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Exam 6: Inventories

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Question 81

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Match each description to the appropriate inventory system (a or b).​ -When using this system, a physical inventory is necessary to determine cost of goods sold. A)Perpetual B)Periodic

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Question 82

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During the taking of its physical inventory on December 31, Almond Supplies Company incorrectly counted its inventory as $545,000 instead of the correct amount of $554,000.(a) Indicate the effects of the misstatement on Almond Supplies Company's balance sheet and income statement for the year ended December 31.(b) If uncorrected, what would be the effects of the error on next year's balance sheet and income statement?

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(a) (b) Effects on next year's balance ...

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Question 83

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If the perpetual inventory system is used, the inventory account is debited for purchases of merchandise.

Describe three inventory cost flow assumptions and how they impact the financial statements.

During times of rising prices, which of the following is not an accurate statement?

FIFO is the inventory costing method that follows the physical flow of the goods.

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

List the internal control objectives illustrated by the following: (a)keeping the inventory storeroom locked (b)counting the inventory at the end of the accounting period and comparing it with the inventory ledger clerk's records (c)using subsidiary ledgers and a perpetual inventory system

Beginning inventory, purchases, and sales for an inventory item are as follows: Assuming a perpetual inventory system and the last-in, first-out method, determine (a) the cost of the goods sold for the September 30 sale and (b) the inventory on September 30.

Which of the following is not an example for safeguarding inventory?

Generally, the lower the number of days' sales in inventory, the better.

Applying the lower of cost or market to each item of inventory, what should the total inventory value be for the following items?

The following lots of a Commodity P were available for sale during the year. Use this information to answer the questions that follow. 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 cost of goods sold for the year according to the average cost method?

Beginning inventory, purchases, and sales data for widgets are as follows: Complete the inventory cost card assuming the business maintains a perpetual inventory system and determine the cost of goods sold and ending inventory using FIFO.

Match each description to the appropriate cost flow assumption (a-c). -Does not follow the physical flow of goods in most cases A)FIFO B)LIFO C)Weighted average

Which of the following measures the length of time it takes to acquire, sell, and replace inventory?

Match each description to the appropriate inventory system (a or b).​ -This system can be costly and time consuming if not computerized. A)Perpetual B)Periodic

On the basis of the following data for Sanford Industries as of December 31, determine the value of the inventory at the lower of cost or market. Also, show how the inventory would appear on the balance sheet (assume that the cost was determined by the FIFO method). Apply lower of cost or market to each inventory item.

In the retail inventory method, the cost to retail ratio is equal to the cost of goods sold divided by the retail price of the goods sold.

Excess inventory results in all of the following except