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Exam 7: Inventory and Cost of Goods Sold

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Question 21

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ASPE and IFRS do not permit companies to use LIFO inventory cost method except for which of the following reason(s) .

A) If a Canadian public company has foreigners as its majority shareholders.
B) If a Canadian public company is listed on a US stock exchange.
C) If a Canadian public company does more than 50% of its business outside Canada.
D) All of the answers provide a reason.

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

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Question 22

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Weighted average cost per unit is calculated by multiplying cost of units available for sale by the number of units available for sale

A) True
B) False

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Question 23

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Alphabet Company,which uses the periodic inventory method,buys different letters for resale.It buys A through G in January at $4 per letter.It buys H through L at $6 per letter.It buys M through R in March at $7 per letter.It sells A,D,E,H,J and N in April. If the company uses the specific identification method,what is the cost of its ending inventory?

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.

Which of the following inventory method will give the highest ending inventory in a period of falling prices?

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.

Which of the following companies would be least concerned about a low inventory turnover ratio?

In March,BetterBuy purchases six plasma TVs from Toshiba for $1,500 each (serial numbers 11534892 through 11534897) .In April,the company purchases four more identical TVs from Toshiba for $1,450 each (serial numbers 11542631 through 11542634) .In May,the company purchases five more identical TVs for $1,600 each (serial numbers 11550964 through 11550968) .In June,BetterBuy sells two of these TVs (serial numbers 11534894 and 11542631) . If BetterBuy uses the specific identification method,its cost of goods sold will be:

The primary goals of inventory managers are to ensure

An incorrect valuation of the ending inventory affects the balance sheet but not the income statement.

First in,first out method

For a company making cheese,cheese that has been made but is curing before being ready to sell would be included in which of the following:

$\begin{array} { | r | r | } \hline \text { Costs of goods sold for } 2018 & \$ 1,800,00 \\\hline \text { Irventory, Decernber } 31,2017 & 435,000 \\\hline \text { Irventory, Decernber } 31,2018 & 465,000 \\\hline\end{array}$ What is the inventory turnover for 2018?

Your company has 500 units in inventory that had been purchased for $12 each and that would currently cost $15 to replace.Your supplier has just announced the cost of these goods is rising to $16.50.

Inventory may include materials used in producing goods for sale.

The Acme Corporation buys 300 units of merchandise in January at $5 each.Acme buys 500 units at $4 each in February and 200 units at $6 each in March. Acme sells 150 units during this quarter.Acme uses the weighted average method.What is its cost of goods sold for the quarter?

Match the term and the definition.Not all definitions will be used.

The process of buying and selling inventory is known as inventory

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. $\begin{array} { | l | l | l | } \hline & \text { FIFO } & \text { L.IFO } \\\hline \text { Cost of Goods Sold } & - & - \\\hline \text { Ending irventory } & - & - \\\hline \text { Net Income } & - & - \\\hline \text { Irventory Tumover } & - & - \\\hline \text { Days to sell } & - & - \\\hline\end{array}$

In each accounting period,a manager can select the inventory costing method that yields the most positive net income.