Question 1

In the ____________________ method of inventory valuation,inventory cost is determined by multiplying the number of units in inventory by a unit cost,which is calculated by dividing the cost of goods available for sale by the units of merchandise available for sale.

Accepted Answer

The answer of In the ____________________ method of inventory valuation,inventory...

Question 2

The lower the ending inventory valuation,the ____________________ the reported net income.

Accepted Answer

The answer of The lower the ending inventory valuation,the ____________________...

Question 3

The lower the ending inventory valuation,the ____________________ the cost of goods sold.

Accepted Answer

The answer of The lower the ending inventory valuation,the ____________________...

Question 4

The ________________ method of inventory costing must be used for financial accounting purposes if it is chosen for federal income tax purposes.

Accepted Answer

The answer of The ________________ method of inventory costing must...

Question 5

Under a periodic inventory system,the _________________________ account is the one account that appears on both the balance sheet and the income statement.

Accepted Answer

The answer of Under a periodic inventory system,the _________________________ account...

Question 6

For internal control,unit figures used to compute the inventory should be verified through spot checks.

Accepted Answer

It is important to verify unit figures through spot checks to ensure accurate inventory valuation and prevent misstatements or discrepancies.

Question 7

In periods of rising prices,the inventory valuation procedure that results in the highest net income is

Accepted Answer

In periods of rising prices, the FIFO (First-In, First-Out) method results in the highest net income because it assigns the oldest, and typically lower, costs to the cost of goods sold, leaving the more recent, higher costs in ending inventory.

Question 8

When the ____________________ method is used,the cost of the ending inventory is computed by using the cost of the latest purchases.

Accepted Answer

The answer of When the ____________________ method is used,the cost...

Question 9

A price reduction below the original markon is a ________________.

Accepted Answer

The answer of A price reduction below the original markon...

Question 10

A physical inventory should be taken at least annually to verify the goods on hand.

Accepted Answer

Taking a physical inventory at least annually is recommended to ensure the accuracy of the inventory records and to help identify any discrepancies or potential issues with inventory management.

Question 11

In periods of rising prices,use of the ____________________ method of inventory valuation results in the lowest inventory cost on the balance sheet.

Accepted Answer

The answer of In periods of rising prices,use of the...

Question 12

A firm that sells a single product had a beginning inventory of 4,000 units with a total cost of $28,000.Early in the year,10,000 units were purchased at $9 each.Using FIFO,what is the value of the ending inventory of 3,000 units?

Accepted Answer

Under FIFO, the oldest inventory costs are used first. The beginning inventory of 4,000 units is used first, then 6,000 units from the 10,000 purchased. The ending inventory of 3,000 units is valued at the cost of the most recent purchases: 3,000 units x $9 = $27,000.

Question 13

When inventory is valued at the lower of cost or market,the accountant is applying the principle or convention called ___________________.

Accepted Answer

The answer of When inventory is valued at the lower...

Question 14

A merchant who deals in one-of-a-kind items with large unit costs may account for inventory by the _________________________ method.

Accepted Answer

The answer of A merchant who deals in one-of-a-kind items...

Question 15

The ____________________ method of inventory valuation is a procedure developed for charging the current costs of goods against current sales prices.

Accepted Answer

The answer of The ____________________ method of inventory valuation is...

Question 16

The ____________________ method of estimating inventory requires the use of data about both cost and selling prices.

Accepted Answer

The answer of The ____________________ method of estimating inventory requires...

Question 17

If other items remain the same,the larger the ending inventory valuation,the

Accepted Answer

The larger the ending inventory valuation, the lower the cost of goods sold and therefore the higher the reported gross profit and net income.

Question 18

The ____________________ method of estimating ending inventory involves estimating the cost of goods sold by applying a company's cost/sales ratio to its sales for the current period.

Accepted Answer

The answer of The ____________________ method of estimating ending inventory...

Question 19

Net Sales minus Gross Profit equals ___________________.

Accepted Answer

The answer of Net Sales minus Gross Profit equals ___________________....

Question 20

The price the business would have to pay to buy an item of inventory through usual channels in usual quantities is either market price or __________________ cost.

Accepted Answer

The answer of The price the business would have to...

Quiz 17: Merchandise Inventory