FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 7: Inventory and Cost of Goods Sold

Show Answer

Share

---

All types

Filters

Study Flashcards

Question 31

Multiple Choice

Review LaterAdd Note

Review Later

An adjustment to ending inventory under the Lower of cost and net realizable value (LC&NRV) rule would be most likely to be recorded by a company that sells:

A) Plastic storage containers.
B) Paper clips.
C) Body lotion.
D) Designer clothes.

Correct Answer

verified

Show Answer

Question 32

Multiple Choice

Review LaterAdd Note

Review Later

A rising balance in the inventory account and a rising inventory turnover ratio would imply that the inventory build up is occurring because:

A) goods are not selling as fast as anticipated.
B) the company is expecting to sell more in the future.
C) goods are selling but it is taking longer to collect payment.
D) goods cannot be shipped fast enough.

Correct Answer

verified

Show Answer

Question 33

True/False

Review LaterAdd Note

The measurement of inventory affects both the balance sheet and the income statement within an accounting period. BT: Comprehension

Which of the following would not be affected by the choice of an inventory costing method (that is between FIFO,LIFO,weighted average,and specific identification) ?

Most changes in sales revenue have no effect on cost of goods sold. BT: Comprehension

Fill in the blanks below to indicate which inventory costing method causes the value to be higher and which causes it to be lower.Assume that the cost of merchandise is decreasing. $\begin{array}{lr}&\text { FIFO }&\text { LIFO }\\\text {Cost of Goods Sold }&\_\_\_\_&\_\_\_\_\\\text { Ending inventory}&\_\_\_\_&\_\_\_\_\\\text { Net Income }&\_\_\_\_&\_\_\_\_\\\text { Inventory Turnover }&\_\_\_\_&\_\_\_\_\\\text { Days to sell }&\_\_\_\_&\_\_\_\_\\\end{array}$

The days to sell measure equals 365 divided by the receivables turnover ratio. BT: Knowledge

Which of the following is true regarding the differences between ASPE and IFRS regarding inventory valuation?

An adjustment to ending inventory under the lower of cost and net realizable value (LC&NRV) rule would be least likely to be recorded by a company that sells:

The inventory turnover ratio and days to sell measure will be affected by the cost flow assumptions used,which causes problems for financial statements users. BT: Comprehension

A higher inventory turnover ratio is preferable to a lower one. BT: Knowledge

An auto manufacturer's inventory would not include:

A company should always keep extra inventory on hand; it could be needed if demand increases and it has to be bought sooner or later so it adds nothing to cost. BT: Knowledge

Your company had a beginning inventory of $109,500 and purchased $240,720 during the accounting period.Assuming no returns,find the goods available for sale,the cost of goods sold,the inventory turnover ratio,and days to sell for the company if its ending inventory was $94,820.

A company has beginning inventory of $128,400 and an ending inventory of $89,100.The company purchased $67,900 during the accounting period.Assuming no returns,calculate the goods available for sale and the cost of goods sold.

Which of the following statements is true?

Companies that are both manufacturers and merchandisers must list their finished goods inventory and merchandise inventory separately. BT: Knowledge

A one-time error in the application of the lower of cost and net realizable value (LC&NRV) rule in the current period distorts financial results for the current accounting period

If a company purchased 200 units of inventory at $9 per unit and 300 units at $10 per unit,its weighted average unit cost for this inventory would be:

A rising balance in the inventory account and a falling inventory turnover ratio implies that the inventory build up is occurring because: