Correct Answer
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Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Cost flow assumption

Correct Answer
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Nu Company reported the following pretax data for its first year of operations. - What is Nu's gross profit ratio if it elects LIFO?

Correct Answer
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Listed below are 10 terms, followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term. -LIFO

Correct Answer
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Buckeye Corporation adopted dollar-value LIFO on January 1, 2018, when the inventory value was $500,000 and the cost index was 1.0. On December 31, 2018, the inventory value at year-end costs was $535,000 and the cost index was 1.06. Buckeye would report a LIFO inventory of:

Correct Answer
verified

Exam 8: Inventories: Measurement

Inventory costing methods are merely means by which costs are allocated between ending inventory and cost of goods sold.

Correct AnswerverifiedShow Answer

The following information is taken from the accounting records of Madeline Inc. for the year 2018. Missing information has been left blank. Inventory is the only supply that Madeline purchases on credit. Required: Compute the missing amounts. -

Correct AnswerverifiedShow Answer

In a perpetual average cost system:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Listed below are 10 terms, followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term. -Average cost

Correct AnswerverifiedShow Answer

Correct AnswerverifiedSet the base year, 1...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Listed below are 10 terms, followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term. -LIFO conformity rule

Correct AnswerverifiedShow Answer

Briefly explain how companies that use LIFO can both increase and decrease reported earnings by "managing" ending inventories.

Correct AnswerverifiedA company that uses LIFO can manipulate ...View AnswerShow Answer

The use of LIFO in accounting for a firm's inventory:

Correct AnswerverifiedShow Answer

Listed below are 10 terms, followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term. -F.o.b. destination

Correct AnswerverifiedShow Answer

Inventory records for Herb's Chemicals revealed the following: March 1, 2018, inventory: 1,000 gallons @ $7.20 = $7,200 - Ending inventory assuming LIFO in a periodic inventory system would be:

Correct AnswerverifiedShow Answer

-Required: Compute the January 31 ending inventory and cost of goods sold for January, assuming Denver uses FIFO.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Briefly explain the advantages of dollar-value LIFO (DVL).

Correct AnswerverifiedDVL is less costly to apply than unit LI...View AnswerShow Answer

In a periodic inventory system, the cost of purchases is debited to:

Correct AnswerverifiedShow Answer

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Cost flow assumption

Correct AnswerverifiedShow Answer

Nu Company reported the following pretax data for its first year of operations. - What is Nu's gross profit ratio if it elects LIFO?

Correct AnswerverifiedShow Answer

Listed below are 10 terms, followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term. -LIFO

Correct AnswerverifiedShow Answer

Buckeye Corporation adopted dollar-value LIFO on January 1, 2018, when the inventory value was $500,000 and the cost index was 1.0. On December 31, 2018, the inventory value at year-end costs was $535,000 and the cost index was 1.06. Buckeye would report a LIFO inventory of:

Correct AnswerverifiedShow Answer

Correct Answer
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Set the base year, 1...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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A company that uses LIFO can manipulate ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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DVL is less costly to apply than unit LI...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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