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Exam 7: Inventory and Cost of Goods Sold

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Question 21

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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:

A) Raw materials inventory.
B) Work in progress inventory.
C) Finished goods inventory.
D) All of the above.

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

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Question 22

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Match the term and the definition.Not all definitions will be used. _____ raw materials inventory. _____ FIFO. _____ inventory write-down. _____ merchandiser. _____ inventory turnover ratio. _____ lower of cost or market. _____ manufacturer. _____ finished goods inventory. _____ LIFO. A.Inventory that reflects goods currently under production. B.The concept that a company needs to report amounts separately only if large enough to affect decisions. C.A company that buys raw materials and produces goods for sale to others. D.Also known as least cost measure,it is the concept that firms should use the lowest unit cost of those in inventory to evaluate the rest. E.When the company reduces the book value of inventory that has declined in market value. F.The percentage of a company's total inventory that is in raw materials inventory. G.The interest a company loses when it holds goods in inventory. H.The concept that a company should report inventory at either its cost or its current market value,whichever is less. I.A company that buys finished goods from other companies and sells them to others. J.An inventory costing method that assumes the goods sold were the oldest in inventory. K.An analysis of the change in storage costs for inventory. L.When a company does not immediately report a known loss but waits until a period with high revenues to report it. M.An inventory costing method that assumes the goods sold were the newest in inventory. N.A company's stockpile of inputs to be used to manufacture goods. O.A manufacturer's stockpile of goods that is ready to be sold. P.A tool for analyzing the frequency with which inventory rises and falls as a business buys and sells goods.

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Question 23

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Alphabet Company buys different letters for resale.It buys A thru J on January 1 at $4 per letter,and sells C on January 15.On February 1,it buys K thru L at $6 per letter and sells A and K on February 9.It then buys M thru O on March 1 at $7 per letter and sells F,L,M,N,and O on March 19.If the company uses the LIFO method on a perpetual basis,what is the cost of goods sold?

An increase in inventory levels is always a sign of inefficiency in inventory management. BT: Comprehension

The primary goals of inventory management do not include:

How long on average does it take to sell something from inventory after it is purchased?

Which of the following statements is true?

A company purchased $6,000 of merchandise.Transportation costs were an additional $100.The company later returned $250 of the merchandise and paid the invoice within the 2% discount period.What is the total amount of cash paid?

Last year bell-bottom jeans were fashionable and this year boot-cut jeans are.A retail company's inventory has 375 bell-bottom jeans that cost $17 each and could be replaced for $15.The inventory also includes 1,000 boot-cut jeans that cost $16 each and could be replaced for $19.Explain why this situation requires an adjustment to the accounting records,prepare the journal entry that would be used to make the adjustment,and show the effects of the adjustment on the accounting equation.

Given the following information for Maynor Company in 2009,calculate the company's ending inventory,cost of goods sold and gross profit,using the following inventory costing methods,assuming the company uses the periodic system: a)Weighted Average b)FIFO c)LIFO d)Specific Identification.(The ending inventory consisted of 15 @ $66; 10 @ $70; and 5 @ $76.) $\begin{array}{lllll}2009&&\text { Units } & \text { Unit Cost } &\text { Total Cost }\\\hline \text { Jan 1 } & \text { Beginning Inventory } & 10 & \$ 60 & \$ 600 \\\text { Purchases } & & & & \\\text { March } 28 & \text { Purchase } & 20 & 66 & 1,320 \\\text { Aug } 22 & \text { Purchase } & 20 & 70 & 1,400 \\\text { Oct } 14 & \text { Purchase } & 25 & 76 & 1,900\\\text { Goods Available for Sale }&&75&&\$5,220\\\\\hline\text { Sales }&&&\text { Unit Sales Price }&\text { Revenue }\\\text { May 1 } & \text { Sales } & 25 & \$ 100 & \$ 2,500 \\\text { October 28 } & \text { Sales } & 20 & \$ 100 & \$ 2,000\\\text { Total Revente }&&45&&\$4,500\end{array}$

If BetterBuy uses the specific identification method,its cost of goods sold will be:

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

For a company making cheese,milk and cream would be included in which the following type of inventory?

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

Days to sell for 2010 is:

Carrying insufficient quantities of inventory on hand:

Generally,which inventory costing method approximates most closely the current cost for each of the following?

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

Which of the following statements is true?

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