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Exam 6: Inventories

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Question 31

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When merchandise sold is assumed to be in the order in which the purchases were made,the company is using

A) first-in,last-out
B) last-in,first-out
C) first-in,first-out
D) average cost

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

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Question 32

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Hampton Co.took a physical count of its inventory on December 31.In addition,it had to decide whether or not the following items should be added to this count. a. Merchandise on hand had been sold earlier in the year but had been returned by customers for various warranty repairs. b. Hampton Co.sent merchandise on a consignment basis on December 31 just prior to the physical count. c. On December 22,Hampton Co.ordered merchandise on FOB destination terms.The merchandise was shipped by the supplier on December 30 but had not been received by December 31. d. On December 27,Hampton Co.ordered merchandise on FOB shipping point terms.The merchandise was shipped on December 29 but had not been received by December 31. e. Merchandise sold FOB shipping point on December 31 was picked up by the freight company just before closing on December 31. f. Merchandise shipped to a customer FOB destination was picked up by the freight company on December 28 but had not arrived at its destination as of December 31. Answer "yes" or "no" to indicate which items should and should not be added to the December 31 inventory count.

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a. no
b. y...

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Question 33

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If Beginning Inventory BI + Purchases P - Ending Inventory EI = Cost of Merchandise Sold COMS,an equivalent equation can be written as

Cost flow is in the order in which costs were incurred when using

The following lots of a particular commodity were available for sale during the year: -What is the amount of cost of goods sold for the year according to the average cost method?

Direct disposal costs do not include special advertising or sales commissions.

The lower of cost or market is a method of inventory valuation.

The following units of an inventory item were available for sale during the year: 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:

The following lots of a particular commodity were available for sale during the year: -The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year.What is the amount of inventory at the end of the year rounded to nearest dollar according to the average cost method?

Unsold consigned merchandise should be included in the consignee's inventory.

If 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

The choice of an inventory costing method has no significant impact on the financial statements.

Merchandise 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?

The following lots of a particular commodity were available for sale during the year: -What is the amount of cost of merchandise sold for the year according to the LIFO method?

If a manufacturer ships merchandise to a retailer on consignment,the unsold merchandise should be included in the inventory of the

During periods of increasing costs,the use of the FIFO method of costing inventory will result in a greater amount of net income than would result from the use of the LIFO cost method.

The following lots of a particular commodity were available for sale during the year: -What is the amount of the inventory at the end of the year using the LIFO method?

Determine the total value of the merchandise using net realizable value.

Beginning inventory,purchases,and sales for an inventory item are as follows: $\begin{array}{|l|l|}\hline \text { Beginning inventory } & 150 \text { units@ } \$ 755 \\\hline \text { Sale } & 120 \text { units } \\\hline \text { First purchase } & 400 \text { units @ } \$ 785 \\\hline \text { Sale } & 200 \text { units } \\\hline \text { Second purchase } & 300 \text { units @ } \$ 805 \\\hline \text { Sale } & 290 \text { units } \\\hline\end{array}$ The firm uses the perpetual inventory system and there are 240 units of the item on hand at the end of the year.What is the total cost of ending inventory according to LIFO?

The units of Product Green-2 available for sale during the year were as follows: $\begin{array}{lrll}\text { Aprl } & 1 & \text { Inventory } & 15 \text { units } &@& \$30 \\\text { June } & 16 & \text { Purchase } & 29 \text { units } &@& \$33\\\text { Sep. } & 28 & \text { Purchase } & 45 \text { units }&@& \$35\end{array}$ There are 17 units of the product in the physical inventory at September 30.The periodic inventory system is used.Determine the cost of merchandise sold by a FIFO,b LIFO,and c average cost methods.