Question 1

The results under FIFO in a perpetual inventory system are the same as in a periodic inventory system.

Accepted Answer

This statement is true. Under both perpetual and periodic inventory systems, the results using the FIFO (first-in, first-out) method will be the same.

Question 2

Match the inventory system with the statement by entering the appropriate letters the left:
A. Perpetual inventory system.
B. Periodic inventory system.
C. Neither of the above is correct.
D. Both A and B are correct.

Accepted Answer

The answer of Match the inventory system with the statement...

Question 3

Match the appropriate letter regarding inventory systems with each of the following statements.
A. The perpetual inventory system.
B. The periodic inventory system.
C. Both the perpetual and periodic inventory systems.
D. Neither the perpetual nor the periodic inventory systems.
1. Uses a separate account for recording purchases.
____ 2. Requires that purchases be recorded at their cash equivalent cost.
____ 3. Requires that two concurrent journal entries be made to record a purchase
____ 4. Cost of goods sold cannot be determined until a physical count is taken.
5. Inventory account is increased for each purchase and decreased for each sale.
____ 6. Used to reveal any inventory shortages and shrinkage that occur during the period.

Accepted Answer

The answer of Match the appropriate letter regarding inventory systems...

Question 4

For each of the following types of inventory, enter a letter to indicate the type of business in which the inventory is more likely to appear.
Type of Business
A. Retail
B. Manufacturing Type of Inventory
____ 1. Raw materials.
____ 2. Merchandise.
____ 3. Finished goods.
____ 4. Work in progress.

Accepted Answer

The answer of For each of the following types of...

Question 5

The lower of cost and net realizable value basis of valuing inventories ensures that inventories are

Accepted Answer

This method ensures that inventories are not overvalued by requiring regular assessment of their net realizable value compared to their cost.

Question 6

An error in the ending inventory of the current period will have a similar but inverse effect on profit of the next accounting period.

Accepted Answer

An error in the ending inventory of the current period will affect the cost of goods sold and therefore the profit of the current period. However, since the ending inventory of the current period becomes the beginning inventory of the next period, any errors in the ending inventory of the current period will carry over to the beginning inventory of the next period and affect the cost of goods sold and profit of the next period in the opposite direction. Therefore, the statement is true.

Question 7

Will Company's independent accountant discovered that the ending inventory for 20B had been overstated by the company by $2,000. Before the correction, what was the effect in the 20B statement of earnings because of the overstatement of the ending inventory?

Accepted Answer

When ending inventory is overstated, the cost of goods sold is understated, leading to an overstatement of pretax profit.

Question 8

If net realizable value of the inventory is lower than its cost, the total assets on the statement of financial position and net earnings on the statement of earnings will be reduced.

Accepted Answer

Net realizable value is the estimated selling price of the inventory minus the estimated cost of completion and disposal. If it is lower than the cost, it means the inventory is not worth what the company paid for it and therefore it must be written down to its net realizable value. This will reduce the value of total assets on the statement of financial position and also decrease net earnings on the statement of earnings due to the recognition of a loss.

Question 9

Inventory that originally cost $20,000 was written down to its net realizable value of $18,500 in the last accounting period. At the end of the current accounting period, the net realizable value is determined to be $23,000. At what amount should the inventory be reported on the current period's statement of financial position?

Accepted Answer

The inventory should be reported at the lower of cost or net realizable value. Since the original cost ($20,000) is lower than the current net realizable value ($23,000), it should be reported at its original cost of $20,000.

Question 10

Which of the following costs would be included in the costs of inventory of a manufacturer?

Accepted Answer

The costs of inventory for a manufacturer would include the direct costs associated with producing the inventory, such as the wages for factory workers who are involved in the production process. Administrative staff wages, electricity for the office building, and sales salaries would not be considered part of the costs of inventory for a manufacturer.

Question 11

On March 10, Frazier Company received merchandise for resale from its normal supplier. The invoice price was $3,600 with terms of 2/10, n/30 for 100 units of Part #345. The invoice was paid on March 17. Freight costs were $120 and the company paid $108 of interest on a loan to buy the inventory. What is the unit cost that should be recorded for each of the 100 units of Part #345?

Accepted Answer

The unit cost includes the invoice price minus the discount, plus freight costs. The discount is 2% of $3,600, which is $72. So, the net invoice price is $3,528. Adding the freight cost of $120 gives a total cost of $3,648. Dividing this by 100 units results in a unit cost of $36.48. The interest on the loan is not included in the inventory cost.

Question 12

If transportation costs are the responsibility of the buyer, they should be added to the cost of purchases for the period.

Accepted Answer

If transportation costs are the responsibility of the buyer, then they should be included in the cost of purchases for the period in order to accurately reflect the total cost of those purchases.

Question 13

Inventory is a tangible asset purchased for use in the company's operations.

Accepted Answer

The answer of Inventory is a tangible asset purchased for...

Question 14

An overstatement of the beginning inventory results in

Accepted Answer

An overstatement of the beginning inventory increases the cost of goods sold, which reduces the profit for the period.

Question 15

Which of the following is correct?

Accepted Answer

The formula for calculating the ending inventory is: Beginning Inventory + Purchases - Cost of Goods Sold = Ending Inventory.

Question 16

The 20B records of Tom Company showed beginning inventory, $6,000; cost of goods sold, $14,000; and ending inventory, $8,000. What was the purchases amount for 20B?

Accepted Answer

The answer of The 20B records of Tom Company showed...

Question 17

An error that understates the ending inventory will cause the cost of goods sold for the period to be understated.

Accepted Answer

The answer of An error that understates the ending inventory...

Question 18

In the average cost formula used in a periodic inventory system, the same weighted average cost per unit is used to calculate all of the goods sold during the period.

Accepted Answer

In the average cost formula used in a periodic inventory system, the same weighted average cost per unit is used to calculate the cost of goods sold for each individual sale.

Question 19

In 20B, Landings, Inc. provided the following items in their footnotes. Their cost of goods available for sale was $4.5 billion under FIFO costing and their ending inventory value under FIFO costing was $2.1 billion. Their purchases were $4.1 billion. What was their opening inventory?

Accepted Answer

The opening inventory can be calculated using the formula: Opening Inventory = Cost of Goods Available for Sale - Purchases. Therefore, Opening Inventory = $4.5 billion - $4.1 billion = $0.4 billion.

Question 20

Match the descriptions with inventory costing methods by entering the proper lett in the space to the left.
A. Specific identification
B. Weighted average
C. FIFO
D. None of the above is correct.

Accepted Answer

The answer of Match the descriptions with inventory costing methods...

Quiz 8: Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural Resources

The results under FIFO in a perpetual inventory system are the same as in a periodic inventory system.

Match the inventory system with the statement by entering the appropriate letters the left: A. Perpetual inventory system. B. Periodic inventory system. C. Neither of the above is correct. D. Both A and B are correct.

For each of the following types of inventory, enter a letter to indicate the type of business in which the inventory is more likely to appear. Type of Business A. Retail B. Manufacturing Type of Inventory 1. Raw materials. 2. Merchandise. 3. Finished goods. 4. Work in progress.

The lower of cost and net realizable value basis of valuing inventories ensures that inventories are

An error in the ending inventory of the current period will have a similar but inverse effect on profit of the next accounting period.

Will Company's independent accountant discovered that the ending inventory for 20B had been overstated by the company by $2,000. Before the correction, what was the effect in the 20B statement of earnings because of the overstatement of the ending inventory?

If net realizable value of the inventory is lower than its cost, the total assets on the statement of financial position and net earnings on the statement of earnings will be reduced.

Which of the following costs would be included in the costs of inventory of a manufacturer?

If transportation costs are the responsibility of the buyer, they should be added to the cost of purchases for the period.

Inventory is a tangible asset purchased for use in the company's operations.

An overstatement of the beginning inventory results in

Which of the following is correct?

The 20B records of Tom Company showed beginning inventory, $6,000; cost of goods sold, $14,000; and ending inventory, $8,000. What was the purchases amount for 20B?

An error that understates the ending inventory will cause the cost of goods sold for the period to be understated.

In the average cost formula used in a periodic inventory system, the same weighted average cost per unit is used to calculate all of the goods sold during the period.

In 20B, Landings, Inc. provided the following items in their footnotes. Their cost of goods available for sale was $4.5 billion under FIFO costing and their ending inventory value under FIFO costing was $2.1 billion. Their purchases were $4.1 billion. What was their opening inventory?

Match the descriptions with inventory costing methods by entering the proper lett in the space to the left. A. Specific identification B. Weighted average C. FIFO D. None of the above is correct.

Quiz 8: Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural Resources

The results under FIFO in a perpetual inventory system are the same as in a periodic inventory system.

Match the inventory system with the statement by entering the appropriate letters the left: A. Perpetual inventory system. B. Periodic inventory system. C. Neither of the above is correct. D. Both A and B are correct.

For each of the following types of inventory, enter a letter to indicate the type of business in which the inventory is more likely to appear. Type of Business A. Retail B. Manufacturing Type of Inventory ____ 1. Raw materials. ____ 2. Merchandise. ____ 3. Finished goods. ____ 4. Work in progress.

The lower of cost and net realizable value basis of valuing inventories ensures that inventories are

An error in the ending inventory of the current period will have a similar but inverse effect on profit of the next accounting period.

Will Company's independent accountant discovered that the ending inventory for 20B had been overstated by the company by $2,000. Before the correction, what was the effect in the 20B statement of earnings because of the overstatement of the ending inventory?

If net realizable value of the inventory is lower than its cost, the total assets on the statement of financial position and net earnings on the statement of earnings will be reduced.

Which of the following costs would be included in the costs of inventory of a manufacturer?

If transportation costs are the responsibility of the buyer, they should be added to the cost of purchases for the period.

Inventory is a tangible asset purchased for use in the company's operations.

An overstatement of the beginning inventory results in

Which of the following is correct?

The 20B records of Tom Company showed beginning inventory, $6,000; cost of goods sold, $14,000; and ending inventory, $8,000. What was the purchases amount for 20B?

An error that understates the ending inventory will cause the cost of goods sold for the period to be understated.

In the average cost formula used in a periodic inventory system, the same weighted average cost per unit is used to calculate all of the goods sold during the period.

In 20B, Landings, Inc. provided the following items in their footnotes. Their cost of goods available for sale was $4.5 billion under FIFO costing and their ending inventory value under FIFO costing was $2.1 billion. Their purchases were $4.1 billion. What was their opening inventory?

Match the descriptions with inventory costing methods by entering the proper lett in the space to the left. A. Specific identification B. Weighted average C. FIFO D. None of the above is correct.

For each of the following types of inventory, enter a letter to indicate the type of business in which the inventory is more likely to appear. Type of Business A. Retail B. Manufacturing Type of Inventory 1. Raw materials. 2. Merchandise. 3. Finished goods. 4. Work in progress.