Question 1

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 C)
F) None of the above

Question 2

Boston Dollar Store uses the gross method to record purchase discounts, and uses a perpetual inventory system. Boston engaged in the following transactions during April:
4/12 Purchased $15,000 in merchandise subject to terms of 2/10, n30. The goods were shipped f.o.b. shipping point.
4/13 Received a billing from Orange Freight Lines for $300 for the 4/12 purchase.
4/15 Returned $1,000 of merchandise from the 4/12 purchase.
4/20 Paid balances due from 4/12 purchase.
Required:
Prepare journal entries to record the above transactions.

Accepted Answer

The answer of Boston Dollar Store uses the gross method...

Question 3

When reported in financial statements, a LIFO allowance account usually:

Accepted Answer

A)  Is shown in the firm's income statement.
B)  Is added to LIFO cost to indicate what the inventory would cost on a FIFO basis.
C)  Indicates the effect on income if LIFO were not used.
D)  Shows the current rate of inflation for that asset.E) B) and C)
F) B) and D)

Question 4

Suppose that Badger's 2011 ending inventory, valued at year-end costs, was $153,600 and that the relative cost index for this inventory in 2011 was 1.20. What inventory balance would Badger report on its 12/31/11 balance sheet?

Accepted Answer

A)  $128,000
B)  $129,800
C)  $153,600
D)  None of these is correct $153,600/1.20 = $128,000.This includes the first two layers, the first at $100,000 and the second at $20,000, plus another at $8,000 from 2010.No additional layers are added in 2011 because the inventory in base year terms actually decreased in 2011.To get the 12/31/11 balance, the three layers are multiplied by their relative price indexes of 1.00, 1.05, and 1.10, respectively.E) B) and C)
F) A) and D)

Question 5

The LIFO Conformity Rule states that if LIFO is used for:

Accepted Answer

A)  One class of inventory, it must be used for all classes of inventory.
B)  Tax purposes, it must be used for financial reporting.
C)  One company in an affiliated group, it must be used by all companies in an affiliated group.
D)  Domestic companies, it must be used by foreign partners.E) A) and B)
F) All of the above

Question 6

On January 1, 2008, ECT Co. adopted the dollar-value LIFO method for its one inventory pool. The pool's value on this date was $600 million. The 2008 and 2009 ending inventory valued at year-end costs were $702 million and $840 million, respectively. The appropriate cost indexes are 1.08 for 2008 and 1.20 for 2009.
Required:
Calculate the inventory balance that ECT Co. would report on its year-end balance sheets for 2008 and 2009, using the dollar-value LIFO method.

Accepted Answer

The answer of On January 1, 2008, ECT Co. adopted...

Question 7

The following information is taken from the accounting records of Madeline Inc. for the year 2009. 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...

Question 8

Required: Compute the ending inventory and cost of goods sold assuming Denver uses average cost and a perpetual inventory system.

Accepted Answer

The answer of Required: Compute the ending inventory and cost...

Question 9

Chavez Inc adopted dollar-value LIFO on January 1, 2009, when the inventory value was $850,000. The December 31, 2009, ending inventory at year-end cost was $950,000 and the cost index for the year is 1.08.
Required:
Compute the dollar-value LIFO inventory valuation for the December 31, 2009, inventory.

Accepted Answer

The answer of Chavez Inc adopted dollar-value LIFO on January...

Question 10

Required: Compute the ending inventory and cost of goods sold assuming Random Creations uses LIFO and perpetual inventory system.

Accepted Answer

The answer of Required: Compute the ending inventory and cost...

Question 11

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 12

In a perpetual inventory system, the cost of inventory sold is:

Accepted Answer

A)  Debited to accounts receivable.
B)  Credited to cost of goods sold.
C)  Debited to cost of goods sold.
D)  Not recorded at the time.E) A) and B)
F) A) and C)

Question 13

During periods of falling prices, LIFO ending inventory will be less than FIFO ending inventory.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

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

Question 15

If a company uses LIFO, a LIFO liquidation is problematic for a company's income taxes:

Accepted Answer

A)  When inventory purchase costs are rising.
B)  When inventory purchase costs are declining.
C)  Whether inventory purchase costs are declining or rising.
D)  LIFO liquidations are not problematic for a company's income taxes.When costs are rising, a liquidation causes pre-tax income and income taxes to rise.E) All of the above
F) A) and B)

Question 16

It is the end of the accounting period, and your boss asks you to help determine the inventory balance to place in the company's balance sheet. Explain which physical quantities of inventory that you will include, and which you will exclude.

Accepted Answer

Taking a physical inventory is a necessa...

Question 17

Under the gross method, purchase discounts taken are:

Accepted Answer

A)  Deducted from interest expense.
B)  Added to net purchases.
C)  Added to interest income.
D)  Deducted from purchases.E) A) and B)
F) A) and C)

Question 18

Ending inventory using the LIFO method is:

Accepted Answer

A)  $ 650.
B)  $1,000.
C)  $ 707.
D)  $ 600.10 units $100 = $1,000.E) B) and C)
F) A) and D)

Question 19

In a period when costs are rising and inventory quantities are stable, the inventory method that would result in the highest ending inventory is:

Accepted Answer

A)  Weighted average.
B)  Moving average.
C)  FIFO.
D)  LIFO.E) A) and B)
F) A) and C)

Question 20

The following information is taken from the accounting records of Rapid Runner Inc. for the year 2009. Missing information has been left blank.
 
 Required: Compute the missing amounts.

-

Accepted Answer

The answer of   The following information is taken...

Exam 8: Inventories: Measurement

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

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

The following information is taken from the accounting records of Madeline Inc. for the year 2009. Missing information has been left blank. Inventory is the only supply that Madeline purchases on credit. Required: Compute the missing amounts. -

Correct Answer
verified

Correct Answer
verified

Required: Compute the ending inventory and cost of goods sold assuming Random Creations uses LIFO and perpetual inventory system.

Correct Answer
verified

Suppose that Badger's 2011 ending inventory, valued at year-end costs, was $153,600 and that the relative cost index for this inventory in 2011 was 1.20. What inventory balance would Badger report on its 12/31/11 balance sheet?

Correct Answer
verified

During periods of falling prices, LIFO ending inventory will be less than FIFO ending inventory.

Correct Answer
verified

The following information is taken from the accounting records of Rapid Runner Inc. for the year 2009. Missing information has been left blank. Required: Compute the missing amounts. -

Correct Answer
verified

Correct Answer
verified

What is cost of goods available for sale, assuming CBC uses the gross method?

Correct Answer
verified

If a company uses LIFO, a LIFO liquidation is problematic for a company's income taxes:

Correct Answer
verified

Required: Compute the ending inventory and cost of goods sold assuming Denver uses average cost and a perpetual inventory system.

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

In a period when costs are rising and inventory quantities are stable, the inventory method that would result in the highest ending inventory is:

Correct Answer
verified

In a perpetual inventory system, the cost of inventory sold is:

Correct Answer
verified

The LIFO Conformity Rule states that if LIFO is used for:

Correct Answer
verified

Ending inventory using the LIFO method is:

Correct Answer
verified

It is the end of the accounting period, and your boss asks you to help determine the inventory balance to place in the company's balance sheet. Explain which physical quantities of inventory that you will include, and which you will exclude.

Correct Answer
verified
Taking a physical inventory is a necessa...
View Answer

When reported in financial statements, a LIFO allowance account usually:

Correct Answer
verified

Under the gross method, purchase discounts taken are:

Correct Answer
verified

Exam 8: Inventories: Measurement

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

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

The following information is taken from the accounting records of Madeline Inc. for the year 2009. Missing information has been left blank. Inventory is the only supply that Madeline purchases on credit. Required: Compute the missing amounts. -

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Required: Compute the ending inventory and cost of goods sold assuming Random Creations uses LIFO and perpetual inventory system.

Correct AnswerverifiedShow Answer

Suppose that Badger's 2011 ending inventory, valued at year-end costs, was $153,600 and that the relative cost index for this inventory in 2011 was 1.20. What inventory balance would Badger report on its 12/31/11 balance sheet?

Correct AnswerverifiedShow Answer

During periods of falling prices, LIFO ending inventory will be less than FIFO ending inventory.

Correct AnswerverifiedShow Answer

The following information is taken from the accounting records of Rapid Runner Inc. for the year 2009. Missing information has been left blank. Required: Compute the missing amounts. -

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What is cost of goods available for sale, assuming CBC uses the gross method?

Correct AnswerverifiedShow Answer

If a company uses LIFO, a LIFO liquidation is problematic for a company's income taxes:

Correct AnswerverifiedShow Answer

Required: Compute the ending inventory and cost of goods sold assuming Denver uses average cost and a perpetual inventory system.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a period when costs are rising and inventory quantities are stable, the inventory method that would result in the highest ending inventory is:

Correct AnswerverifiedShow Answer

In a perpetual inventory system, the cost of inventory sold is:

Correct AnswerverifiedShow Answer

The LIFO Conformity Rule states that if LIFO is used for:

Correct AnswerverifiedShow Answer

Ending inventory using the LIFO method is:

Correct AnswerverifiedShow Answer

It is the end of the accounting period, and your boss asks you to help determine the inventory balance to place in the company's balance sheet. Explain which physical quantities of inventory that you will include, and which you will exclude.

Correct AnswerverifiedTaking a physical inventory is a necessa...View AnswerShow Answer

When reported in financial statements, a LIFO allowance account usually:

Correct AnswerverifiedShow Answer

Under the gross method, purchase discounts taken are:

Correct AnswerverifiedShow Answer

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Taking a physical inventory is a necessa...
View Answer

Correct Answer
verified

Correct Answer
verified