7224232
Description
Quiz by Angelica Vannarath, updated more than 1 year ago
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Created by Angelica Vannarath
over 7 years ago
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Question 1
Question
Which of the following inventory cost flow methods would an automobile dealership most likely use for its new car sales?
Answer
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Specific identification
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FIFO
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LIFO
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Weighted-average
Question 2
Question
What is the cost of goods sold using the FIFO cost flow method?
Answer
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$960
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$1,000
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$990
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$1,120
Question 3
Question
What is the cost of goods sold using the LIFO cost flow method?
Answer
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$980
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$1,000
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$1,120
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$1,040
Question 4
Question
What is the cost of goods sold using the weighted-average cost flow method?
Answer
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$950
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$1,000
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$1,120
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$995.60
Question 5
Question
What is the ending inventory using the LIFO cost flow method?
Answer
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$500
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$635
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$575
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$650
Question 6
Question
Which of the following is an incorrect statement when comparing the FIFO, LIFO, and weighted average inventory cost flow methods?
Answer
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The Internal Revenue Service requires that companies using LIFO for income tax purposes must use FIFO for financial reporting purposes.
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Although gross margins may vary between these three inventory methods, the cash outflow for inventory purchases is the same regardless of which method is used.
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Generally accepted accounting principles (GAAP) require that financial statements disclose which inventory method is used in the financial statements.
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All of the above statements are correct.
Question 7
Question
Use the following list to identify which situations refer to the inventory cost flow assumption known as LIFO:
1. Produces the highest amount of net income in an inflationary environment.
2. Produces the highest amount of assets in an inflationary environment.
3. Produces the lowest amount of net income in a deflationary environment.
4. Produces the same unit cost for assets and cost of goods sold in an inflationary environment.
5. Produces the lowest amount of net income in an inflationary environment.
6. Produces an asset value that was the same regardless of whether the environment was inflationary or deflationary.
7. Produces the lowest amount of assets in an inflationary environment.
8. Produces the highest amount of assets in a deflationary environment.
Answer
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1, 2, 3
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1, 2, 3, 4
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5, 7, 8
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4, 6
Question 8
Question
If Hughes Corporation applies the lower-of-cost-or-market rule to each individual item, what is the amount of inventory that Hughes will show on its books after the adjustment, if any?
Answer
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$2,780
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$2,720
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$2,990
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Cannot determine from the information provided
Question 9
Question
If Hughes Corporation applies the lower-of-cost-or-market rule to the aggregate inventory, what is the amount of inventory that Hawk will show on its books after the adjustment, if any?
Answer
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$2,780
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$2,720
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$2,990
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Cannot determine from the information provided
Question 10
Question
Kincaid Company applies the lower-of-cost-or-market 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 inventory write-down would affect Kincaid’s financial statements?
Answer
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A
-
B
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C
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D
Question 11
Question
Which of the following is an incorrect statement?
Answer
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A discrepancy between the perpetual inventory account and the physical inventory account may indicate the presence of fraud.
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Inventory is often the largest single asset reported on the balance sheet of a merchandising business.
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The same individual should record inventory transactions and count the inventory to reduce the likelihood of an inventory-related fraud occurrence.
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Cost of goods sold is normally the largest single expense on the balance sheet of a merchandising business.
Question 12
Question
The ending inventory for Brewer Company was erroneously written down causing an understatement of $9,800 at the end of 2016. Based on this, which of the following would be overstated?
Answer
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2016 cost of goods sold, 2016 gross margin, and 2017 net income.
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2016 gross margin, 2016 net income, and 2017 cost of goods sold.
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2016 cost of goods sold, 2017 cost of goods available, and 2017 gross margin.
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2017 beginning inventory, 2017 net income, and 2016 goods available for sale.
Question 13
Question
What is Oregon Company’s estimated gross margin in dollars?
Answer
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$164,700
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$310,000
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$281,250
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$343,750
Question 14
Question
What is the average number of days to sell inventory (average days in inventory ratio) for Baker Corporation? (Round your answer to two decimal places)
Answer
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5.00
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7.50
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73.00
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48.67
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