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Exam 7: Inventory and Cost of Goods Sold

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Question 91

Multiple Choice

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In a period of rising prices,the inventory costing method that assigns a value to inventory that approximates current cost is:

A) LIFO.
B) FIFO.
C) Weighted average.
D) Specific identification.

E) C) and D)
F) A) and C)

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Question 92

Multiple Choice

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An understatement of the beginning inventory balance causes cost of goods sold to be:

A) understated and net income to be understated.
B) understated and net income to be overstated.
C) overstated and net income to be understated.
D) overstated and net income to be correct.

E) C) and D)
F) A) and B)

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Question 93

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When the periodic inventory system is in use,the choice of an inventory costing method usually has no impact on gross profit or cost of goods sold.

Eaton Electronics uses a periodic inventory system.On March 31,Eaton has two plasma TVs on hand at a cost of $1,500 each (serial numbers 11534892 and 11534894) .In April,the company purchases four more identical TVs from Toshiba for $1,450 each (serial numbers 11542631 through 11542634) .In May,the company purchases five more identical TVs for $1,600 each (serial numbers 11550964 through 11550968) .In June,Eaton sells two of these TVs (serial numbers 11534894 and 11542631) .There were no additional purchases or sales during the remainder of the year. Eaton Electronics uses the LIFO method.What is the cost of its ending inventory?

Yucca Co.updates its inventory periodically.The company's beginning inventory was $4,860 and purchases were $10,080 during the year.The company's ending inventory count was $9,000.What was the amount of its cost of goods sold?

The LIFO Conformity Rule requires that LIFO be used:

A company uses a perpetual inventory system.On May 1,beginning inventory consists of 10 items at a cost of $10 each.On May 3,10 items are purchased at $12 each.On May 8,12 items are sold.On May 15,10 items are purchased at $14 each.Using the weighted average cost,cost of goods sold for the month ended May 31 is:

Generally,which inventory costing method approximates most closely the current cost for each of the following? $\begin{array}{|c|c|c|}\hline & \text { Ending Inventory } & \text { Cost of Goods Sold } \\\hline \text { A) } & \text { FIFO } & \text { LIFO } \\\hline \text { B) } & \text { LFO } & \text { LFO } \\\hline \text { C) } & \text { FIFO } & \text { FIFO } \\\hline \text { D) } & \text { LFO } & \text { FIFO } \\\hline\end{array}$

Eaton Electronics uses a periodic inventory system.On March 31,Eaton has two plasma TVs on hand at a cost of $1,500 each (serial numbers 11534892 and 11534894) .In April,the company purchases four more identical TVs from Toshiba for $1,450 each (serial numbers 11542631 through 11542634) .In May,the company purchases five more identical TVs for $1,600 each (serial numbers 11550964 through 11550968) .In June,Eaton sells two of these TVs (serial numbers 11534894 and 11542631) .There were no additional purchases or sales during the remainder of the year. Eaton Electronics uses the weighted average method.What is the company's weighted average cost per unit? (Round the per unit cost to the nearest dollar. )

Which financial statements will be properly stated if the Year 1 ending inventory balance is understated?

The number of days to sell is calculated as:

A company uses a periodic inventory system.The company had beginning inventory of 3 units that cost $5 each.During the month,17 units were purchased for $6 each.The company sold 15 units during the month and had 5 remaining in ending inventory.If the company uses FIFO instead of LIFO to calculate cost of goods sold,then cost of goods sold will be:

Most companies report their lower of cost or market write-down expense as a ________ expense even if the goods haven't been sold,because it's a necessary cost of carrying and (eventually) selling the goods.

Sleepy Monk offers roasted coffee beans for sale on consignment from Sea Level Roasters.Which company should report the inventory of unsold coffee beans on its balance sheet?

Sweetwater Co.updates its inventory perpetually.The company reported a beginning inventory of $3,000.During the year,the company recorded inventory purchases of $9,000 and cost of goods sold of $10,000.What was the amount of its ending inventory?

Which of the following would be in the finished goods inventory of a company making ice cream?

The most commonly used inventory costing method in the U.S.is:

Goods placed in inventory are initially recorded at market value.

Match the term to the appropriate definition.There are more definitions than terms. -Inventory

Zippy Shoe Co.uses a periodic inventory system.Zippy purchased 800 pairs of shoes at $70 each in June,2,000 pairs in August at $72 each,and 1,200 pairs in December at $75 each.Zippy sold 3,800 pairs of shoes during the year. Required: Calculate the company's ending inventory and cost of goods sold using the each of following inventory costing methods. a.FIFO b.LIFO c.Weighted Average