Quiz
Test 6 - Chapter 6 Costing Test
Fragen in diesem Quiz (50)
1All of the following are inventory costing methods except for
- Aspecific unit cost method
- Bweighted-average cost method
- CFIFO cost method
- DLIFO cost method
2This method of accounting for inventory assumes that the units acquired earliest are sold or used first
- Aspecific identification method
- Bfirst in, last out
- Clast in, first out
- Dfirst in, first out
3This method of accounting for inventory assumes that the units acquired most recently are sold or used first
- Aspecific identification method
- Bfirst in, last out
- Clast in, first out
- Dlast in, last out
4The cost at which an inventory item could be acquired today is the
- Amarket price
- Breplacement cost
- Cacquisition cost
- Dnone of the above
5Inventory costing methods place primary reliance on assumptions about the flow of
- Agoods
- Bcosts
- Cresale prices
- Dvalues
6The selection of an appropriate inventory cost flow assumption for an individual company is made by
- Athe external auditors
- BCanada Revenue Agency
- Cthe internal auditors
- Dmanagement
7The primary goals of inventory management include
- Amaintaining a sufficient quantity of inventory to keep customers satisfied
- Bmaintaining a sufficient quality of inventory to keep customers satisfied
- Cminimizing the costs associated with maintaining inventories
- Dall of the above
8A company just starting in business purchased three inventory items at the following prices: first purchase, $80; second purchase, $95; third purchase, $85. If the company sold two units for a total of $200 and used FIFO costing, the gross profit for the period would be
- A$25
- B$35
- C$20
- D$10
9Which of the following would not be affected by the choice of costing methods?
- Anet sales
- Bcost of goods sold
- Cgross profit
- Dnet income
10In periods of rising prices, the inventory method which results in the highest gross profit is
- Athe FIFO method
- Bthe LIFO method
- Cthe average cost method
- Dnot determinable
11In a period of declining prices, which of the following inventory methods generally results in the lowest balance sheet figure for inventory?
- Aaverage cost method
- BLIFO
- CFIFO
- Dneed more information to answer
12Which inventory method generally results in cost allocated to ending inventory that will approximate their current cost?
- ALIFO
- BFIFO
- Caverage cost method
- Dwhichever method produces the highest ending inventory figure
13The managers of Sera Company receive performance bonuses based on the net profit of the firm. Which inventory costing method are they likely to favour in periods of declining prices?
- ALIFO
- Baverage cost method
- CFIFO
- Dphysical inventory method
14In periods of rising prices, LIFO will produce
- Ahigher net income than FIFO
- Bthe same net income as FIFO
- Clower net income than FIFO
- Dhigher net income than average cost method
15Considerations that affect the selection of an inventory costing method do not include:
- Atax effects
- Bbalance sheet effects
- Cincome statement effects
- Dperpetual versus periodic inventory system
16The LCM rule for inventory is an example of the application of
- Aconservatism principle
- Bhistorical cost principle
- Cmateriality principle
- Deconomic entity principle
17Which of these would cause the inventory turnover ratio to increase the most
- Aincreasing the amount of inventory on hand
- Bkeeping the amount of inventory on hand constant but increasing sales
- Ckeeping the amount of inventory on hand constant but decreases sales
- Ddecreasing the amount of inventory on hand but increasing sales
18Wonder Corp. failed to record the purchase of merchandise on account. As a result, ending inventory was understated. What is the effect of these errors on assets, liabilities, capital, and net income, respectively?
- Aunderstated, understated, no effect, no effect
- Bunderstated, understated, understated, understated
- Cunderstated, overstated, overstated, understated
- Doverstated, overstated, understated, overstated
19The specific ID method would probably be most appropriate for which of the following goods?
- Aboxes of brass 4-inch drywall screws at Home Depot
- Bbottles of suntan lotion in Wal-Mart's central warehouse
- Csets of tires at the Goodyear plant
- Ddiamond necklaces at a Tiffany's & Co. jewelry store
20Gerber Department Store utilizes the retail inventory method. Gerber's beginning inventory cost $140 000 and retailed for $280 000. Purchases for the period amounted to $390 000 and were priced to sell at twice that amount. Sales for the period, at retail, were $600 000. How much is the cost of ending inventory?
- A115 000
- B150 000
- C230 000
- D300 000
21Which inventory costing method generally results in the most recent costs being assigned to ending inventory?
- ALIFO
- BFIFO
- Caverage cost
- Dall of the above
22The 2014 records of Thompson Co. showed beginning inventory, $6 000; cost of goods sold, $14 000; and ending inventory, $8 000. The cost of purchases for 2014 was
- A12 000
- B10 000
- C9 000
- D16 000
23Which of the following statements is true with regards to all inventory costing methods?
- AThe ending inventory balance and cost of goods sold move in the same direction
- BThe ending inventory balance and cost of total assets move in the opposite direction
- CThe ending inventory balance and net income move in the same direction
- Dall of the above
24An adjustment to ending inventory under the LCM rule would be most likely to be recorded by a company that sells
- Aplastic storage containers
- Bpaper clips
- Cbody lotion
- Ddesigner clothes
25When the LCM rule requires an inventory adjustment
- Athe adjustment usually, but not always, reduces the book value of inventory
- Bthe write off is usually reported as a selling expense or part of cost of goods sold
- Cthe inventory adjustment is recorded in a contra-revenue account called sales allowances
- Dall of the above
26A rising balance in the inventory account and a falling inventory turnover ratio implies that the inventory buildup is occurring because
- Agoods are not selling as fast as anticipated
- Bthe company is expecting to sell more in the future
- Cgoods are selling, but it is taking longer to collect payment
- Dgoods cannot be shipped fast enough
27Which of the following companies would be least concerned about a low inventory ratio?
- AA fish market selling fish
- BA hardware company selling drywall screws
- CA dairy company selling butter and milk
- DA semiconductor company selling microchips
28Because LIFO uses older costs for inventory, in times of rising prices:
- ALIFO results in a higher book value of inventory and lower inventory turnover ratio than FIFO
- BLIFO results in a lower book value of inventory and a lower inventory turnover ratio than FIFO
- CLIFO results in a higher book value of inventory and a higher inventory turnover ratio than FIFO
- DLIFO results in a lower book value of inventory and a higher inventory turnover ratio than FIFO
29Which of the following inventory cost flow methods would an auto dealership most likely use for its new car sales?
- AFIFO
- BLIFO
- CAVG Cost
- DSpecific Identification
30In an inflationary environment in Canada, which inventory cost flow method will require the smallest cash payment for income taxes?
- AFIFO
- BLIFO
- CAVG Cost
- Dnot determinable
31Carrington Company applies the LCM rule to each individual item in its ending inventory. The company determines that it must write down its inventory by $4 000. Which of the following answers reflects how this would effect the statements? (Assets = Liabilities + Equity; Revenue - Expenses = Net Income)
- A(4 000) = n/a + (4 000); n/a - 4 000 = (4 000)
- B(4 000) = 4 000 + n/a; n/a - 4 000 = (4 000)
- C(4 000) = n/a + (4 000); n/a - n/a = n/a
- D4 000 = n/a + 4 000; 4 000 - n/a = 4 000
32An overstatement of ending inventory results in an
- Aoverstatement of cost of goods sold
- Boverstatement of gross profit
- Coverstatement of sales revenue
- Dunderstatement of net income
33The following info is from the 2014 accounting records of Odom Company: Sales Revenue = $625 000; Beginning Inventory = $254 000; Purchases = $366 000; Historical Gross Profit Margin = 40%
What is the estimated gross profit?- A$156 000
- B$250 000
- C$269 000
- D$375 000
34The ? principle states that a company should use the same accounting methods and procedures from one period to the next.
- Aconservatism
- Bconsistency
- Cfull disclosure
- Dmateriality
35An undiscovered inventory error usually affects:
- Atwo reporting periods
- Bthe balance sheet of the first period but not the balance sheet of the second period
- Cthe income statements of both periods
- Dall of the above are true
36When using the FIFO inventory method, the most recent inventory costs will be found on the
- Abalance sheet
- Bincome statement
- Cstatement of OE
- Dcash flow statement
37Use the following info for this question: Beginning Inventory: 10 units, $10 each; January 20 Purchase: 10 units, $20 each; January 30 Purchase: 5 units, $30 each. 15 of the 25 are sold. Calculate cost of goods sold using FIFO.
- A150
- B200
- C350
- Dnone of the above
38Use the following info for this question: Beginning Inventory: 10 units, $10 each; January 20 Purchase: 10 units, $20 each; January 30 Purchase: 5 units, $30 each. 15 of the 25 are sold. Calculate cost of goods sold using LIFO.
- A200
- B350
- C450
- Dnone of the above
39Use the following info for this question: Beginning Inventory: 10 units, $10 each; January 20 Purchase: 10 units, $20 each; January 30 Purchase: 5 units, $30 each. 15 of the 25 are sold. Calculate cost of goods sold using average cost.
- A200
- B270
- C300
- Dnone of the above
40In a period of rising prices, all of the following statements are true regarding LIFO except:
- Amost recent inventory costs are allocated to cost of goods sold
- Bending inventory is generally undervalued
- Cthe ending inventory figure represents replacement value
- Dall of the above are true
41In a period of falling prices, all of the following statements are true regarding FIFO except:
- Athe units purchased earlier in the period are allocated to cost of goods sold
- Bthe lower priced units are allocated to ending inventory
- Cthe ending inventory figure represents replacement value
- Dnet income is generally higher
42Use the following information:
May 1 Beginning Inventory: 50 units @ $20
May 7 Purchases: 40 units @ $25
May 18 Sales: 60 units
May 22 Purchases: 10 units @ $30
May 29 Sales: 25 units
What is the ending inventory using the LIFO method?- A$300
- B$1 875
- C$425
- D$2 000
43Use the following information:
May 1 Beginning Inventory: 50 units @ $20
May 7 Purchases: 40 units @ $25
May 18 Sales: 60 units
May 22 Purchases: 10 units @ $30
May 29 Sales: 25 units
What is the ending inventory using the AVG cost method?- A$375
- B$1 955
- C$2 125
- D$345
44Use the following information:
May 1 Beginning Inventory: 50 units @ $20
May 7 Purchases: 40 units @ $25
May 18 Sales: 60 units
May 22 Purchases: 10 units @ $30
May 29 Sales: 25 units
What is the ending inventory using the FIFO method?- A$300
- B$1 875
- C$425
- D$2 000
45Use the following info to compute gross profit. Sales price of merchandise sold to customers is $10 000, beginning inventory $1 000, inventory purchases $4 000, and cost of goods sold $3 000.
- A$2 000
- B$5 000
- C$7 000
- Dnone of the above
46Errors may arise in the process of counting inventory. Assume some inventory is accidentally counted twice. All of the following statements are true except:
- Athis accounting period's cost of goods sold will be overstated
- Bthis accounting period's net income will be overstated
- Cnext accounting period's net income will be understated
- Dnext accounting period's ending OE will be correct
47Which inventory method generally best follows the matching rule?
- Awhichever method is used for tax purposes
- Baverage cost
- CFIFO
- DLIFO
48During periods of declining prices, which inventory method probably will result in the lowest ending inventory?
- Aaverage cost
- Bspecific ID
- CFIFO
- DLIFO
49Insurance companies often verify the extent of inventory lost or destroyed by applying the
- Aspecific ID method
- Bretail method
- CLCM method
- Dgross profit method
50Which of the following statement is true of inventory errors?
- Aif the error counterbalances, it does not have to be disclosed
- Ba counterbalancing error impacts on two income statements and one balance sheet
- Ca counterbalancing error impacts on two balance sheets and one income statement
- Dnone of the above are true
Informationen
- Beschreibung
- Grade 12 Accounting Midterm Prep
- Autor
- Claudia Voin
- Sprache
- English
- Aufrufe
- 745
- Schlagwörter
- Bewertung
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