Question 1

RJ Corporation has provided the following information about one of its inventory items:  During the year,RJ sold 3,000 units.
-
What was ending inventory using the average cost flow assumption?

Accepted Answer

A)  $640,000.
B)  $840,000.
C)  $770,000.
D)  $880,000.E) B) and C)
F) A) and C)

Question 2

Which of the following statements is correct when inventory unit costs are decreasing?

Accepted Answer

A)  FIFO's cost of goods sold will be the largest among the inventory costing methods.
B)  LIFO's income tax will be the lowest among the inventory costing methods.
C)  Ending inventory using the FIFO cost method will be higher than the ending inventory when the LIFO method is used.
D)  Cost of goods sold using the average cost method will be less than cost of goods sold when the LIFO method is used.E) All of the above
F) B) and D)

Question 3

Which of the following statements is correct when inventory unit costs are increasing?

Accepted Answer

A)  LIFO will result in lower net income and a higher inventory valuation than will FIFO.
B)  LIFO will result in higher net income and lower inventory valuation than will FIFO.
C)  FIFO will result in lower net income and a lower inventory valuation than will LIFO.
D)  FIFO will result in higher net income and a higher inventory valuation than will LIFO.E) B) and C)
F) A) and B)

Question 4

Lauer Corporation has provided the following information about one of its laptop computers:  During the year,Lauer sold 750 laptop computers.
-
What was ending inventory using the FIFO cost flow assumption?

Accepted Answer

A)  $60,000.
B)  $55,000.
C)  $45,000.
D)  $40,000.E) C) and D)
F) A) and C)

Question 5

RJ Corporation has provided the following information about one of its inventory items:  During the year,RJ sold 3,000 units.
-
What was cost of goods sold using the LIFO cost flow assumption?

Accepted Answer

A)  $11,680,000.
B)  $11,590,000.
C)  $11,480,000.
D)  $11,550,000.E) A) and B)
F) A) and C)

Question 6

The average days to sell inventory decreases as inventory turnover increases.

Accepted Answer

A) True 
 B)False

Question 7

Of the following,which is not a reason for having controls to safeguard inventories?

Accepted Answer

A)  Protect inventory items from theft.
B)  Avoid stock-outs from not having enough inventory on hand.
C)  Reduce costs of maintaining the LIFO Reserve.
D)  Keep track of overstocked items.E) All of the above
F) B) and D)

Question 8

An overstatement of the 2018 ending inventory results in an understatement of net income during 2019.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is correct when,in the same year,beginning inventory is overstated by $1,300 and ending inventory is understated by $700?

Accepted Answer

A)  Net income is understated by $600.
B)  Net income is understated by $2,000.
C)  Net income is overstated by $600.
D)  Net income is overstated by $2,000.E) C) and D)
F) All of the above

Question 10

A company can use the LIFO inventory method for income tax purposes and the FIFO inventory method for financial reporting purposes during a given year.

Accepted Answer

A) True 
 B)False

Question 11

An understatement of ending inventory results in an overstatement of net income.

Accepted Answer

A) True 
 B)False

Question 12

Carrie Company sold merchandise with an invoice price of $1,000 to Underwood,Inc. ,with terms of 2/10,n/30.Which of the following is the correct entry to record the payment by Underwood Inc. ,within 10 days if the company uses the perpetual inventory system and the gross method to record purchases?

Accepted Answer

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

Question 13

Which of the following would not be a component of the year-end inventory balance?

Accepted Answer

A)  Freight-in costs.
B)  Inventory inspection costs.
C)  Inventory preparation costs.
D)  Inventory-related selling costs.E) A) and B)
F) C) and D)

Question 14

The FIFO inventory method allocates the earliest inventory purchase costs to ending inventory.

Accepted Answer

A) True 
 B)False

Question 15

Hopkins Company reported the following information related to inventory and sales:
  Sales-8,000 units at $35 per unit.
Compute the following amounts:

Accepted Answer

The answer of Hopkins Company reported the following information related...

Question 16

RJ Corporation has provided the following information about one of its inventory items:  During the year,RJ sold 3,000 units.
-
What was cost of goods sold using the FIFO cost flow assumption?

Accepted Answer

A)  $11,680,000.
B)  $11,590,000.
C)  $11,480,000.
D)  $11,550,000.E) B) and C)
F) C) and D)

Question 17

RJ Corporation has provided the following information about one of its inventory items:  During the year,RJ sold 3,000 units.
-
What was cost of goods sold using the average cost flow assumption?

Accepted Answer

A)  $11,680,000.
B)  $11,590,000.
C)  $11,480,000.
D)  $11,550,000.E) C) and D)
F) B) and C)

Question 18

Carp Corporation has provided the following information for its most recent month of operation: sales $16,000;ending inventory $4,000,purchases $8,000 and gross profit $10,000.How much was Carp's beginning inventory?

Accepted Answer

A)  $2,000.
B)  $18,000.
C)  $6,000.
D)  $12,000.E) B) and D)
F) All of the above

Question 19

A company provided the following data: sales,$500,000;beginning inventory,$40,000;ending inventory,$45,000;and gross profit,$150,000.What was the amount of inventory purchased during the year?

Accepted Answer

A)  $385,000.
B)  $355,000.
C)  $345,000.
D)  $145,000.E) All of the above
F) B) and C)

Question 20

Which of the following statements is correct?

Accepted Answer

A)  The choice of an inventory costing method is dependent upon the actual physical flow of the goods in inventory.
B)  LIFO should be used during a period of increasing unit costs when the objective is to maximize the ending inventory value on the balance sheet.
C)  FIFO should be used during a period of decreasing unit costs when the objective is to maximize the gross profit reported on the income statement.
D)  The average cost method will result in an ending inventory balance which is somewhere between LIFO and FIFO when inventory unit costs are changing.E) All of the above
F) A) and C)

Exam 7: Reporting and Interpreting Cost of Goods Sold and Inventory

RJ Corporation has provided the following information about one of its inventory items: During the year,RJ sold 3,000 units. - What was cost of goods sold using the FIFO cost flow assumption?

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RJ Corporation has provided the following information about one of its inventory items: During the year,RJ sold 3,000 units. - What was cost of goods sold using the LIFO cost flow assumption?

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Of the following,which is not a reason for having controls to safeguard inventories?

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A company can use the LIFO inventory method for income tax purposes and the FIFO inventory method for financial reporting purposes during a given year.

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Carrie Company sold merchandise with an invoice price of $1,000 to Underwood,Inc. ,with terms of 2/10,n/30.Which of the following is the correct entry to record the payment by Underwood Inc. ,within 10 days if the company uses the perpetual inventory system and the gross method to record purchases?

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Hopkins Company reported the following information related to inventory and sales: Sales-8,000 units at $35 per unit. Compute the following amounts:

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Carp Corporation has provided the following information for its most recent month of operation: sales $16,000;ending inventory $4,000,purchases $8,000 and gross profit $10,000.How much was Carp's beginning inventory?

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Which of the following would not be a component of the year-end inventory balance?

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A company provided the following data: sales,$500,000;beginning inventory,$40,000;ending inventory,$45,000;and gross profit,$150,000.What was the amount of inventory purchased during the year?

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Which of the following statements is correct?

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Which of the following statements is correct when inventory unit costs are decreasing?

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An understatement of ending inventory results in an overstatement of net income.

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Which of the following statements is correct when inventory unit costs are increasing?

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An overstatement of the 2018 ending inventory results in an understatement of net income during 2019.

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Lauer Corporation has provided the following information about one of its laptop computers: During the year,Lauer sold 750 laptop computers. - What was ending inventory using the FIFO cost flow assumption?

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The FIFO inventory method allocates the earliest inventory purchase costs to ending inventory.

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RJ Corporation has provided the following information about one of its inventory items: During the year,RJ sold 3,000 units. - What was cost of goods sold using the average cost flow assumption?

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RJ Corporation has provided the following information about one of its inventory items: During the year,RJ sold 3,000 units. - What was ending inventory using the average cost flow assumption?

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Which of the following is correct when,in the same year,beginning inventory is overstated by $1,300 and ending inventory is understated by $700?

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The average days to sell inventory decreases as inventory turnover increases.

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