Chapter 6 - Inventories

1. 1The following units of an inventory item were available for sale during the year:
   
   Beginning inventory 10 units at $55
   First purchase 25 units at $60
   Second purchase 30 units at $65
   Third purchase 15 units at $70
   
   The firm uses the periodic inventory system. During the year, 60 units of the item were sold.
   
   The value of ending inventory using FIFO is
   

   1. A1250
   2. B1350
   3. C1375
   4. D1150
2. 2The following units of an inventory item were available for sale during the year:
   Beginning inventory 10 units at $55
   First purchase 25 units at $60
   Second purchase 30 units at $65
   Third purchase 15 units at $70
   
   The firm uses the periodic inventory system. During the year, 60 units of the item were sold.
   
   The value of ending inventory using LIFO is

   1. A1250
   2. B1350
   3. C1375
   4. D1150
3. 3The following units of an inventory item were available for sale during the year:
   Beginning inventory 10 units at $55
   First purchase 25 units at $60
   Second purchase 30 units at $65
   Third purchase 15 units at $70
   
   The firm uses the periodic inventory system. During the year, 60 units of the item were sold.
   
   The value of ending inventory rounded to nearest dollar using average cost is:

   1. A1353
   2. B1263
   3. C1375
   4. D1150
4. 4Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items?
   

   1. AFIFO
   2. BLIFO
   3. CAverage Cost
   4. DSpecific Identification
5. 5Under a periodic inventory system
   
   
   
   
   

   1. Aaccounting records continuously disclose the amount of inventory
   2. Ba separate account for each type of merchandise is maintained in a subsidiary ledger
   3. Ca physical inventory is taken at the end of the period
   4. Dmerchandise inventory is debited when goods are returned to vendors
6. 6If the revenues are correctly reported and the gross profit of a company is understated, what is the effect on stockholders' equity?
   
   
   
   
   

   1. Aunderstated
   2. Boverstated
   3. Ccorrectly stated
   4. Dnone of these
7. 7If a manufacturer ships merchandise to a retailer on consignment, the unsold merchandise should be included in the inventory of the

   1. AConsignee
   2. BRetailer
   3. CManufacturer
   4. DShipper
8. 8Merchandise inventory at the end of the year was inadvertently overstated. Which of the following statements correctly states the effect of the error on net income, assets, and stockholders' equity?

   1. Anet income is overstated, assets are overstated, and stockholders' equity is understated
   2. Bnet income is overstated, assets are overstated, and stockholders' equity is overstated
   3. Cnet income is understated, assets are understated, and stockholders' equity is understated
   4. Dnet income is understated, assets are understated, and stockholders' equity is overstated
9. 9Merchandise inventory at the end of the year was understated. Which of the following statements correctly states the effect of the error?

   1. Anet income is understated
   2. Bnet income is overstated
   3. Ccost of merchandise sold is understated
   4. Dmerchandise inventory reported on the balance sheet is overstated
10. 10If the cost of an item of inventory is $60 and the current replacement cost is $75, the amount included in inventory according to the lower of cost or market is

    1. A15
    2. B60
    3. C75
    4. D135

11. 11During the taking of its physical inventory on December 31, 2014, Barry’s Bike Shop incorrectly counted its inventory as $350,000 instead of the correct amount of $280,000. The effect on the balance sheet and income statement would be

    1. Aassets overstated by $70,000; retained earnings understated by $70,000; and net income statement understated by $70,000
    2. Bassets overstated by $70,000; retained earnings understated by $70,000; and no effect on the income statement
    3. Cassets, retained earnings, and net income all overstated by $70,000
    4. Dassets and retained earnings overstated by $70,000; and net income understated by $70,000
12. 12Which of the following is used to analyze the efficiency and effectiveness of inventory management?

    1. Ainventory turnover only
    2. Bnumber of days’ sales in inventory only
    3. Cboth inventory turnover and number of days’ sales in inventory
    4. Dneither inventory turnover or number of days’ sales in inventory
13. 13Which of the following measures the relationship between cost of merchandise sold and the amount of inventory carried during the period?

    1. AInventory Turnover
    2. Bfixed asset turnover
    3. Cretail method of inventory costing
    4. Dgross profit method of inventory costing
14. 14Which of the following measures the length of time it takes to acquire, sell, and replace inventory?

    1. AInventory Turnover
    2. Bnumber of days’ sales in inventory
    3. Cretail method of inventory costing
    4. Dgross profit method of inventory costing
15. 15The number of days' sales in inventory measures

    1. Athe length of time it takes to acquire, sell, and replace the inventory
    2. Bthe length of time it takes to acquire and receive payment for the inventory
    3. Cthe number of days inventory is on hand prior to sale
    4. Dthe number of days inventory takes to arrive after ordering
16. 16For the year ended December 31, Depot Max’s cost of merchandise sold was $56,900. Inventory at the beginning of the year was $6,540. Ending inventory was $7,250. Compute Depot Max’s inventory turnover for the year.

    1. A8.7
    2. B7.8
    3. C8.3
    4. D44
17. 17For the year ended December 31, Depot Max’s cost of merchandise sold was $56,900. Inventory at the beginning of the year was $6,540. Ending inventory was $7,250. Depot Max’s number of days' sales in inventory is closest to
    

    1. A42
    2. B46
    3. C8
    4. D44
18. 18Damaged merchandise that can be sold only at prices below cost should be valued at

    1. ANet Realizable Value
    2. BLIFO
    3. CFIFO
    4. DAverage Cost

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durka Business/Economics Quiz on Chapter 6 - Inventories , created by Mahmoud Hemood on 08/04/2018.

Author

Mahmoud Hemood

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English

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