You are watching: Which of the following statements is true regarding inventory cost flow assumptions?
B. Providers that room manufacturers perform their perfect goods, work-in-process and raw products inventory separately.
C. Perform is classified together a long-term asset ~ above the balance sheet.
D. Merchandisers buy list in finished type ready because that resale.
Which that the adhering to statements regarding inventory calculations is true?
A. Beginning inventory + network purchases - finishing inventory = expense of items sold.
B. Goods available for sale + finishing inventory = price of items sold.
C. Beginning inventory + network purchases - ending inventory = goods easily accessible for sale.
D. Goods available for revenue + price of items sold = finishing inventory.
Which the the following statements about inventory costing approaches is true?
A. The LIFO technique assumes that the expenses for the newest items (the last ones in) are used very first and the older prices are left in finishing inventory.
B. Throughout a period of rising prices, LIFO results in a greater income tax expense than walk FIFO.
C. Global Financial Reporting criter (IFRS) permit the use of LIFO yet not FIFO.
D. In the U.S., if a firm uses LIFO ~ above the income tax return, it may use a different method for financial reporting.
The LIFO technique assumes the the costs for the newest items (the critical ones in) space used an initial and the older expenses are left in ending inventory.
Which the the adhering to statements regarding the calculations supplied for the weighted mean inventory costing method is true?
A. Under the weighted average price method, if the products in inventory to be purchased in ~ three different prices, the three various prices would be added and then separated by 3 to uncover the weighted average cost per unit.
B. When the weighted mean inventory costing an approach is used, ending inventory and also cost of items sold are calculated utilizing different prices per unit.
C. Over there is no difference in the calculations under the weighted average method whether a perpetual or regular inventory device is used.
D. The weighted-average an approach will create an inventory price which is in between the results of FIFO and LIFO list costing methods.
The weighted-average technique will develop an inventory price which is between the outcomes of FIFO and also LIFO perform costing methods.
Which of the complying with statements concerning the reduced of cost or market dominion is not true?
A. The reduced of price or market dominion sometimes reasons the publication value of inventory come be composed down listed below cost, yet will never reason the book value of inventory to be increased over cost.
B. The amount of list write-down is an expense which many companies report as price of products sold.
C. Reduced of price or sector is an inventory cost technique used come determine price of items sold and ending inventory.
D. The reduced of price or market ascendancy is based upon the conservatism concept.
Lower of cost or market is an inventory cost technique used to determine price of products sold and also ending inventory.
Which among the complying with statements about inventory is not true?
A. An increase in inventory level is always a sign of inefficiency in list management.
B. The measurement of inventory affect both the balance sheet and also the revenue statement in ~ an audit period.
C. The ending inventory the one accounting period becomes the start inventory of the next accountancy period.
D. The expense of merchandise can vary over time and also may be affected by weather, politics, and technical innovation.
An increase in inventory levels is constantly a sign of incompetent in inventory management.
Which the the adhering to statements regarding inventory measures is not true?
A. If the list turnover proportion increases, the job to offer measure decreases.
B. The days to sell measure can help managers make ordering decisions because that inventory.
C. A higher inventory sales ratio suggests that inventory is moving an ext quickly from acquisition to sale.
D. The is rare for a firm with a lower gross profit percentage to have actually a much faster inventory turnover.
It is rare for a company with a reduced gross profit portion to have a quicker inventory turnover.
Which that the adhering to statements about comparisons made in controlling inventory is not true?
A. In make comparisons of financial statements, the is desirable to to compare data calculated using the exact same inventory costing methods.
B. The inventory sales ratio and days to offer measure will certainly be impacted by the expense flow presumptions used, which reasons problems for financial declaration users.
C. List turnover and also days to offer are often affected by changes in the economic climate.
D. The perform turnover and also days to market ratios room consistent among companies in various industries.
The list turnover and days to market ratios room consistent among companies in various industries.
Carrying poor quantities of list on hand:
A. Would certainly not affect the company"s profitability.
B. May an outcome in shed sales.
C. Has tiny effect on customer satisfaction.
D. Will increase the prices of transferring inventory.
may result in shed sales.
Which that the complying with is not true if too much quantities that inventory are purchased?
A. Storage and interest prices may increase.
B. Goods can have to be sold at huge discounts.
C. There is a greater probability that items will end up being damaged or obsolete.
D. The perform turnover proportion is most likely to increase.
The perform turnover proportion is likely to increase.
The main goals that inventory management do not include:
A. Maintaining a enough quantity of inventory to save customers satisfied.
B. Maintaining sufficient quality of inventory to store customers satisfied.
C. Minimizing the costs linked with keeping inventories.
D. Minimizing the quantity of ending inventory.
minimizing the quantity of ending inventory.
Which of the adhering to is not true around an auto manufacturer"s inventory?
A. Tires, batteries, glass, paint, headlamp bulbs, and also electric wiring would be included in raw products inventory.
B. Incomplete dare that are still gift processed would certainly be contained in work-in-process inventory.
C. Finished cars all set to be shipped to dealers would certainly be included in finished products inventory.
D. Cars that have been marketed to dealers would be contained in finished products inventory.
Cars that have actually been marketed to dealers would be consisted of in finished products inventory.
Which the the complying with is the equation for expense of goods sold?
A. Beginning inventory + network purchases - ending inventory
B. Start inventory + net purchases + ending inventory
C. Net purchases - finishing inventory
D. Ending inventory + net purchases - beginning inventory
Beginning list + network purchases - ending inventory
A goods company"s beginning inventory to add merchandise purchase equals:
A. Finishing inventory.
B. Expense of products sold.
C. Goods obtainable for sale.
D. Network purchases.
goods available for sale.
A goods company"s start inventory to add merchandise purchase minus ending inventory equals:
A. Network sales.
B. Expense of goods sold.
C. Goods easily accessible for sale.
D. Net purchases.
cost of products sold.
Which that the following would be in the raw products inventory that a company making cheese?
A. Milk and also cream supplied to make the cheese.
B. Cheese that has actually been made but is curing before being ready to sell.
C. Cured cheese that is waiting to be transport to retailers.
D. Partially processed cheese.
Milk and cream provided to make the cheese.
Which that the adhering to would be in the work-in-process inventory of a agency making cheese?
A. Milk and also cream provided to do the cheese.
B. Cheese that has been made but is curing prior to being prepared to sell.
C. Cured cheese the is wait to be transport to retailers.
D. Cured cheese that has been marketed to retailers.
Cheese that has been made however is curing prior to being all set to sell.
Which of the following would be in the finished products inventory of a firm making cheese?
A. Milk and also cream offered to do the cheese.
B. Cheese that has actually been made yet is curing before being ready to sell.
C. Cured cheese that is wait to be transport to retailers.
D. Cured cheese that has been sold to retailers.
Cured cheese the is waiting to be transport to retailers.
The specific identification technique would most likely be most appropriate for i m sorry of the adhering to goods?
A. Crate of brass 4-inch drywall screws at residence Depot.
B. Party of suntan odor in Wal-Mart"s main warehouse.
C. Sets of tires at the Goodyear plant.
D. Diamond necklaces at a Tiffany & Co. Jewel store.
Diamond necklaces in ~ a Tiffany & Co. Jewel store.
The Acme coporation, group buys 300 devices of merchandise in January at $5 each. In February, Acme buys 500 devices at $4 each and in March it buys 200 devices at $6 each. Acme selling 150 units during this quarter. What is the expense of goods sold under the FIFO method?
If a firm purchased 200 units of inventory at $9 every unit and also 300 devices at $10 per unit, the weighted typical unit price for this inventory would certainly be:
The LIFO list costing technique assumes the the expense of the units most recently purchased is:
A. The last to it is in assigned to expense of items sold.
B. The very first to be assigned to finishing inventory.
C. The very first to be assigned to expense of goods sold.
D. The critical to it is in assigned come units accessible for sale.
the first to it is in assigned to price of goods sold.
Which perform costing technique generally results in the most recent costs being assigned to ending inventory?
C. Weighted median cost.
D. Basic average cost.
During 2013, Shockglass firm recorded inventory purchases the $45,000 and also cost of items sold of $50,000. If inventory at the beginning of the year to be $15,000, the finishing inventory balance must have been:
The 2014 documents of Thompson agency showed start inventory, $6,000; expense of items sold, $14,000; and ending inventory, $8,000. The cost of purchase was:
The Acme coporation, group buys 300 devices of goods in January at $5 each. Acme buys 500 systems at $4 every in February and also 200 devices at $6 each in March. Acme selling 150 units throughout this quarter. Acme provides a regular inventory system and also had no beginning inventory. What is its expense of items sold for the quarter making use of the LIFO method?
Which the the complying with statements is true?
A. As soon as unit prices are steadily climbing or falling, the weighted average cost method yields a price of products sold between that that FIFO and also LIFO.
B. FIFO will cause the highest possible net revenue if unit expenses are falling.
C. LIFO will constantly yield a smaller net income than FIFO.
D. Certain identification is the most practical, but least accurate, measure of cost and also net income.
When unit costs are steadily climbing or falling, the weighted typical cost technique yields a cost of items sold between that the FIFO and LIFO.
Which of the following impacts would occur as a an outcome of a acquisition of merchandise because that cash in a perpetual perform system?
A. Total assets increase.
B. Complete assets space unchanged.
C. Full liabilities increase.
D. Full stockholders" same decreases.
Total assets are unchanged.
An adjustment to finishing inventory under the lower of expense or sector (LCM) dominance would it is in least likely to be recorded by a firm that sells:
A. A family members staple choose laundry detergent.
B. A fad product prefer bathing suits.
C. Seasonal items like snow blowers.
D. High-tech products like an individual Digital Assistants.
a family staple prefer laundry detergent.
An convey to finishing inventory under the lower of price or industry (LCM) ascendancy would be most likely to be tape-recorded by a firm that sells:
A. Plastic warehouse containers.
B. Document clips.
C. Human body lotion.
D. Designer clothes.
When the reduced of cost or market (LCM) dominance requires an perform adjustment:
A. The mediate usually, yet not always, reduce the publication value that inventory.
B. The write-down is usually reported as a part of expense of goods sold.
C. The inventory adjustment is tape-recorded in a contra-account called merchandise allowances.
D. The write-down does not affect any of the gaue won statements.
the write-down is generally reported as a component of price of goods sold.
Your company has 500 units in inventory that had actually been purchased because that $12 each and that would currently cost $15 to replace. Her supplier has actually just announced the expense of these products is climbing to $16.50.
A. Your agency should make no adjustments come the list account.
B. Your company should adjust the perform account using the reduced of the recent market values, i beg your pardon is $15.
C. Your company should change the perform account making use of the cost, which is $12.00.
D. Your agency should change the inventory account making use of the typical of the recent market values, i beg your pardon is $14.50.
Your company should do no adjustments to the perform account.
Your firm has 100 systems in inventory, purchased in ~ $16 every unit, that can be changed for $14.
A. The company should credit price of products sold for $200.
B. The agency should debit price of products sold for $1,400.
C. The company should credit inventory because that $200.
D. The firm should debit inventory for $1,400.
The agency should credit transaction inventory because that $200.
If the market value of products in inventory drops to $26,000 below its cost, the agency should:
A. Perform nothing, because assets are reported in ~ their initial purchase price.
B. Credit transaction inventory for $26,000.
C. Debit inventory because that $26,000.
D. Use the weighted median cost method since that method provides a much more accurate indicator of present value.
credit inventory for $26,000.
When the replacement expense of list drops listed below the price recorded in the financial records, using the reduced of price or industry (LCM) ascendancy causes:
A. A decrease in expense of items sold.
B. No change in net income, other things being equal.
C. A reduction in the book value of full assets.
D. Boost in net income.
a reduction in the publication value of complete assets.
The procedure of buying and selling inventory is recognized as inventory:
Inventory levels increase by 10% in ~ your agency during the fourth quarter. Based upon this increase, which of the following statements is true?
A. This is always good news due to the fact that inventories room an asset to the company.
B. This could be good news if the firm is ordering more goods since sales appear to it is in rising.
C. This can be bad news if the firm is ordering much more goods due to the fact that unit prices are falling.
D. This is always bad news because higher inventories mean higher costs.
This can be good news if the agency is ordering more goods since sales appear to be rising.
For a manufacturer, inventory turnover refers to how many times:
A. Throughout the duration the firm replaces the raw products inventory.
B. The company buys and also sells its perform of finished goods.
C. The company produces its goods and delivers the inventory to customers.
D. The firm orders life materials.
the agency produces its goods and delivers the inventory to customers.
For a merchandiser, list turnover describes how many times:
A. During the period the agency replaces that raw products inventory.
B. The agency buys and also sells its perform of goods.
C. The firm produces and delivers its perform of items to customers.
D. The company orders merchandise.
the company buys and also sells its list of goods.
An enhancing balance in the inventory account and also a declining inventory sales ratio implies that the inventory develop up is arising because:
A. Goods are not selling as quick as they to be in the past.
B. The agency is expecting come sell an ext in the future.
C. Goods are selling, but it is taking longer to collect payment.
D. Products cannot be shipped rapid enough.
goods room not offering as rapid as they to be in the past.
An enhancing balance in the inventory account and a faster inventory turnover proportion would imply that the inventory accumulation is developing because:
A. Goods are not selling as quick as anticipated.
B. The company is expecting to sell an ext in the future.
C. Items are selling however it is taking much longer to collect payment.
D. The economic situation is slowly down.
the company is expecting to sell much more in the future.
Which that the complying with companies would certainly be least concerned about a low inventory sales ratio?
A. A fish sector selling fresh fish.
B. A hardware company selling drywall screws.
C. A dairy company selling butter and also milk.
D. A semiconductor company selling microchips.
A hardware agency selling drywall screws.
Which the the adhering to would cause the greatest increase in a company"s inventory turnover ratio?
A. Maintaining the exact same amount of inventory on hand if unit sales room increasing.
B. Increasing the quantity of perform on hand when unit sales are increasing.
C. Keeping the same amount of inventory on hand if unit sales room decreasing.
D. Decreasing the amount of perform on hand when unit sales are increasing.
Decreasing the quantity of perform on hand when unit sales are increasing.
An boosting inventory turnover proportion indicates:
A. A longer time span in between the ordering and also receiving that inventory.
B. A shorter time span in between the ordering and also receiving that inventory.
C. A much shorter time span in between the purchase and also sale of inventory.
D. A longer time span between the purchase and sale of inventory.
a much shorter time span in between the purchase and sale that inventory.
Which that the complying with would no be affected by the an option of an inventory costing an approach (that is in between FIFO, LIFO, weight average, and particular identification)?
A. Net sales
B. Cost of goods sold
C. Pistol profit
D. Network income
Which the the adhering to statements is true?
A. FIFO outcomes in a reduced net earnings than LIFO when costs are increasing.
B. LIFO results in a greater net income than FIFO when expenses are increasing.
C. LIFO results in a greater net income than FIFO when costs are decreasing.
D. LIFO outcomes in the same net earnings as FIFO when costs are increasing.
LIFO results in a greater net income than FIFO when prices are decreasing.
The most commonly used perform costing technique in the U.S. Is:
B. Details identification.
D. Weighted average.
On April 6, Lopez Co. Purchased $5,000 the merchandise, terms 1/15, n/30. Lopez Co. Paid for the acquisition on April 26. The entry to document the payment top top April 26 in a perpetual perform system contains which that the following?
A. A credit transaction to inventory for $50.
B. A debit to account payable because that $4,900.
C. A credit transaction to accounts payable because that $5,000.
D. A credit to cash because that $5,000.
A credit to cash for $5,000.
Because LIFO uses older costs for inventory, in times of rising prices:
A. LIFO outcomes in a greater book worth of inventory and lower list turnover proportion than FIFO.
B. LIFO outcomes in a lower book value the inventory and lower list turnover proportion than FIFO.
C. LIFO outcomes in a greater book worth of perform and higher inventory turnover ratio than FIFO.
D. LIFO outcomes in a lower publication value of perform and greater inventory turnover proportion than FIFO.
LIFO outcomes in a lower book value of list and greater inventory turnover ratio than FIFO.
One of the most typical sources the misstatement in gaue won statements is the:
A. Use of alternating inventory costing methods.
B. Failure to create down inventory when the sector value is listed below cost.
C. Fail to report stock concerns appropriately.
D. Wrongly calculating the inventory sales ratio.
failure to create down inventory once the sector value is listed below cost.
A one-time error in the application of the lower of price or sector (LCM) rule in the current duration distorts financial outcomes for the present accounting period
B. And also the period before.
C. And also the period after.
D. And also all durations after.
and the duration after.
Which of the complying with statements is true?
A. Valuing inventory under LIFO may produce different results depending on whether a perpetual or periodic inventory system is used.
B. Valuing perform under the weighted mean cost an approach always produce the same results using either a perpetual or regular inventory system.
C. Valuing list under FIFO may produce different results relying on whether a perpetual or periodic inventory device is used.
D. Making use of the particular identification technique will produce different results depending upon whether perpetual or routine inventory device is used.
Valuing list under LIFO may produce different results depending upon whether a perpetual or periodic inventory mechanism is used.
A $15,000 overstatement of the 2014 finishing inventory was discovered after the gaue won statements because that the year were prepared. Exactly how would the inventory error affect the 2014 gaue won statements?
A. Current assets to be overstated and also net income was understated.
B. Current assets to be understated and also net earnings was understated.
C. Existing assets to be overstated and also net revenue was overstated.
D. Present assets to be understated and net revenue was overstated.
Current assets to be overstated and also net revenue was overstated.
A firm purchased $6,000 that merchandise. Transportation costs were second $100. The company returned $250 the the merchandise and also then paid the invoice in ~ the 2% discount period. What is the full amount of cash paid?
A retailer utilizing a periodic inventory mechanism returned $3,000 the defective was which to be purchased on account from among its all suppliers. The entrance to document this transaction on the retailer"s publications would incorporate a debit to
A. Account receivable.
B. Expense of products sold.
C. Accounts payable.
Which the the following accounts would normally have a credit transaction balance?
B. Cost of goods sold
D. Sales returns & allowances
If a firm"s start inventory is $35,000, goods purchased during the duration cost $120,000, and also the price of goods sold for the duration is $140,000, what is the quantity of the finishing inventory?
The perform costing technique that smoothes out alters in costs is
An error in the finishing inventory one duration causes an offsetting error in the following period, and as a result:
A. That affects only earnings statement accounts.
B. The affects only balance sheet accounts.
C. Management can ignore the error.
D. The is a self-correcting or counter-balancing error.
it is a self-correcting or counter-balancing error.
An understatement of the ending inventory balance will certainly cause:
A. Expense of products sold to it is in overstated and net revenue to be understated.
B. Expense of goods sold to be overstated and net revenue to it is in overstated.
C. Expense of items sold to be understated and net earnings to be overstated.
D. Price of goods sold to be overstated and also net earnings to it is in correct.
Cost of goods sold to be overstated and also net revenue to be understated.
The inventory turnover ratio is calculate as:
Cost of goods sold split by typical inventory.
Days to sell is calculated as:
365 divided by Inventory sales ratio.
An understatement of the start inventory balance causes:
A. Expense of products sold to it is in understated and also net earnings to be understated.
B. Cost of products sold to be understated and net revenue to it is in overstated.
C. Price of goods sold to be overstated and also net earnings to be understated.
D. Expense of goods sold to it is in overstated and net revenue to be correct.
Cost of items sold to be understated and also net revenue to be overstated.
In applying the reduced of price or market an approach to inventory, sector is defined as
A. Historical cost.
B. Current replacement cost.
C. Existing sales price.
D. Weighted-average cost.
current replacement cost.
Generally accepted accountancy principles (GAAP) need that the list be report at:
A. Sector value.
B. Historic cost.
C. Lower of price or market.
D. Retail value.
lower of price or market.
A company had been selling its product because that $20 per unit, but recently lower the marketing price to $15 every unit. The company"s existing inventory consists of 200 devices purchased at $16 every unit. The replacement cost of this was is at this time $13 every unit. In ~ what amount need to the company"s perform be reported on the balance paper under the lower of expense or sector rule?
The net sales that a company is $300,000. The price of goods easily accessible for sale is $280,000 and the pistol profit percent is 35%. What is the lot of ending inventory?
Which the the following will happen when inventory expenses are decreasing?
FIFO will an outcome in a lower net income and also a lower finishing inventory then will certainly LIFO.
When a company uses a perpetual perform system, purchase returns will certainly be recorded by:
A. Debiting inventory.
B. Debiting acquisition returns.
C. Crediting account payable.
D. Crediting inventory.
What is the amount of the discount to be taken by a firm that purchases inventory for $10,000 v terms 2/10, n/30, return $2,000 that the list purchased, obtain an pin money for defective goods of $100, and also pays the lot due in ~ the discount period?
Which of the following activities would not impact the inventory account because that a agency that provides the perpetual inventory system?
B. Purchase returns
In a duration of increasing prices, the list costing method that will cause the firm to have the lowest income taxes is
C. Load average.
D. Specific identification.
In a duration of rising prices, the list costing method that will reason the company to have actually the lowest expense of items sold is
C. Weighted average.
D. Specific identification.
In a period of climbing prices, the inventory costing technique that assigns a worth to inventory the approximates current cost is
C. Weighted average.
D. Particular identification.
In a duration of climbing prices, the inventory costing method that will tend to smooth out erratic alters in expenses is
C. Load average.
D. Certain identification.
In a period of fall prices, the list costing technique that will reason the firm to have the lowest cost of goods sold is
C. Weight average.
D. Certain identification.
In a period of falling prices, the perform costing technique that assigns a worth to inventory that approximates current price is
C. Weighted average.
D. Particular identification.
Which of the following is a valid reason for a agency to forgo a discount ~ above a purchase made under state 2/10, n/30?
A. The agency does not have the cash and would have to borrow funds to pay the invoice within the discount period.
B. The interest price the firm can knife on investments exceeds the annualized discount rate.
C. The company plans to return some of the merchandise prior to the finish of the credit period.
D. Other suppliers market a 1% discount for prompt payment.
The interest price the agency can knife on invest exceeds the annualized discount rate.
In a perpetual inventory system, paying transport charges on goods purchased FOB shipping point would have which of the following effects?
A. Decrease operating expenses.
B. Boost selling, general, and also administrative expenses.
C. Decrease cost of products sold.
D. Increase inventory.
Which the the following is true around terms 2/10, n/30?
A. A 2% discount is given if the invoice is paid in 10 days; the complete amount is early in 30 days.
B. A 10% discount is given if the invoice is payment in 2 days; the full amount is early out in 30 days.
C. The discount duration is 30 days.
D. The credit duration is 10 days.
A 2% discount is offered if the invoice is paid in 10 days; the full amount is early in 30 days.
Which that the complying with statements is not true around accounts payable?
A. That is attributed when was is purchase on account.
B. That is attributed for transportation charges paid.
C. It is debited when payment is do on account.
D. That is debited as soon as merchandise is reverted by the purchaser.
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It is credited for transportation charges paid.
Lower of expense or industry is an application of which audit principle? A. Consistency B. Conservatism C. Matching D. Accumulation Basi