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Exam 5: Inventories and Cost of Sales

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Question 21

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The weighted average method matches the costs of inventory items with the revenue generated by the sale of the inventory items.

A) True
B) False

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Question 22

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The selected inventory costing method impacts:

A) Gross profit and ending inventory.
B) Sales.
C) The physical flow of goods.
D) Amount of inventory on hand.
E) The shipping terms to the buyer.

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

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Question 23

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It can be expected that companies selling perishable goods have a higher inventory turnover than companies selling nonperishable goods.

A company's inventory records indicate the following data for the month of January: If the company uses the LIFO perpetual inventory system,what would be the cost of the ending inventory?

A company had the following purchases and sales during its first month of operations: Using the perpetual weighted average method,what is the value of cost of goods sold? (Round weighted average costs per unit to 2 decimal places.)

The ________ method is commonly used to estimate the value of inventory that has been destroyed,lost,or stolen.

Assuming items in inventory were purchased at different prices,the inventory cost method used affects net income.

A company decides which inventory amounts to record to cost of goods sold and which amounts remain in ending inventory:

Determining the unit costs assigned to inventory items is one of the most important decisions in accounting for inventory.

Merchandise inventory includes:

According to the expense recognition principle,inventory costs are expensed as cost of goods sold when inventory is sold.

Days' sales in inventory is calculated as:

The inventory valuation method that tends to smooth out erratic changes in costs is:

Eastview Company uses a periodic LIFO inventory system,and has the following purchases and sales: -What is the value of cost of goods sold?

McCarthy Company has inventory of 8 units at a cost of $200 each on October 1.On October 2,it purchased 20 units at $205 each.11 units are sold on October 4.Using the FIFO perpetual inventory method, -What is the value of inventory after the October 4 sale?

A company uses the periodic inventory system,and the following information is available.All purchases and sales are on credit.The selling price for the merchandise is $11 per unit. Required: Determine the cost of the ending inventory and the cost of goods sold for June using the LIFO method.

In applying the lower of cost or market method to inventory valuation,market is defined as the current replacement cost for LIFO.

Goods in transit are included in a purchaser's inventory:

When costs to purchase inventory regularly decline,which method of inventory costing will yield the lowest gross profit and income?

A company had the following purchases and sales during its first year of operations: On December 31,there were 26 units remaining in ending inventory. -Using the periodic FIFO inventory costing method.What is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)