Question 1

In periods when costs are rising, LIFO liquidations:

Accepted Answer

A)  Can't occur.
B)  Are used to reduce tax liabilities.
C)  Are a source of off-balance-sheet financing.
D)  Distort the net income.E) B) and D)
F) B) and C)

Question 2

Purchases equal the invoice amount:

Accepted Answer

A)  Plus freight-in, plus discounts lost.
B)  Less purchase returns, plus purchase allowances.
C)  Plus freight-in, less purchase discounts.
D)  Plus discounts, less purchase returns.E) All of the above
F) B) and D)

Question 3

Ending inventory using the average cost method (rounded)  is:

Accepted Answer

A)  $650.
B)  $1,000.
C)  $707.
D)  $600.E) B) and D)
F) None of the above

Question 4

It is the end of the accounting period, and your boss asks you to help determine the inventory balance to place in the company's balance sheet. Explain which physical quantities of inventory that you will include and which you will exclude.

Accepted Answer

Taking a physical inventory is a necessa...

Question 5

Assuming Northwest uses the gross method to record purchases, what is the cost of goods available for sale?

Accepted Answer

A)  $492,500.
B)  $496,500.
C)  $490,500.
D)  $492,550.E) A) and D)
F) B) and D)

Question 6

Chavez Inc adopted dollar-value LIFO on January 1, 2013, when the inventory value was $850,000. The December 31, 2013, ending inventory at year-end cost was $950,000 and the cost index for the year is 1.08.
Required:
Compute the dollar-value LIFO inventory valuation (rounded) for the December 31, 2013, inventory.

Accepted Answer

The answer of Chavez Inc adopted dollar-value LIFO on January...

Question 7

Required:
Compute the January 31 ending inventory and cost of goods sold for January, assuming Random Creations uses LIFO and perpetual inventory system.

Accepted Answer

The answer of Required:
Compute the January 31 ending inventory and...

Question 8

Selected financial statement data from Western Colorado Stores is shown below.  Required:
1. Compute the gross profit ratio for 2013.
2. Compute the inventory turnover ratio for 2013.

Accepted Answer

The answer of Selected financial statement data from Western Colorado...

Question 9

Linguini Inc. adopted dollar-value LIFO (DVL)  as of January 1, 2013, when it had an inventory of $800,000. Its inventory as of December 31, 2013, was $811,200 at year-end costs and the cost index was 1.04. What was DVL inventory on December 31, 2013?

Accepted Answer

A)  $780,000.
B)  $800,000.
C)  $811,200.
D)  $832,000.E) A) and B)
F) A) and C)

Question 10

The gross profit ratio is calculated by dividing gross profit by average inventory.

Accepted Answer

A) True 
 B)False

Question 11

During periods when costs are rising and inventory quantities are stable, ending inventory will be:

Accepted Answer

A)  Higher under LIFO than FIFO.
B)  Lower under average cost than LIFO.
C)  Higher under average cost than FIFO.
D)  Higher under FIFO than LIFO.E) None of the above
F) A) and D)

Question 12

When reported in financial statements, a LIFO allowance account usually:

Accepted Answer

A)  Is shown in the firm's income statement.
B)  Is added to LIFO cost to indicate what the inventory would cost on a FIFO basis.
C)  Indicates the effect on income if LIFO were not used.
D)  Shows the current rate of inflation for that asset.E) A) and B)
F) C) and D)

Question 13

The inventory method that will always produce the same amount for cost of goods sold in a periodic inventory system as in a perpetual inventory system would be:

Accepted Answer

A)  FIFO.
B)  LIFO.
C)  Weighted average.
D)  None of the above.E) C) and D)
F) None of the above

Question 14

Dollar-value LIFO eliminates the risk of LIFO liquidations.

Accepted Answer

A) True 
 B)False

Question 15

Compared to dollar-value LIFO, unit LIFO is:

Accepted Answer

A)  Less costly to implement.
B)  Less susceptible to LIFO liquidation.
C)  More costly to implement.
D)  More concerned with cost indexes.E) B) and C)
F) A) and C)

Question 16

On January 1, 2012, ECT Co. adopted the dollar-value LIFO method for its one inventory pool. The pool's value on this date was $600 million. The 2012 and 2013 ending inventory valued at year-end costs were $702 million and $840 million, respectively. The appropriate cost indexes are 1.08 for 2012 and 1.20 for 2013.
Required:
Calculate the inventory balance that ECT Co. would report on its year-end balance sheets for 2012 and 2013, using the dollar-value LIFO method.

Accepted Answer

The answer of On January 1, 2012, ECT Co. adopted...

Question 17

In a period when costs are falling and inventory quantities are stable, the lowest taxable income would be reported by using the inventory method of:

Accepted Answer

A)  Weighted average.
B)  LIFO.
C)  Moving average.
D)  FIFO.E) A) and D)
F) None of the above

Question 18

Ending inventory assuming LIFO in a perpetual inventory system would be:

Accepted Answer

A)  $4,960.
B)  $5,060.
C)  $5,080.
D)  $5,140.E) B) and D)
F) C) and D)

Question 19

What inventory balance should Badger report on its 12/31/13 balance sheet?

Accepted Answer

A)  $126,000
B)  $121,000
C)  $120,000
D)  $100,000E) B) and C)
F) B) and D)

Question 20

Required:
Compute the January 31 ending inventory and cost of goods sold for January, assuming Denver uses average cost and a periodic inventory system.

Accepted Answer

Periodic Average Cos...

Exam 8: Inventories: Measurement

The inventory method that will always produce the same amount for cost of goods sold in a periodic inventory system as in a perpetual inventory system would be:

Correct Answer
verified

Correct Answer
verified

Ending inventory using the average cost method (rounded) is:

Correct Answer
verified

Dollar-value LIFO eliminates the risk of LIFO liquidations.

Correct Answer
verified

Required: Compute the January 31 ending inventory and cost of goods sold for January, assuming Denver uses average cost and a periodic inventory system.

Correct Answer
verified
Periodic Average Cos...
View Answer

Compared to dollar-value LIFO, unit LIFO is:

Correct Answer
verified

Selected financial statement data from Western Colorado Stores is shown below. Required: 1. Compute the gross profit ratio for 2013. 2. Compute the inventory turnover ratio for 2013.

Correct Answer
verified

Assuming Northwest uses the gross method to record purchases, what is the cost of goods available for sale?

Correct Answer
verified

Correct Answer
verified

Required: Compute the January 31 ending inventory and cost of goods sold for January, assuming Random Creations uses LIFO and perpetual inventory system.

Correct Answer
verified

It is the end of the accounting period, and your boss asks you to help determine the inventory balance to place in the company's balance sheet. Explain which physical quantities of inventory that you will include and which you will exclude.

Correct Answer
verified
Taking a physical inventory is a necessa...
View Answer

Purchases equal the invoice amount:

Correct Answer
verified

In periods when costs are rising, LIFO liquidations:

Correct Answer
verified

During periods when costs are rising and inventory quantities are stable, ending inventory will be:

Correct Answer
verified

The gross profit ratio is calculated by dividing gross profit by average inventory.

Correct Answer
verified

In a period when costs are falling and inventory quantities are stable, the lowest taxable income would be reported by using the inventory method of:

Correct Answer
verified

When reported in financial statements, a LIFO allowance account usually:

Correct Answer
verified

Linguini Inc. adopted dollar-value LIFO (DVL) as of January 1, 2013, when it had an inventory of $800,000. Its inventory as of December 31, 2013, was $811,200 at year-end costs and the cost index was 1.04. What was DVL inventory on December 31, 2013?

Correct Answer
verified

What inventory balance should Badger report on its 12/31/13 balance sheet?

Correct Answer
verified

Ending inventory assuming LIFO in a perpetual inventory system would be:

Correct Answer
verified

Exam 8: Inventories: Measurement

The inventory method that will always produce the same amount for cost of goods sold in a periodic inventory system as in a perpetual inventory system would be:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Ending inventory using the average cost method (rounded) is:

Correct AnswerverifiedShow Answer

Dollar-value LIFO eliminates the risk of LIFO liquidations.

Correct AnswerverifiedShow Answer

Required: Compute the January 31 ending inventory and cost of goods sold for January, assuming Denver uses average cost and a periodic inventory system.

Correct AnswerverifiedPeriodic Average Cos...View AnswerShow Answer

Compared to dollar-value LIFO, unit LIFO is:

Correct AnswerverifiedShow Answer

Selected financial statement data from Western Colorado Stores is shown below. Required: 1. Compute the gross profit ratio for 2013. 2. Compute the inventory turnover ratio for 2013.

Correct AnswerverifiedShow Answer

Assuming Northwest uses the gross method to record purchases, what is the cost of goods available for sale?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Required: Compute the January 31 ending inventory and cost of goods sold for January, assuming Random Creations uses LIFO and perpetual inventory system.

Correct AnswerverifiedShow Answer

It is the end of the accounting period, and your boss asks you to help determine the inventory balance to place in the company's balance sheet. Explain which physical quantities of inventory that you will include and which you will exclude.

Correct AnswerverifiedTaking a physical inventory is a necessa...View AnswerShow Answer

Purchases equal the invoice amount:

Correct AnswerverifiedShow Answer

In periods when costs are rising, LIFO liquidations:

Correct AnswerverifiedShow Answer

During periods when costs are rising and inventory quantities are stable, ending inventory will be:

Correct AnswerverifiedShow Answer

The gross profit ratio is calculated by dividing gross profit by average inventory.

Correct AnswerverifiedShow Answer

In a period when costs are falling and inventory quantities are stable, the lowest taxable income would be reported by using the inventory method of:

Correct AnswerverifiedShow Answer

When reported in financial statements, a LIFO allowance account usually:

Correct AnswerverifiedShow Answer

Linguini Inc. adopted dollar-value LIFO (DVL) as of January 1, 2013, when it had an inventory of $800,000. Its inventory as of December 31, 2013, was $811,200 at year-end costs and the cost index was 1.04. What was DVL inventory on December 31, 2013?

Correct AnswerverifiedShow Answer

What inventory balance should Badger report on its 12/31/13 balance sheet?

Correct AnswerverifiedShow Answer

Ending inventory assuming LIFO in a perpetual inventory system would be:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Periodic Average Cos...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Taking a physical inventory is a necessa...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified